Finding the cheapest states to retire in can mean the difference between a comfortable retirement and stretching every dollar. According to the U.S. Bureau of Labor Statistics' 2024 Consumer Expenditure Survey, the average American household led by someone 65 or older spends roughly $60,000 per year — a figure that varies dramatically by location.
The cheapest states to retire in routinely cut that figure by a third or more.
The problem is that most retirement advice focuses on savings targets without addressing the single biggest variable: where you live. A move to a lower-cost state can reduce your annual expenses by 30% or more without sacrificing quality of life.
This guide breaks down seven states where your retirement income goes furthest, explains the tax advantages that matter most, and gives you actionable steps to evaluate each option for your specific situation.
1. Mississippi: The Lowest Overall Cost of Living
Mississippi consistently ranks as the most affordable state for retirees. According to the Missouri Economic Research and Information Center's (MERIC) 2024 Cost of Living Index, Mississippi's composite index sits well below the national average — with housing costs among the lowest in the nation.
That combination keeps Mississippi at the top of nearly every list of the cheapest states to retire in.
The state exempts Social Security benefits from income tax, and retirement income from pensions and 401(k)s receives favorable treatment for residents 59½ and older. Property taxes average under 1% of home value in most counties.
Healthcare access is a trade-off. Rural areas have fewer specialists, but cities like Jackson and Gulfport offer solid medical facilities. The trade-off in cost savings often justifies the difference for healthy retirees.
How to apply this: Use MERIC's cost of living calculator to compare Mississippi against your current state using your actual spending categories — not just averages.
2. West Virginia: Affordable Housing Meets Mountain Scenery
West Virginia offers some of the cheapest housing in the country. According to Zillow's 2024 home value data, the median home price in West Virginia remains significantly below the national median — often by six figures. Among the cheapest states to retire in, it pairs low housing costs with genuine natural beauty.
The state exempts Social Security from income tax and offers a senior citizen income tax deduction on other retirement income. Property taxes rank among the lowest nationally, with the average effective rate under 0.6%.
The outdoor recreation access is a genuine bonus — hiking, fishing, and state parks are abundant. The trade-off is limited public transportation and fewer large-city amenities.
How to apply this: Check Zillow's market reports for Morgantown or Charleston to see current median prices and compare them to your current housing cost.
3. Arkansas: Low Taxes and Affordable Healthcare
Arkansas combines low living costs with surprisingly accessible healthcare. The state's medical facilities in Little Rock, including UAMS Medical Center, provide quality care at costs below coastal averages — a rare package among the cheapest states to retire in.
Arkansas does not tax Social Security benefits. The state also offers a retirement income exclusion for residents 59½ and older — currently $6,000 per person, per year, according to the Arkansas Department of Finance and Administration.
Grocery costs and utilities run below the national average per MERIC data. The climate is mild with four distinct seasons, though summer humidity is notable.
How to apply this: Review the Arkansas Department of Finance and Administration's retirement income exclusion rules to calculate your exact tax savings based on your income sources.
4. Oklahoma: Budget-Friendly with Growing Urban Amenities
Oklahoma's cost of living runs roughly 12% below the national average, per MERIC's 2024 index. Housing in Tulsa and Oklahoma City remains affordable even as those cities add cultural amenities and healthcare infrastructure. That steady investment is why more retirees now rank Oklahoma among the cheapest states to retire in.
The state exempts Social Security from income tax and offers a $10,000 per person deduction on other retirement income. Property taxes average around 0.9% of home value.
Oklahoma City's senior-focused community programs and low-cost recreation options make it a practical choice. Severe weather — tornadoes and ice storms — is the main consideration.
How to apply this: Compare Tulsa versus Oklahoma City on Numbeo's cost of living comparison tool to see which metro fits your budget and lifestyle preferences.
5. Alabama: Warm Climate with Minimal Tax Burden
Alabama offers warm winters and a tax structure friendly to retirees. The state does not tax Social Security, and property taxes are the second-lowest in the nation, according to the Tax Foundation's 2024 state rankings. Retirees searching the cheapest states to retire in often overlook Alabama because of its mild Gulf Coast reputation, but inland towns deliver real savings.
The cost of living runs below the national average across most categories, per MERIC data. Coastal areas like Fairhope and Gulf Shores cost more than inland towns, but still compare favorably to Florida's Gulf Coast.
Healthcare access has improved with expansions in Birmingham and Huntsville. The humidity and summer heat require adjustment for some retirees.
How to apply this: Use the Tax Foundation's interactive state tax map to compare Alabama's total tax burden against your current state using your expected retirement income.
6. Iowa: Affordable Healthcare and Low Crime
Iowa stands out for combining affordability with excellent healthcare quality. The Commonwealth Fund's 2024 State Scorecard on Health System Performance ranks Iowa among the top states for healthcare access and quality — unusual for a low-cost state, and a key reason Iowa belongs on any shortlist of the cheapest states to retire in.
Iowa taxes Social Security for higher-income retirees but exempts it for those below income thresholds. The state offers a retirement income exclusion for residents 55 and older, per the Iowa Department of Revenue.
Smaller cities like Cedar Falls and Dubuque offer walkable downtowns and low crime rates. The trade-off is cold winters, which some retirees actively seek to avoid.
How to apply this: Check the Commonwealth Fund's state scorecard to compare healthcare quality metrics — hospital readmission rates, preventive care access — between Iowa and your current state.
7. Michigan: Great Lakes Living on a Budget
Michigan surprises many retirees with its affordability. According to MERIC's 2024 data, the state's overall cost of living sits near the national average, but housing costs in many communities — particularly outside the Detroit metro — run well below it. For lake lovers, Michigan ranks among the cheapest states to retire in without feeling like a compromise.
Michigan exempts Social Security from income tax and offers a deduction on other retirement income for residents born before 1946, per the Michigan Department of Treasury. Property taxes vary by municipality but average around 1.4%.
The four-season climate includes beautiful summers and autumns, with harsh winters in the Upper Peninsula. Lakeside towns like Ludington and Traverse City offer recreation without coastal price tags.
How to apply this: Use the Michigan Department of Treasury's retirement income estimator to calculate your exact state tax liability before committing to a move.
Cost Comparison Table
The table below summarizes why these seven states keep appearing on lists of the cheapest states to retire in.
| State | Social Security Tax | Median Home Price Trend | Best For |
|---|---|---|---|
| Mississippi | Exempt | Lowest in nation | Maximum savings |
| West Virginia | Exempt | Very low | Outdoor lovers |
| Arkansas | Exempt | Low | Healthcare access |
| Oklahoma | Exempt | Low | Urban amenities |
| Alabama | Exempt | Low | Warm climate |
| Iowa | Partial exemption | Moderate | Healthcare quality |
| Michigan | Exempt | Moderate | Lakeside living |
Action to take: Filter this table by the one factor that matters most to you — tax burden, housing cost, or healthcare — then research that state's specific county-level costs.
Frequently Asked Questions About cheapest states to retire in
How do I verify a state's actual tax burden before moving?
Request a tax calculation from the state's Department of Revenue using your specific income sources. Many states offer online estimators. For example, a retiree with $50,000 in Social Security and pension income might owe $0 in Mississippi but several hundred dollars in Iowa — the difference comes down to income thresholds and deduction rules that generic rankings miss.
Request a tax calculation from the state's Department of Revenue using your specific income sources, and check whether the cheapest states to retire in offer online estimators for that purpose. Many revenue departments will model your exact situation, so confirm the numbers before deciding which of the cheapest states to retire in fits your income.
Beyond taxes and housing, weigh insurance premiums and utility bills when comparing the cheapest states to retire in, since coastal Alabama and tornado-prone Oklahoma cost far more to insure than inland Mississippi.
What hidden costs should I check when comparing the cheapest states to retire in?
Look beyond taxes and housing. Property insurance costs vary widely — coastal Alabama and Oklahoma tornado zones carry higher premiums than inland Mississippi. Utility costs also differ; states with deregulated energy markets often have higher electric rates. Request actual utility bills from a potential neighborhood before committing.
Most of the cheapest states to retire in have limited transit outside major metros, so budget for rideshares if you cannot drive.
Can I retire in a cheap state but keep my current healthcare providers?
Medicare coverage follows you nationwide, but Medicare Advantage plans are county-specific. If you have an Advantage plan, you must switch plans when you move. Check whether your preferred doctors accept the plans available in your target county.
Some retirees use a hybrid approach — living most of the year in a cheap state while maintaining a small residence near existing specialists. This strategy is common among people weighing the cheapest states to retire in with access to familiar care.
Are there cheap states to retire in that also offer good public transportation?
Most low-cost states have limited public transit outside major metros. Oklahoma City and Tulsa offer bus systems, and some Michigan cities have regional transit. If you cannot drive, budget for rideshare services or choose a walkable small town — several Iowa and West Virginia communities have compact downtowns where daily needs are within walking distance.
What is the cheapest state to retire in if I rent rather than own?
Mississippi and West Virginia typically offer the lowest median rents, per HUD's Fair Market Rent data. A one-bedroom apartment in many Mississippi counties rents for under $700 per month. However, rent increases can outpace inflation in growing markets, so factor in a 3-5% annual increase when projecting long-term rental costs in any of the cheapest states to retire in.
Conclusion
Choosing among the cheapest states to retire in requires balancing cost savings against lifestyle priorities.
- Mississippi and West Virginia offer the lowest overall costs, ideal for maximizing fixed income
- Arkansas and Iowa provide stronger healthcare access without coastal price tags
- Alabama and Michigan offer climate and recreation variety at moderate costs
- Always verify state tax rules with official revenue departments before deciding
Your next step: pick two states from this list, run your actual income numbers through their official tax calculators, and schedule a short-term rental visit during the least pleasant season. That single trip will reveal more about fit than any ranking of the cheapest states to retire in ever could.
