Are you planning on retiring soon? If so, congratulations on the move to the next phase of your life. But have you thought about the best states to retire on a fixed income? Ideally, you'll want to find a place that's affordable but still offers a great quality of life during your golden years.
This blog post will give you suggestions of states which offer low costs of living, low tax burdens, and amenities retirees’ need, all without breaking the bank. If sunbelt living or natural scenery are calling your name, you have come to the right place.
10 Best states for Retirement on a Budget
Let's start with our list of the 10 best states to retire on a fixed income, all-things-considered:
- Florida
- Georgia
- Michigan
- Ohio
- Missouri
- Virginia
- Colorado
- Wyoming
- Delaware
- New Hampshire
What to Consider When Choosing Place to Retire
Another thing we need to make clear is that when it comes to picking your best retirement state, there is no one-size-fits-all choice, as everyone has different priorities and preferences. That said, there are a few important things that everyone should keep in mind, especially for those who are on a fixed income. Here are a few of them.
Low Taxes
Taxes are always a concern if you are living on a fixed income. Some states make retirement more affordable by not taxing too much of your income. As such, you should always look for states with no income tax, no estate tax, no inheritance tax, low sales tax, and property tax exemptions or caps for seniors. Also, if you're receiving social security benefits, some states also don't tax social security income or retirement income of any kind.
Lowest Tax States For Seniors
Seven states have no state income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. Not paying state income tax on your retirement income, pensions, and Social Security and investment earnings can save you thousands each year.
In other states, retirement income may be partially or fully exempt from state income taxes. For example, up to $6,000 of retirement income is tax-free in Mississippi, and in New Mexico, up to $8,000 is exempt. Some states, such as Illinois, exempt all pension income. Be sure to check with the states you’re interested in to see how they tax retirement and pension income.
Low sales tax and property tax rates also help. Five states have no state sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. Property taxes vary more but some states offer property tax exemptions, caps, or freezes for seniors. In Alabama for example, homeowners 65 and older get a $5,000 property tax deduction and in Florida, property values are capped for long-time residents.
If you are a retiree on a fixed income, it's important to check individual state and local taxes to find the best deals. While no two situations are alike, focusing on low-tax and tax-friendly states can help ensure you get to keep more of your hard-earned money in retirement.
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Affordable Housing
Another factor to consider with a fixed income is housing costs. For most people, housing costs are usually the biggest item on their expense lists. Several states are known for the low cost of living, especially for housing, making them suitable for retirees.
- Florida: Florida’s lack of state income tax and low property taxes appeal to many seniors. Rent for a one-bedroom apartment averages around $1,000/month.
- Arizona: Parts of Arizona, like Mesa and Tucson, offer scenic surroundings at an affordable price. You can find small homes for under $200,000 and rent around $800/month.
- Texas: Texas has no state income tax and below-average living costs. Outside of Austin and Houston, housing is very budget-friendly. A one-bedroom in San Antonio or El Paso is typically under $700/month.
- Arkansas: The Ozarks of Arkansas and Missouri are beautiful and cheap. A small house can be found for under $100,000. Rent for a basic apartment is around $600/month or less.
- New Mexico: New Mexico’s mild winters and stunning scenery come at an affordable price due to low demand. Santa Fe and Albuquerque have rent around $800/month and small homes under $200,000.
Access to Healthcare
Healthcare costs are a major concern for retirees living on a fixed income. Several states make access to affordable healthcare a priority for their older residents. For example, some offer prescription drug assistance and Medicaid programs with higher income limits, so more seniors can qualify. A few states also have their own healthcare marketplaces and Medicare options with lower premiums for those over 65.
- Arizona: Arizona's Medicaid income limit for seniors is $25,980 for individuals and $35,100 for couples. They also have prescription assistance programs to help cover drug costs.
- New Mexico: New Mexico offers Medicaid for retirees with annual incomes up to $23,792 for individuals and $32,319 for couples. They have an affordable health insurance exchange and additional assistance for Medicare premiums and co-pays.
- Oregon: Oregon provides Medicaid for seniors making up to $16,398 annually for individuals and $22,221 for couples. They also offer assistance paying for Medicare premiums, deductibles and prescription drugs with several state programs.
Some of the best states for healthcare in retirement also have high-quality hospitals and lots of doctors, especially geriatricians and specialists focused on senior care. Some also rank well for general wellness and healthy lifestyles, which naturally leads to lower healthcare costs overall.
Natural Beauty and Outdoor Activities
One of the best parts of retirement is having the time to get outside and enjoy nature. Many states offer an abundance of natural beauty and opportunities for outdoor recreation on a budget.
Take Arizona as an example. The stunning Sonoran Desert landscape is home to saguaro cacti, coyotes, and sunsets that set the sky ablaze. You can go hiking in the Superstition Mountains, stargaze at night in one of the International Dark Sky Communities, or take in the views at the Grand Canyon for little or no cost.
The Pacific Northwest states of Oregon and Washington provide perfect weather for outdoor activities. Go beachcombing along the coast, kayak into old-growth forests, or hike to thundering waterfalls in the Columbia River Gorge. The scenery is fascinating.
Florida’s natural attractions revolve around its 1,200 miles of coastline and the Everglades ecosystem. You can go shelling along the Gulf Coast, see manatees in Crystal River, or spot roseate spoonbills in the Everglades National Park. The ocean breezes and balmy weather make it perfect for bird watching, boating, or just sitting by the sea.
New Mexico is filled with desert scenery, mountain vistas and vibrant sunsets. You can engage in activities in White Sands National Monument or walk in the colorful rock formations at Bandelier National Monument. The Land of Enchantment is true to its name.
Outdoor activities are plentiful in these states, with most parks and recreation areas offering free admission or steep senior discounts. Getting outside and experiencing the natural beauty will enrich your retirement in many ways.
Low Crime Rates
Another top priority for most retirees is safety and security. And that means you should avoid states with high crime rates and focus on those with crime rates below the national average. In the latter, you can feel at ease knowing your community is a safe haven.
Some of the states with the lowest crime rates include:
- Maine: Peaceful, rural Maine has one of the lowest crime rates in the U.S. You can enjoy the natural scenery without worry.
- Vermont: Friendly Vermont is one of the safest states, with stunning fall foliage and quaint towns.
- New Hampshire: Rustic New Hampshire offers a quiet country lifestyle and ranks high for safety. It has no state income tax on retirement income either!
- Hawaii: Beautiful beaches and lush landscapes aside, Hawaii has a very low violent crime rate compared to other states. You can relax into the island vibe.
- Wyoming: Majestic Wyoming, the least populated state, is a safe place to settle in with stunning views of the Grand Tetons and Yellowstone.
Living in a place with less crime means less stress and risk, which is important for your health, happiness, and budget in retirement. Focus on the states promoting a safe community and natural beauty where you can really enjoy your golden years without fretting over security concerns.
Weather and Climates
Weather and temperature are also important factors to consider when finding your retirement paradise. Some of the states on our list experience mild, Mediterranean climates with warm, dry summers and rainy winters. Others see mostly sunny skies all year. A few face long, harsh winters that may require extra planning.
Consider how weather and climate will impact your lifestyle in retirement. Do you want to be able to garden, swim or golf comfortably most of the year? States like California, Texas and Florida may appeal to you. Don’t mind bundling up for outdoor activities? Maine, Michigan or Minnesota could work well. Prefer staying indoors when the weather is frightful? Then opt for a state that sees less extreme winters.
Think about natural disasters too, like hurricanes, wildfires or flooding. Some states are more prone to these types of events, which can wreak havoc on home insurance costs and safety. Choose a location that fits your tolerance level for risk.
At the end of the day, you should select a state with weather and a climate you’ll happily retire in. After all, you’ll be living with it for the long haul! Consider visiting top candidates during different seasons to experience the weather first-hand. That way you can find a place that’s not too hot, not too cold, but just right for your retirement dreams.
Culture and Entertainment
When you retire, you'll have more free time to enjoy life's simple pleasures. Some of the best states for retirees offer an abundance of cultural attractions and entertainment options to keep you active and engaged.
Arizona's stunning scenery and 300 days of sunshine aren't the only perks. Cities like Phoenix and Tucson boast a thriving arts and culture scene. You can catch Broadway shows, visit world-class museums, and dine at amazing restaurants. The state is also home to spring training for many Major League Baseball teams.
Florida, especially cities like Tampa, St. Petersburg and Fort Myers, provides endless entertainment for retirees. You have beaches, golfing, museums, restaurants, shopping and theme parks like Disney World and Universal Studios. There are also many retirement communities with their own recreational facilities.
Nevada's Las Vegas needs no introduction. Where else can you gamble, see amazing shows, dine at celebrity chef restaurants, shop, get pampered at world-class spas and more, all while enjoying little to no state income tax? The city really does have something for everyone.
New Mexico is a paradise for culture vultures with stunning scenery as a backdrop. Santa Fe and Albuquerque boast vibrant art galleries, Native American cultural centers, historical sites, festivals and performing arts. The state's food, influenced by Mexican and Southwestern flavors, is also a major draw.
These are just a few of the many states offering enviable weather, natural beauty and a wealth of cultural attractions and entertainment options for retirees. When your daily grind turns into a daily adventure in retirement, life is good.
Need to Find a Medicare Plan For Your New State?
If you're thinking of moving to a new state to enjoy your retirement, you may be in the market for a new Medicare plan as well. Whether your current Medicare plan doesn't offer coverage in your ideal retirement state or it simply doesn't cover all of your needs --- we're here to help you find the insurance plan that's perfect for you.
At EASY Insurance, we're a team of experienced agents that are dedicated to helping you find the health plans that best suit your needs and wants. Whether you need a plan offered by the government or a private insurance company, we are always happy to help.
We're here for you and can't wait to help you live an EASY and comfortable retirement life!
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