HIGHLIGHTS
- Start with your budget, then test each state against it.
- Taxes matter, but total cost of living matters more.
- Health care access and costs vary widely from state to state.
- Score your shortlist before you ever tour a home.
- A local 55+ expert can pressure-test your final pick.
Deciding which state to retire in comes down to matching a place to your finances, your health, and the daily life you want, not chasing a ranking. The top state on a magazine list can be the wrong one for your budget or your family.
The method below narrows the map in seven steps, from your monthly budget down to a specific community.
Why the Right State Matters More Than a Ranking
Retirement relocation is common, but it is far from universal. According to HireAHelper, about 258,000 Americans moved for retirement in 2024, and roughly 32% of them crossed state lines, nearly double the out-of-state rate for the general population. That tells you plenty of people find a better fit somewhere new. It does not tell you where you belong.
“Best states to retire” lists rank an average retiree who does not exist. The state that tops the list on taxes may sit hundreds of miles from your grandchildren. The one with the mildest winters may cost more than your budget allows. A move is expensive and disruptive, so the goal is fit, not popularity.
Related Article: How to Relocate for Retirement: A Step-by-Step Guide
1. Start With Your Retirement Budget
Every state comparison means little until you know your monthly number. Start by adding up your guaranteed income (Social Security, any pension, an annuity), then add what you can safely draw from savings and investments each month. That combined figure is the budget every state has to fit.
Knowing the number first changes how you read everything else. A state stops being “affordable” or “expensive” in the abstract and becomes a simple question: Does the life you want there cost more or less than what you bring in each month?
Two costs will move that math more than any others: housing and health care. Both vary widely by state, and each gets its own step below. Build in a cushion for the years when medical costs climb, and revisit the number if you plan to buy rather than rent, since a home purchase reshapes the whole picture.
2. Compare How States Tax Retirement Income
According to the Tax Foundation, eight states levy no individual income tax in 2025: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, and Wyoming. Washington has no wage tax but taxes long-term capital gains. Social Security is handled separately. Per The Motley Fool, 41 states plus Washington, D.C., do not tax those benefits. Nine still tax them to some degree, with West Virginia phasing its tax out by 2026.
Estate and inheritance taxes are the part most people miss. Twelve states plus Washington, D.C., levy an estate tax. The Tax Foundation notes Oregon’s starts at just $1 million, far below the federal exemption. That exemption stands at $13.99 million in 2025 and rises to $15 million in 2026. Five states also levy an inheritance tax. A modest estate can owe state tax where it owes nothing federally.
A state with no income tax often makes up the difference elsewhere, through higher sales or property taxes, so weigh the total tax burden rather than one line of it. On the other end, the Tax Foundation counts five states that charge no statewide sales tax at all: Alaska, Montana, New Hampshire, Delaware, and Oregon. Tax rules change often, so confirm the current details with a tax professional or your state’s department of revenue before you decide.
Related Article: The Best and Worst States for Retirement Taxes
3. Add Up the Full Cost of Living
Taxes are one slice of affordability; cost of living is the whole pie. The U.S. Bureau of Economic Analysis measures it as an index where the national average equals 100. California tops the scale at 110.7, followed by Hawaii at 110.0 and New Jersey at 108.8. At the affordable end sit Arkansas at 86.9, Mississippi at 87.0, and Iowa at 87.8.
Housing drives most of that gap. California housing runs about 54% above the national average, while West Virginia housing sits roughly 46% below it. The National Association of Realtors puts the national median price of an existing single-family home at about $414,900 in the fourth quarter of 2025, though that midpoint hides an enormous state-to-state range.
What the spread means in practice is simple: The same nest egg buys a very different life depending on the ZIP code. A budget that feels tight on the California coast can feel comfortable across much of the Midwest or South. Reviewing homes for sale on 55places.com in a few candidate areas is a quick way to reality-check local prices against your number.
Related Article: What Is the Cheapest State to Retire In? 6 Options to Stretch Your Budget
4. Weigh Health Care Access and Costs
Health care is the cost retirees most often underestimate, and it is deeply personal. Fidelity Investments estimates that a 65-year-old retiring in 2026 will spend about $185,500 on health care across the rest of retirement, which is a lifetime total rather than an annual bill. The estimate assumes Original Medicare, excludes long-term care and dental, and rose 7.5% from the year before.
Medicare itself is federal, so basic coverage travels with you. What changes by location is choice and out-of-pocket cost. The KFF found that 99.6% of beneficiaries can access a Medicare Advantage plan, but metro areas average 45 plans to choose from versus 27 in rural areas. More competition often means lower premiums and richer extras.
Beyond cost, the care itself is shaped by where you live: prior-authorization rules, plan networks, and out-of-pocket drug costs all differ from one state to the next. Proximity matters more as the years add up. Being a short drive from a hospital and the specialists you may need is worth weighing now. Plan for the life you will lead at 80, not only at 65.
5. Match Climate, Landscape, and Daily Life
Numbers narrow the map, but daily life decides between the places left on it. Picture an ordinary Tuesday. Are you walking a beach before breakfast, hiking a canyon trail, or driving to a farmers market for the week’s tomatoes? The answer points toward a climate and a landscape.
Warm, sunny weather remains one of the top reasons people relocate, which is why Florida, Arizona, Texas, and Southern California draw so many active adults. Milder options sit closer to the Northeast: Delaware offers gentle winters, Virginia gives you four distinct seasons, and North Carolina, South Carolina, and Tennessee stay pleasant much of the year. If open space calls, Utah and Colorado put several national parks within a weekend’s reach.
Landscape shapes the everyday, too. Coastal towns like Hilton Head Island in South Carolina trade in salt air and golf, while mountain and lake settings offer cooler air and quieter mornings. Local food culture is part of the draw, whether that is a Saturday farmers market or a community with an on-site restaurant where neighbors linger over dinner.
One more layer is worth checking: long-term livability. Natural-hazard exposure differs sharply even within a single state, so look it up at the county level using FEMA’s National Risk Index before you commit.
6. Map Proximity to Family and Community
For many people, the decision hinges on one question: How far will you be from the people who matter? Distance sets the cost and effort of every visit, from a two-hour drive to a connecting flight and a rental car. A state that scores well on paper can still feel wrong if it turns holidays into logistics.
Family is only part of the equation. Strong social connection is one of the best predictors of a happy, healthy retirement, and a new state means building a circle from scratch. That is where the setting does real work. Active adult communities are built around connection. Clubs, fitness classes, shared meals, and neighbors close to your age give you a head start on friendship.
The goal is balance. Weigh closeness to loved ones against the budget, tax, cost, health care, and climate factors you have already scored, rather than letting any single one decide for you.
7. Score Your Shortlist and Narrow to a Community
Here is the step that turns research into a decision. Take your top two to four states and build a simple scoring worksheet. Down one side, list the factors that matter: budget fit, taxes, cost of living, health care, climate, and proximity to family. Rate each state 1 to 5 on every factor.
Then weight the factors by what matters most to you. If staying near grandchildren outranks everything, double the proximity score. If money is tight, give cost of living and taxes extra pull. Add up the weighted totals. The state with the highest score is your starting point. It’s not a verdict, just the place to look first.
From there, the map keeps narrowing. A state becomes a region, a region becomes a handful of towns, and a town becomes specific communities and homes. New Hampshire, for instance, pairs no income tax with no statewide sales tax; browsing New Hampshire active adult communities shows what that budget stretches to on the ground. When two states run close, tour both and visit in different seasons. An August that feels perfect can hide a January you would rather skip.
Mistakes to Avoid
A few missteps trip up even careful planners:
- Chasing “no income tax” without checking the total tax burden, including sales and property taxes.
- Picking a state off a ranking without ever touring it in person.
- Underestimating health care and other long-term costs that climb with age.
- Deciding after a single visit, in a single season, when the weather was at its best.
Related Article: Staying In-State or Moving Out of State
When to Bring in a Local Expert
You can handle much of this research yourself. Tax rates, cost-of-living indexes, and climate data are all public, and the steps above put them in order. Where local knowledge pays off is everything a spreadsheet cannot capture: how a neighborhood actually feels, which communities have the strongest reputations, and when to make an offer in a shifting market.
55places Partner Agents specialize in the 55+ market and know individual communities well, which makes them useful once a shortlist narrows to real places. For the money side, a tax professional can confirm how a given state would treat your specific income and estate. When the shortlist is ready, connecting with a 55places Partner Agent who knows the area turns a scored list into a real front door.
Frequently Asked Questions
What factors should you consider when choosing a retirement state?
The factors that matter most when choosing a retirement state are your budget, taxes, overall cost of living, health care access and cost, climate, and proximity to family and community. No single one wins on its own. The smarter approach is to score each candidate state against all of them, then weight the scores by what matters most to you. A state that ranks high on taxes but sits far from your grandchildren may still lose to a closer, pricier option.
What are the best states to retire in for low taxes?
For low taxes, the eight states with no individual income tax get the most attention: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, and Wyoming. Separately, 41 states plus Washington, D.C., do not tax Social Security benefits. Low income tax does not always mean low total tax, though. States often recover the revenue through higher sales or property taxes, so compare the full tax burden. Confirm the current rules with a tax professional before you decide.
Is it worth relocating for retirement?
Relocating for retirement can lower your costs and put you in a place that fits your lifestyle better, which is why hundreds of thousands of people do it each year. However, it’s also expensive and disruptive, and it means rebuilding a social circle. The move is worth it when a new state clearly beats staying put across the factors you care about: budget, health care, climate, and closeness to family. If the scores are close, staying put may be the smarter call.
How much should you budget for health care in retirement?
A useful benchmark is Fidelity’s 2026 estimate that a 65-year-old can expect to spend about $185,500 on health care over the course of retirement. That is a lifetime total on Original Medicare, and it excludes long-term care and dental costs, so treat it as a floor rather than a ceiling. Your actual number depends on your health, how long you live, and where you settle, since plan choice and out-of-pocket costs vary by location.
Find the Right 55+ Community in Your Top State
Once you know which state fits your budget and the life you want, a 55places Partner Agent can show you matching communities and share the local details a scoring worksheet cannot capture. Contact 55places.com today!
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