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 eight 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.
8. New Mexico
- Annual expenditures: $44,997
The costs of groceries and healthcare are barely below the U.S. mean, but residents of the Land of Enchantment can find meaningful savings in housing and utilities, which are more affordable by 19.6% and 11.1%, respectively.
- Annual expenditures: $44,897
Alabama is worthy of serious consideration in your retirement planning because its healthcare costs are the seventh-lowest in the nation at $6,177 annually. Alabama’s cost of living is 10.6% below the U.S. mean.
- Annual expenditures: $44,897
Housing costs in Georgia come in at $6,959, which is fourth-best in the nation and 28.7% below the U.S. average. That might be why you can find luxurious retirement communities in the Peach State.
- Annual expenditures: $44,646
Though the cost of utilities in Missouri hovers around the national mean, housing expenses in the Show-Me State are the fifth-cheapest in the U.S. at $6,988, which is 28.4% lower than average.
- Annual expenditures: $44,143
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 $3,770 and $7,008, respectively.
- Annual expenditures: $44,093
Arkansas is one of the most affordable places to live because it has the third-least expensive healthcare and transportation costs, which can help make your retirement savings last longer.
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- Annual expenditures: $43,591
At $3,681, Oklahoma’ transportation costs are the sixth-lowest the country the country. It’s also one of the top three states where $500,000 lasts the longest in retirement.
- Annual expenditures: $42,587
Early retirement might be possible in Mississippi, the state where retirees spend the least each year. Housing, in particular, is a steal at $6,510, which is a staggering 33.3% below the national average and less than any state in the ranking.
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 concentrated in the South and the Midwest. Mississippi, Oklahoma and Arkansas — all Southern states — captured the No. 1, No. 2 and No. 3 spots, respectively. In the Midwest, Kansas earned No. 4 in our rankings. Missouri, Georgia, Alabama and New Mexico filled out the remaining top eight states where your retirement will cost the least each year.
Rounding out the bottom of the rankings are Hawaii, the District of Columbia and California. All told, you’ll need over $65,000 per year in six states. Hawaii and D.C. are the lone states to break $70,000 in annual expenditures, and they do so by a wide margin — over $28,000 for Hawaii and almost $11,000 for D.C. You’ll spend nearly $56,000 more each year to make the jump from No. 1 Mississippi to dead-last Hawaii, where it costs retirees a whopping $98,582 each year.
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Daria Uhlig contributed to the reporting for this article.
Methodology: To find every state where retirement will cost less than $45,000 per year, GOBankingRates first referenced data from the Bureau of Labor Statistics’ 2019 Consumer Expenditure Survey to find (1) the national average total annual expenditures for consumers 65 years and older. Then, GOBankingRates used cost of living index data for the third quarter of 2020 from the Missouri Economic Research and Information Center to find (2) the cost of living index score of every state. Multiplying factor (1) by factor (2) for every state, GOBankingRates was able to estimate (3) the total annual expenditures for a consumer 65 years or older living in each state. Supplemental data was included on each state’s cost of living index score and estimated annual spending in the following five necessity categories: grocery, housing, utilities, transportation, and health. All data was collected on and up to date as of December 1, 2020.