If you’re thinking about relocating to somewhere cheaper in retirement, you’re not alone — many Americans lack sufficient retirement savings to afford the cost of living in their home states after their working years are over. Moving to a more cost-effective area can help stretch your funds further in retirement, alleviating some uncertainty about your financial future.
To help you choose the perfect place to retire, GOBankingRates evaluated all 50 states and determined where you can live out your golden years for less than $45,000 annually. The study analyzed factors like groceries, housing, utilities, transportation, healthcare and the overall cost-of-living index in each state, all of which contribute heavily to your yearly expenses in retirement. These indices were then multiplied by the average annual expenditures of Americans aged 65 and older, which provided the final ranking of the top 26 states. The figures quoted in this article are per household. The most recent Census lists the average number of people per household as 2.5. To prepare for retirement, take a look at places to live that will cost you less than $45,000 annually.
26. South Carolina
Annual Expenditure: $44,978
It’s not difficult to see why South Carolina is one of the 10 best states to retire rich. The annual housing bill in the Palmetto State is $13,853, which is 12.8 percent cheaper than the national average.
25. West Virginia
Annual Expenditure: $44,292
West Virginia is one of the states where many people have less than $10,000 saved for retirement. Luckily, annual expenditures fall below the U.S. mean in every category except for groceries, which exceed the average by a mere 3.1 percent.
Annual Expenditure: $44,246
Illinois is a state where you can maximize your retirement benefits. Healthcare, utilities, housing and groceries are all less expensive in Illinois compared to the rest of America, making it one of the cheapest places to retire.
Annual Expenditure: $44,200
You don’t have to stay too busy when you reach retirement age in the Beehive State. Utah’s cost of living comes in at 3.4 percent below the U.S. average, which could contribute to why it’s one of the states where it’s easiest to save $1 million for retirement.
Annual Expenditure: $44,063
Although healthcare is 16.1 percent more expensive in Wisconsin, housing helps make up for it — at $13,964, residents can reap a 12.1 percent savings compared to the rest of the U.S.
Annual Expenditure: $43,285
Arizona is one of the best states for taxes in retirement, which is also conducive to its lower cost of living. In the Grand Canyon State, only utilities cost more than the national average.
20. North Carolina
Annual Expenditure: $42,965
You can boost your retirement savings by choosing to live in a state like North Carolina. Healthcare might cost 7 percent more compared to the rest of the U.S., but housing is an enticing 17.3 percent cheaper.
Annual Expenditure: $42,736
Louisiana is one of the 20 states where your $1 million nest egg will last the longest. Housing is nearly 15 percent cheaper compared to the rest of America, and you can save more than 10 percent on utilities. Louisiana’s cost of living is lower than the national average by 6.6 percent.
Annual Expenditure: $42,736
Nebraska is one of the 10 least tax-friendly states for retirees, but only transportation and healthcare costs exceed the national mean — and not by much. Prospective residents can save on groceries, housing and utilities.
17. New Mexico
Annual Expenditure: $42,507
Though the costs of groceries and healthcare are higher than the U.S. mean, residents of the Land of Enchantment can find savings in housing and utilities, which are more affordable by 17.6 percent and 10.8 percent, respectively.
Annual Expenditure: $42,416
Idaho’s cost of living beats the U.S. mean by 7.3 percent. But watch out for hidden expenses in retirement — transportation and healthcare both cost slightly more in this state.
Annual Expenditure: $42,416
Moving to Ohio could be a brilliant solution for your retirement plan. Housing costs clock in at $12,105, which is a noteworthy 23.8 percent cheaper than the national average.
Annual Expenditure: $42,370
Grocery costs in Kentucky are lower than the national average by almost 10 percent. It gets even better: Housing is cheaper by nearly 20 percent, which can help stretch your retirement fund further.
Annual Expenditure: $42,050
Iowa ranks among the top 20 states for retirees, partly because its housing costs beat the U.S. average by 21.1 percent. The remaining cost-of-living categories also fall below the national mean, which should factor into the best retirement plans.
Annual Expenditure: $41,867
Retirees in this state pay 21.1 percent less for housing, as well as 9 percent less for groceries compared to the rest of the U.S. Indiana is also home to several of the best cities to live on Social Security.
Annual Expenditure: $41,821
Though grocery costs exceed the national average by 5.7 percent, retirees can secure housing and utilities for less in Wyoming — 18.1 percent and 7.5 percent, respectively — compared to the rest of the country.
Annual Expenditure: $41,775
Residents of the Lone Star State pay slightly above the U.S. mean for utilities but fork over the second-least amount of money for groceries.
As you plan for your golden years, keep in mind that moving to a different state can help. But depending on the type of goals you have, saving $1 million might not be enough for your retirement dreams.
Annual Expenditure: $41,546
Housing costs in Georgia come in at $11,899, which is fifth-best in the nation and 25.1 percent below the U.S. average. That might be why you can find luxurious retirement communities in the Peach State.
Annual Expenditure: $40,952
Kansas is one of the states where your Social Security check goes the furthest, which is a serious consideration when you’re deciding where to retire. Both grocery and housing costs are relatively cheap at $3,271 and $12,105, respectively.
Annual Expenditure: $40,906
At $6,208, Tennessee’s transportation costs are the third-least expensive in America; residents can expect savings of 8.9 percent. Tennessee is also one of the cheapest places to retire across Middle America.
Annual Expenditure: $40,677
Though the cost of utilities in Missouri hovers around the national mean, housing expenses in the Show-Me State are the third-cheapest in the U.S. at $11,597, which is 27 percent lower than average.
Annual Expenditure: $40,631
Alabama is worthy of serious consideration in your retirement planning because its healthcare costs are the lowest in the nation at $5,149 annually. Alabama’s cost of living is 11.2 percent below the U.S. mean.
Annual Expenditure: $40,631
Arkansas is one of the most affordable places to live because it has the second-least expensive healthcare costs as well as the fifth-cheapest transportation costs, which can help make your retirement savings last longer.
Annual Expenditure: $40,586
Though its transportation costs are squarely in line with the U.S. average, Michigan boasts the cheapest annual grocery bill in the U.S. Housing also presents the opportunity for real savings, as Michigan’s housing costs are among the 10 cheapest in America.
Annual Expenditure: $40,403
At $6,187, transportation costs are the second-lowest in Oklahoma compared to the rest of the country. It’s also one of the top five states where $500,000 lasts the longest in retirement.
Annual Expenditure: $38,435
Early retirement might be possible in Mississippi, the state where retirees spend the least each year. Housing, in particular, is a steal at $10,882, which is a staggering 31.5 percent below the national average.
States Where Your Retirement Will Cost Less Than $45,000 a Year
The best places to retire on less than $45,000 per year are all located in the South and the Midwest. Mississippi and Oklahoma — both Southern states — captured the No. 1 and No. 2 spots, respectively. In the Midwest, Michigan earned No. 3 in our rankings. Alabama, Arkansas, Missouri, Tennessee, Kansas, Georgia and Texas filled out the remaining top 10 states where your retirement will cost the least each year.
Rounding out the bottom of the rankings are Hawaii, California and New York. These three are the only states where your retirement will cost over $60,000 per year. In fact, Hawaii is the lone state to break $65,000 in annual expenditures, and it does so by a wide margin — over $20,000. You’ll spend nearly $50,000 more each year to make the jump from No. 1 Mississippi to dead-last Hawaii, where it costs retirees a whopping $85,243 each year.
Click through to see if you can pass this tricky retirement quiz.
More on Retirement Planning
- Best Places in Every State to Live on a Fixed Income
- 50 Cheapest Places to Retire
- This Is What a Comfortable Retirement Will Cost You in Every State
- Watch: Planning Where to Retire? This State Could Be the Worst Option
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Methodology: To determine the states where it costs $45,000 or less to retire, GOBankingRates analyzed all 50 states in terms of the following factors: (1) overall cost-of-living index, (2) grocery cost of living, (3) housing cost of living, (4) utilities cost of living, (5) transportation cost of living and (6) health cost of living, all sourced from the Missouri Economic Research and Information Center. These indices were then multiplied by the average annual expenditures of an American aged 65 and older, sourced from the Bureau of Labor Statistics.
About the Author
Grace joined the GOBankingRates team in 2017 with an editorial background in print journalism and magazines. Prior to editing and writing for GOBankingRates, Grace pitched books and movies from Renaissance Literary & Talent, a literary agency and management firm representing clients such as the estate of Audrey Hepburn, Kirk Douglas, Goldie Hawn and Heidi Murkoff of the “What to Expect When You’re Expecting” series.