A large number of baby boomers have zero retirement savings and 40% intend to depend solely on Social Security for their post-retirement income. This does not look good for people worried about retirement, but there’s a way to help save – even if it means retiring in a completely different city.
Here are 12 of the cheapest states to retire in.
- Mississippi
Average cost of living index: 85.1
Median home cost: $140,818
Medicare Advantage Monthly Cost $48.87
In Mississippi, any income from pensions, Social Security, 401(k)s, IRAs, 403(b)s, SEP-IRA’s, and 457(b)s are tax-exempt.
- Alabama
Average cost of living index: 88.6
Median home cost: $170,184
Medicare Advantage Monthly Cost: $64.27
Alabama is among 38 states to fully exempt Social Security from income tax. Additionally, pension income is not taxed.
- Oklahoma
Average cost of living index: 88.2
Median home cost: $150,754
Medicare Advantage Monthly Cost: $47.49
The state of Oklahoma fully exempts Social Security retirement benefits. A deduction of $10,000 is also allowed for other retirement income.
- Arkansas
Average cost of living index: 92.1
Median home cost: $149,120
Medicare Advantage Monthly Cost: $44.34
In general, U.S. retirees consider Arkansas to be a favorable tax state. The state does not tax Social Security benefits. For seniors with other retirement income, such as pensions or IRAs, Arkansas also offers a $6,000 deduction (available for those who reached age 59 ½).
- Georgia
Average cost of living index: 89.8
Median home cost: $245,778
Medicare Advantage Monthly Cost $48.91
Seniors +65 can deduct $65,000 per person from all retirement income and no Social Security tax in Georgia. This deduction decreases to $35,000 for those between the ages of 62 and 64.
- Tennessee
Average cost of living index: 90.0
Median home cost: $231,682
Medicare Advantage Monthly Cost: $58.17
Tennessee has the second lowest per capita and per local tax burden behind Alaska, and is 10.3% below the cost of living index.
- West Virginia
Average cost of living index: 90.1
Median home cost: $117,768
Medicare Advantage Monthly Cost: $59.74
The state is tax-advantaged, although the level of tax-friendliness will depend on your income. West Virginia, for example, has low property and sales taxes.
- Indiana
Average cost of living index: 91.1
Median home cost: $185,805
Medicare Advantage Monthly Cost: $43.65
There is no tax on Social Security income in Indiana. Furthermore, Indiana’s property taxes are fairly low.
- Kansas
Average cost of living index: 86.9
Median home cost: $176,898
Medicare Advantage Monthly Cost: $38.56
In Kansas, the tax climate for retirees is moderate.
- Iowa
Average cost of living index: 90.3
Median home cost: $165,955
Medicare Advantage Monthly Cost: $49.07
Iowa is fairly tax-friendly. For example, it does not charge state income taxes on Social Security benefits.
- South Carolina
Average cost of living index: 94.8
Median home cost: $225,406
Medicare Advantage Monthly Cost: $38.38
A state with low property taxes and no estate or inheritance tax.
- New Mexico
Average cost of living index: 90,6
Median home cost: $248,670
Medicare Advantage Monthly Cost: $39.61
GoBanking Rates estimates that health care costs and grocery prices are somewhat below the U.S. average in New Mexico, but housing and utilities are more affordable.