Choosing where to retire ranks among the most consequential financial decisions you will ever make. According to the U.S. Census Bureau, more than 4 million Americans turn 65 each year, and many will relocate for retirement.
The problem is that most rankings focus on a single factor—taxes or weather—while ignoring the full picture of affordability, healthcare access, and quality of life. This guide breaks down the best and worst states to retire based on verifiable data from government agencies and independent research organizations.
You will learn which states offer genuine value, which ones drain savings, and how to evaluate any state against your personal priorities.
What Makes a State Good or Bad for Retirement
The best and worst states to retire are not determined by a single metric. They emerge from the intersection of several measurable factors that affect your daily life and long-term financial security. Understanding the best and worst states to retire starts with knowing which factors carry the most weight.
Tax Burden: The Biggest Visible Cost
State tax policy directly impacts how far your retirement income stretches. Some states levy no income tax at all, while others tax Social Security, pensions, and retirement account withdrawals. According to the Tax Foundation's 2024 State Business Tax Climate Index, states like Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, and Wyoming impose no individual income tax.
On the other end, California taxes retirement income at rates up to 13.3% for high earners, according to the California Franchise Tax Board.
How to apply this: Pull up the Tax Foundation's state tax map and identify whether your expected retirement income sources—Social Security, 401(k) withdrawals, pension—are taxed in any state you are considering.
Cost of Living and Housing
Housing typically consumes the largest share of a retiree's budget. The Council for Community and Economic Research publishes a Cost of Living Index that compares prices across 270+ urban areas. States like Mississippi and Oklahoma consistently rank among the lowest, while Hawaii and California sit near the top.
The best and worst states to retire often diverge sharply here: a $400,000 home in Ohio might cost $1.2 million in coastal California for comparable square footage.
How to apply this: Use the Council for Community and Economic Research's online calculator to compare the cost of groceries, utilities, and housing between your current city and any prospective retirement destination.
Healthcare Access and Quality
Medicare covers the same benefits nationwide, but the availability of providers varies dramatically. The Kaiser Family Foundation reports that rural areas face significant physician shortages, with some counties having fewer than one primary care physician per 3,500 residents.
States like Massachusetts and Minnesota consistently score high on healthcare access measures, while Mississippi and Alabama rank near the bottom in health outcomes.
How to apply this: Check the Medicare.gov Physician Compare tool to see how many accepting providers are within 25 miles of any address you are considering.
The 5 Best States to Retire in 2025
Several organizations publish annual retirement rankings using different methodologies. While no single list is definitive, certain states appear consistently across multiple credible sources. The best and worst states to retire rankings converge on a handful of standouts year after year.
1. Delaware: Tax-Friendly and Coastal
Delaware earns high marks because it exempts Social Security from state income tax and offers a $12,500 exclusion on pension and retirement account income for residents over 60, according to the Delaware Division of Revenue. Property taxes are among the lowest in the nation. Healthcare access is solid, with ChristianaCare operating one of the largest hospital systems in the mid-Atlantic.
How to apply this: Request a Delaware tax form 1100S to see exactly how your income would be taxed as a resident.
2. New Hampshire: No Income or Sales Tax
New Hampshire imposes no state income tax and no general sales tax, which is rare. The state's property taxes run high—among the top five nationally per capita, according to the Tax Foundation—but the overall tax burden for retirees remains moderate. Dartmouth-Hitchcock Medical Center provides strong regional healthcare access.
The best and worst states to retire often hinge on tradeoffs like this: you save on income tax but pay more on property.
How to apply this: Compare your expected annual income tax savings against the property tax bill for a typical home in a town like Concord or Manchester.
3. South Dakota: Low Cost, No Income Tax
South Dakota consistently ranks among the affordable front-runners on any best and worst states to retire comparison. It has no state income tax, no estate tax, and a cost of living roughly 8% below the national average, according to the Council for Community and Economic Research. Winters are harsh, but the state's financial advantages draw retirees who prioritize savings.
Sanford Health and Avera Health provide hospital networks across the state.
How to apply this: Use the South Dakota Department of Revenue's tax calculator to estimate your total state tax liability compared to your current state.
4. Tennessee: Tax-Free Retirement Income
Tennessee eliminated its tax on interest and dividend income in 2021, making it fully income-tax-free. The state also exempts Social Security and retirement account withdrawals. Nashville and Knoxville offer growing healthcare systems, including Vanderbilt University Medical Center.
The cost of living sits slightly below the national average, a combination that keeps Tennessee high on best and worst states to retire shortlists.
How to apply this: Look up property tax rates in specific Tennessee counties—they vary from 0.5% to over 2% of assessed value—to see if the savings hold up.
5. Wyoming: Quiet, Affordable, Tax-Friendly
Wyoming has no state income tax and some of the lowest property taxes in the nation. The state's small population means fewer urban amenities, but it offers unmatched natural access and low crime rates. According to the FBI's Uniform Crime Reporting data, Wyoming consistently ranks among the five safest states for property crime.
Healthcare is limited outside Cheyenne and Casper, so this state suits healthy retirees who value solitude.
How to apply this: Map the driving distance from any prospective Wyoming town to the nearest hospital with a 24-hour emergency room.
The 5 Worst States to Retire in 2025
The best and worst states to retire lists often overlap less than people expect. Some states with great weather rank poorly due to costs, while others with low costs fail on healthcare. Reviewing the best and worst states to retire side by side makes the tradeoffs obvious.
1. California: High Taxes, High Housing Costs
California taxes retirement income aggressively. The state imposes income tax rates from 1% to 13.3%, and Social Security is exempt only for low-income filers, according to the California Franchise Tax Board. The median home price in California exceeded $800,000 in 2024, per the California Association of Realtors.
Wildfire risk and insurance costs add further strain, landing the state on most best and worst states to retire lists for all the wrong reasons.
How to apply this: If you already own a California home with a low property tax basis under Proposition 13, calculate whether selling and relocating actually saves money after capital gains taxes.
2. New York: Estate Tax and High Property Taxes
New York exempts Social Security and up to $20,000 of pension income, but property taxes remain among the highest in the nation—over $3,700 per capita annually, according to the Tax Foundation. The state also imposes an estate tax on estates over $6.94 million, lower than the federal threshold. Upstate New York offers lower housing costs but fewer healthcare options.
How to apply this: If you plan to leave a significant estate, check whether New York's estate tax threshold would affect your heirs compared to a state with no estate tax.
3. New Jersey: Highest Property Taxes in America
New Jersey's property taxes are the highest in the nation, averaging over $9,000 per household annually, according to the New Jersey Department of Community Affairs. The state does exempt Social Security and offers a retirement income exclusion up to $100,000 for seniors, but housing costs and overall tax burden push it onto many worst-states lists.
Healthcare quality is high, but you pay for it.
How to apply this: Compare your total annual tax bill—property, income, sales—in New Jersey against a no-income-tax state with lower property taxes like Tennessee.
4. Illinois: Fiscal Instability and High Taxes
Illinois faces persistent budget challenges and high tax burdens. The state taxes retirement income, including Social Security, though it recently began phasing in exemptions. Property taxes rank second-highest nationally, according to the Tax Foundation. The state's pension debt exceeds $140 billion, per the Illinois Commission on Government Forecasting and Accountability, creating uncertainty about future tax increases.
How to apply this: Review Illinois' credit rating from Moody's or S&P to understand how the state's fiscal condition might affect future tax policy.
5. Mississippi: Low Cost but Poor Healthcare
Mississippi appears on worst lists for a different reason: healthcare. The state ranks last or near-last in life expectancy, chronic disease rates, and healthcare access, according to the Centers for Disease Control and Prevention. The cost of living is low and taxes are modest, but rural hospital closures have accelerated.
The best and worst states to retire sometimes trade financial savings for health risks.
How to apply this: Before considering Mississippi, search the Kaiser Family Foundation's hospital closure tracker to see how many facilities have closed in the county you are targeting.
How to Evaluate Any State for Your Retirement
Generic rankings only get you so far. Your personal situation—health status, income sources, family location—determines what actually works. The best and worst states to retire lists are starting points, not final answers.
Build a Personal Scorecard
Create a simple weighted scoring system. Assign percentages to the factors that matter most to you: taxes (25%), healthcare (25%), cost of living (20%), proximity to family (15%), climate (15%). Score each state from 1 to 10 on each factor, then multiply by the weight.
This turns subjective rankings into a decision tool, and it works whether you are comparing best and worst states to retire candidates or two towns within one state.
Use Independent Data Sources
Rely on primary sources rather than editorial lists. The U.S. Census Bureau's American Community Survey provides detailed demographic and housing data. The Centers for Medicare and Medicaid Services publishes hospital quality ratings. AARP offers a retirement calculator that factors in state taxes. SmartAsset provides state-specific retirement tax guides with current rates.
How to apply this: Spend one hour pulling data from these three sources for your top three candidate states, then compare side-by-side.
Frequently Asked Questions About best and worst states to retire
What is the single most important factor in choosing a retirement state?
Healthcare access matters most for most retirees. Even in a low-tax state, a serious medical condition can force long drives for treatment or expensive transfers. The best and worst states to retire often differ most on healthcare quality. Check Medicare.gov for provider density in any specific town before committing.
Do I have to establish residency to get a state's tax benefits?
Yes. States require you to spend more than half the year—typically 183 days—in the state to claim residency for tax purposes. Some states audit part-time residents aggressively. Keep a log of days spent in each state if you split time between two homes.
Yes, establishing residency is key when weighing the best and worst states to retire, since most states require you to spend more than half the year—typically 183 days—there to claim tax benefits.
Can I avoid state income tax by moving to a no-tax state but keeping my old home?
No. Your old state may still claim you as a resident if you maintain a home, driver's license, voter registration, or primary healthcare providers there. You must sever ties—sell or rent out the old home, switch your license, register to vote in the new state.
Are there any states that tax Social Security benefits?
Yes, though the list is shrinking. As of 2025, Colorado, Connecticut, Kansas, Minnesota, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont still tax Social Security for some or all recipients, though most offer income-based exemptions. The best and worst states to retire lists change as these laws evolve.
How often should I re-evaluate my retirement state choice?
Every two to three years, or after major life changes like a health diagnosis or the death of a spouse. State tax laws change frequently. A state that was tax-friendly five years ago may have shifted. Set a calendar reminder to review your state's tax code and healthcare access annually.
Conclusion
Choosing among the best and worst states to retire requires looking past headlines and into the data that affects your specific situation. A careful reading of the best and worst states to retire evidence will always beat a headline ranking.
- Tax burden varies by income type—what works for a pension-heavy retiree may not work for someone living on Social Security alone
- Healthcare access can outweigh tax savings, especially as you age
- Cost of living differences compound over a 20-30 year retirement
- Personal factors like family proximity and climate preferences deserve equal weight
Start by pulling your own numbers: your expected retirement income, your health needs, and your housing budget. Then score three candidate states using the weighted scorecard method described above. Use primary sources—the Tax Foundation, Medicare.gov, and the Census Bureau—not editorial rankings. Your retirement destination should fit your life, not someone else's list.
