What are the most tax-friendly states for retirees?
Some states do not tax Social Security or income, which could appeal to retirees. Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming stand out for their tax-friendly policies and other amenities that retirees may enjoy.
South Dakota
South Dakota is considered to be very tax-friendly towards retirees. There is no state income tax in South Dakota. This means that there is no state income tax on Social Security benefits, distributions from retirement accounts such as IRAs or 401(k)s, or pension benefits from public or private pensions.
Q: What state has the lowest cost of living for retirees? A: Alabama ranks as the most affordable state to retire, per WalletHub. The southern state boasts a cost of living nearly 16 percent below the U.S. average, with particularly low costs for housing, transportation, and groceries.
Alaska, Florida, Nevada, New Hampshire*, South Dakota, Tennessee, Texas, Washington, and Wyoming do not tax income.
Idaho is revered as one of the best states to retire on social security for taxes. In this state, social security benefits are not taxed at the state level. Other types of retirement income are taxed at rates ranging from 0.00% to 6.00%. Property and sales tax rates are also low.
While Florida was the most popular destination with 11% of retirees flocking there, other states such as South Carolina also attracted older Americans. South Carolina ranked No. 2 with 10% of all cross-state retirement moves in 2023.
What state is the best financially to retire in? A 2022 Kiplinger analysis ranked the most tax-friendly places in the country for retirement: Alaska, Florida, Iowa, Mississippi, Nevada, Pennsylvania, South Dakota, Tennessee, Texas, and Wyoming.
Retirees looking to live comfortably may want to consider where they call home. Mississippi leads the nation with the cheapest cost of a comfortable retirement at just over $55,000 annually, a new analysis by the personal finance platform GOBankingRates found.
Q: Can I retire in Florida on $3,000 a month? A: According to a GOBakingRates study, there are several cities in Florida where you can live on $3,000 — or even less — each month, including Pensacola and Panama City.
Bottom Line. Yes, Social Security is taxed federally after the age of 70. If you get a Social Security check, it will always be part of your taxable income, regardless of your age. There is some variation at the state level, though, so make sure to check the laws for the state where you live.
What is the best state to retire in 2024?
Florida has regained its status as the best state for retirees in 2024. That's according to WalletHub's latest “Best and Worst States to Retire” study. In 2023, Virginia took the top spot and knocked Florida down to No. 2.
1. Iowa. Iowa tops the list for best states to live on just a Social Security check thanks to a number of factors. Overall, the monthly cost of living-rent, groceries, healthcare, utilities, transportation, and any miscellaneous expenses-comes to just under $3,000.
The cheapest places to retire abroad include Panama, the Philippines, Portugal, Malaysia, Mexico, Thailand and Vietnam. Before making the move, consider expenses such as travel costs, taxes and visas, which can vary significantly from one country to another.
Additionally, Florida outpaced states such as Georgia, which ranked #30 overall, with affordability ranking #10 and Texas, which ranked #32 overall, with affordability ranking #25 for seniors.
In addition, the following states also tax Social Security income: Kansas, Michigan, Minnesota, North Dakota, Utah, West Virginia, Colorado, Montana, Nebraska, and New Mexico.
Inflation and stock market dips have also negatively impacted their financial situation. In response, seniors are seeking more affordable places to call home. For example, many are moving to Limestone County, Alabama, the fastest-growing county in the state.
San Luis Obispo ranked 9, 11, and 41 in the social, finance, and health categories respectively. According to the report, the happiest place to retire in the U.S. is Barnstable, MA, followed by Naples, FL and Ann Arbor, MI.
States with the Oldest Population
Arguably, the state with the oldest population is Florida; residents ages 65 and older, make up the highest percentage of people there, but it, of course, depends on how you look at the statistics: By Percentage: The highest percentage of people ages 65 and over live in Florida.
Retirement Location FAQs
According to the Composite Cost of Living Index, the 10 most expensive states to live in (and retire to) are: Hawaii, Massachusetts, California, New York, Alaska, Washington, New Hampshire, Vermont, Maryland, and Oregon.
One of the cheapest warm places to retire in the world is Mexico. San Miguel de Allende, in particular, is a favorite amongst retirees owing to its established expat community, rich cultural scene, and affordable healthcare.
What is the cheapest way for a senior to live?
One option for seniors is to downsize to a smaller home, apartment, or condo. This can help reduce housing expenses such as rent, mortgage payments, property taxes, insurance, and maintenance costs. Seniors can also consider sharing a living space with family members, friends, or roommates to further reduce costs.
Querétaro, a historic city in Central Mexico, and Isla Mujeres and Cozumel, islands off the coast of Cancun and Riviera Maya, all offer housing for as low as $500 a month, access to excellent healthcare, and an abundance of recreational activities. However, five of the destinations on the list are in Southeast Asia.
Some of the places to retire for $1,000 a month include Ipoh, Malaysia; and Tanjung Bungah in Malaysia. Yet other places exist where individuals can retire for $800 a month, such as Koh Samui in Thailand, Murska Sobota in Slovenia, Chiang Mai in Thailand, and Timisoara in Romania.
It would take $1.46 million to retire comfortably, according to a recent survey of 4,588 adults released Tuesday by financial-services company Northwestern Mutual. That is up from $1.27 million a year ago. And over $1 million more than the average survey participant's nest egg.
A new study by financial website Insider Monkey reveals that a small Southern town in Mississippi is one of the most affordable and vibrant places to retire in the U.S. Tupelo is a historic town in the northeast part of Mississippi.
