Being able to comfortably retire is a key goal for many Americans. And while you should always check your retirement readiness from a top-down view, it’s also a good idea to delve into where you should consider living out your golden years.
Not to cast aspersions on any particular state, but there are definitely ones that are better for retirees than others. Consider living costs, health care, weather, and so on.
Since the average monthly Social Security income is $1,772 per month or $21,264 annually, you should understand your shortfall — or how much additional money beyond Social Security you’ll need to live in that state.
Here are the top states for retirees.
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1. Delaware
Delaware is America’s first state and takes the first slot when it comes to states good for retirees. It’s tax-friendly, with no state or local sales tax and no tax on Social Security benefits. There are also no estate or inheritance taxes.
There are other taxes to consider though, including on gas and cigarettes. The cost of living is just on the high side, with the national average being 100, according to data from the Missouri Economic Research and Information Center.
Cost of living index: 100.9
Weather: Generally moderate with some fluctuations
Average retirement age: 63
How much you’ll need per year for a comfy retirement: $58,418
Shortfall: $37,154
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2. West Virginia
West Virginia gets high marks for affordability thanks to its low cost of living, property taxes, and homeowner insurance.
While it performs moderately in wellness, it scores the lowest in health care quality and cost. High health care expenses, poor system performance, and a limited number of health care centers might make it dicey for older Americans.
Cost of living index: 83.8
Weather: Cold winters with toasty, humid summers.
Average retirement age: 61
How much you’ll need per year for a comfy retirement: $49,439
Shortfall: $28,175
3. Georgia
Georgia’s big selling point is affordability. The Peach State’s cost of living has decreased significantly.
While the quality and cost of health care have seen modest improvements, Georgia's overall well-being and crime ratings remain low this year. These factors contribute to making it a more attractive option for retirees.
Cost of living index: 91.3
Weather: Humid, subtropical, but generally mild
Average retirement age: 63
How much you’ll need per year for a comfy retirement: $50,066
Shortfall: $28,802
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4. South Carolina
Like Georgia, South Carolina gets big points for affordability, though the cost of living is a bit on the upper end.
It’s also got generally nice weather and you won’t find it lacking in terms of well-being — and health care quality and costs.
Cost of living index: 97.6
Weather: Humid and subtropical. Beware of tropical cyclones.
Average retirement age: 63
How much you’ll need per year for a comfy retirement: $53,207
Shortfall: $31,943
5. Missouri
The Show Me State shows up well in terms of affordability, with a strong score in cost of living.
However, the state faces challenges in health care quality, overall well-being, crime, and natural disasters. The past 40 years have seen droughts, floods, freezes, severe storms, tropical cyclones, and winter storms.
Cost of living index: 88.5
Weather: Varies, but expect chilly winters and hot summers
Average retirement age: 63
How much you’ll need per year for a comfy retirement: $50,247
Shortfall: $28,983
6. Mississippi
Mississippi has some great perks for retirees — largely in terms of taxes and retirement income.
It exempts all retirement income, including Social Security, IRA, 401(k), and pensions, from taxes. In addition, Mississippi offers low property taxes and moderate sales tax rates.
Cost of living index: 88.3
Weather: Humid, subtropical. Moderate winters and long, hot summers.
Average retirement age: 63
How much you’ll need per year for a comfy retirement: $46,993
Shortfall: $25,729
Make Money: 8 things to do if you're barely scraping by financially 7. Pennsylvania
Pennsylvania might have a steep cost of living index compared to some other states, but it does very well by being tax-friendly.
Your pension, 401(k) and 403(b) plans, and IRAs are all tax-exempt.
Cost of living index: 95.6
Weather: Diverse — it’s a big state
Average retirement age: 64
How much you’ll need per year for a comfy retirement: $57,941
Shortfall: $36,677
8. Florida
The Sunshine State is a popular destination for retirees due to its tax-friendly policies. While property and state tax rates are around the national average, the overall tax burden is low.
However, the cost of living is a bit above average, with high costs for groceries, housing, and utilities. And don’t forget homeowners insurance, which may be unaffordable in Florida, depending on where you live.
Cost of living index: 103.1
Weather: Expect long, hot summers and mild winters … and hurricanes
Average retirement age: 64
How much you’ll need per year for a comfy retirement: $56,382
Shortfall: $35,118
9. Iowa
Iowa offers a host of benefits for retirees — largely in its balance between cost of living, health care, and tax-friendliness. Housing in particular is well below the national average.
Cost of living index: 90.1
Weather: Humid, warm summers and chilly winters.
Average retirement age: 65
How much you’ll need per year for a comfy retirement: $52,399
Shortfall: $31,135
Are you a senior? Avoid these 6 sneaky money mistakes 10. Wyoming
Wyoming offers lower-than-average sales (an average of 5.44% in state and local sales taxes) and property taxes. Taxes and affordable housing contribute to a cost of living below the national average.
The state relies on special taxes, but it doesn't rank very well in terms of quality of life. The cost of health care is quite a bit above average, which can be a particular drain for older people.
Cost of living index: 95.1
Weather: On average, a pretty cool climate
Average retirement age: 64
How much you’ll need per year for a comfy retirement: $52,330
Shortfall: $31,066
Bottom line
Location, location, location — that’s a big part of the retirement puzzle. Some states may work better for you than others, so take a gander at living costs, health care, and what weather you’d like to spend your days in.
If you choose a state that will require a higher income in order to live comfortably, you may have to consider supplementing your Social Security with a part-time job. And don’t forget, in some states, you may owe taxes on that Social Security income.
Ultimately, it’s up to personal preference and what matters most to you.
Money tips that can work for everyone
No matter what your bank account balance is, there's always an opportunity to optimize and improve your finances. Here's a quick checklist of things you can look at today.
Focus on paying off your debt . Debt can hold you back from making progress with your overall financial well-being. Aside from cutting expenses, there are tools that can help you pay off debt faster like balance transfer credit cards and debt counseling.
Earning extra income can give you breathing room. If finances are tight, earning some extra money to supplement your income can make a huge difference. A new job is one option to consider, but if you're not ready to make a big change or already retired, a part-time side job could be a better choice.
Cut your expenses. It sounds painful and so not fun, but it doesn't have to be. Take a look at your biggest expenses because that's where you'll probably find the biggest savings. For example, auto insurance rates have been soaring so shopping around for a new insurance company can be the fastest way to cut your bill. Also, look for ways to cut your grocery bill (despite rising inflation).
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