15 States To Avoid if You Want To Live Just on Social Security

As you retire early or reach your Golden Years, you may be considering moving somewhere new to start the next chapter of your life. But some places are better than others.

The Council for Community & Economic Research looks at the costs of health care, utilities, groceries, transportation, and housing to determine the cost of living index, the national average at 100.

Based on that data, here are some states you probably don’t want to live in if your only retirement income is Social Security.

1. Minnesota

f11photo/Adobe

Cost of living: 95.3
Tax Social Security: Yes

While Minnesota has a low cost of living overall, the state's health care cost is in the top 10 of all states.

So, it may not be a good option for retirees who need to spend a large portion of Social Security on additional health care expenses.

The state also taxes Social Security after reaching certain thresholds, which may also be a consideration for living there.

2. Colorado

rondakimbrow/Adobe

Cost of living: 101.3
Tax Social Security: No

Colorado allows you to fully deduct Social Security income from your state taxes. However, depending on your income and age, the state will tax your retirement income above certain levels.

3. Maine

Jim Ekstrand/Adobe

Cost of living: 111
Tax Social Security: No

Transportation and housing comprise the largest part of the expenses in the cost of living index developed by the Council for Community & Economic Research.

The general cost of living in Maine is higher at 111, with the national cost of living index at 100. Transportation and housing costs are above the national level in Maine.

Are you a homeowner? Discover 8 savvy money moves to stretch your budget

4. Connecticut

SeanPavonePhoto/Adobe

Cost of living: 110.7
Tax Social Security: Yes

Your Social Security will be taxed if it exceeds a certain limit, so keep that in mind if you only live on Social Security income.

Connecticut also has the fifth highest utilities contributing to the overall cost of living, which could cause issues on a fixed income.

5. Rhode Island

thomas/Adobe

Cost of living: 109.4
Tax Social Security: Yes

Housing is an important factor for retirees living on Social Security in Rhode Island. The median sale price for a home was $512,500, 8.9% higher than a year earlier, according to real estate website Redfin.

That compares with a national median sale price of $433,229 for the same month.

6. New Hampshire

thomas/Adobe

Cost of living: 112.3
Tax Social Security: No

New Hampshire has a high cost of living that’s affected by some specific costs pushing it up. The state is in the top 10 for the cost of utilities and is above the national average for housing and transportation.

7. Vermont

Matt/Adobe

Cost of living: 113.8
Tax Social Security: No

In addition to the high cost of living, Vermont is among the most expensive in specific areas of the cost of living index.

It’s in the top 10 most expensive states for groceries, housing, utilities, and health, which could make it harder for you to stretch your Social Security check .

8. Oregon

Josemaria Toscano/Adobe

Cost of living: 112.2
Tax Social Security: No

The two top expenses in the cost of living index work against you as a retiree in Oregon. Its transportation costs are in the top five most expensive in the U.S., and housing places in the top 10 of the most expensive states.

On the other hand, the state’s cost for utilities is below the nation’s 100-level benchmark.

9. Maryland

Keith Allen/Adobe

Cost of living: 114.7
Tax Social Security: No

Maryland’s cost of living is affected by high housing costs. The median sale price for a home was $436,100 in September, a 4.9% increase over a year earlier.

10. New York

Leonid Andronov/Adobe

Cost of living: 123.5
Tax Social Security: No

New York housing costs rank fifth in the nation, which could quickly sink your Social Security income. The state also ranks in the top 10 for most expensive groceries in the United States.

11. Alaska

Galyna Andrushko/Adobe

Cost of living: 123
Tax Social Security: No

Alaska could be a beautiful state to retire in, especially if you like winter weather. But cost of living factors could eat at your Social Security deposit.

The state ranks highest when it comes to health care costs, which could be a major expense as you get older.

12. California

Lux Blue/Adobe

Cost of living: 143
Tax Social Security: No

California is in the top five states with the highest cost of living, with housing being a major drag for retirees who are only living on Social Security.

The state ranks third in the nation when it comes to housing expenses.

13. Massachusetts

SeanPavonePhoto/Adobe

Cost of living: 139.9
Tax Social Security: No

Living in Massachusetts will take extra cash from your Social Security check for housing, with the state ranking fourth overall for housing costs. The state is also in the top five for its utilities and health care costs.

A long, cold winter will require more heat, and increasing health care costs may strain your fixed monthly Social Security payment as you age.

14. District of Columbia

jonbilous/Adobe

Cost of living: 140.6
Tax Social Security: No

Housing can be a major factor for retirees in the nation’s capital. Washington, D.C., ranks second in the housing cost of living index, only behind Hawaii.

The median sale price for a home in the District in September was $635,750 compared to a national sale price of $433,229.

15. Hawaii

Vermeulen-Perdaen/Adobe

Cost of living: 188.4
Tax Social Security: No

Hawaii doesn’t tax your Social Security , but that may be little solace if you’re living in the state with the highest cost of living.

In addition to the general cost of living, Hawaii has the highest housing costs. The median sale price for homes in Hawaii was $783,700 in September, compared to the national median of $433,229.

Bottom line

If you have the ability and desire to move, understanding the actual cost of living in your desired location should be a starting point.

If you plan to live only on Social Security income, you will need to make a realistic budget and stick to it. Most likely, you’ll need to find ways to make extra money in retirement.

You could also wait to receive your Social Security benefits until age 70 to ensure you have the highest monthly income for the rest of your life.

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).