4 States To Move to If You Want To Build Up Your Retirement Savings

When you’re trying to put money away toward a big goal like retirement, it can be hard to get ahead. You’re still working, but you’re also still juggling multiple financial demands, which may include kids, college costs, mortgages and home improvements — all while trying to maintain a certain standard of living to boot. 

Beyond shaving expenses off here and there, a significant money move may be just that — a literal move to a place with a lower cost of living that will enable you to sock more away for your future retirement. And if your vision of retired life included a change of scenery — whether your goal is warmer weather, closer to family or, yes, cheaper — why not make the move early to get that head start? 

“States with low cost of living, tax benefits and good quality of care can help improve your retirement outlook,” said Erika Kullberg, attorney and personal finance expert and founder of Erika.com. “A low cost of living further helps stretch retirement dollars and make life as a retiree more enjoyable, not extravagant.”

Kurt Mattson, CFP, founder and private wealth advisor with Yari Capital, Northwestern Mutual, said that it’s also important to do a full assessment of the entire financial landscape of any potential location. That includes costs of things like healthcare, transportation, homeowners insurance, and entertainment — and really thinking about what your future day-to-day will be like there.

“When you retire, every day is going to be Saturday and Sunday. So you’re going to have a lot more free time. And what is it that you like to do?” he said.

The bottom line no matter where you go, Mattson said, is to have a budget and stick to it.  

“It doesn’t matter whether you’re making $50,000 a year or $5 million. It means making tough choices, deferring things you may want today, and instead putting that money in a 401(k),” he said. “The people who stick to those budgets can really make any area work.”

From lower taxes to affordable healthcare, here are four states experts recommend if you want to get ahead on your retirement. 

“States like Tennessee, Mississippi and Arkansas are known for their affordability, offering lower housing costs, cheaper groceries, and generally lower taxes,” said Joseph Catanzaro, financial advisor at Oak & Stone Capital Advisors. “These states also tend to have milder climates, which can reduce heating and cooling costs.”

Tennessee is particularly friendly to current and future retirees as it has no income tax, an affordable housing market and plenty of lively culture and natural beauty. The state also courts retirees with its Retire Tennessee program, promoting communities that meet certain criteria of available resources and amenities to help retirees thrive.

Pros:

• No state income tax 
• Average home value: $324,084
• Low property taxes: 0.48% effective property tax rate, with a property tax relief program available to qualifying low-income and disabled applicants

Cons: 

• High sales tax: 9.55% (second-highest in the U.S.)
• Hot, humid summers
• Lack of public transportation

“Many younger retirees like Texas because it lacks state income tax and is an economic powerhouse offering a variety of urban or rural options for a work-life balance,” Kullberg said.

Another benefit is that the state offers “more than adequate healthcare for retirees who anticipate needing more of it as they grow older.”

The cost of living in Texas is also 7% lower than the national average, with housing costs 17% lower. And with cities like Austin, Houston and Dallas, there’s plenty to keep you busy, whether you’re retired or just thinking about it. 

Pros: 

• No state income tax
• Average home value: $306,841
• Strong job market 

Cons: 

• Extreme weather: heat waves and hurricanes 
• Limited healthcare outside of urban centers  

Florida is a mainstay on the lists of financially friendly states for good reason. 

“Florida has no state income tax and a relatively low cost of living, as well as various retirement benefits for seniors, such as property tax exemptions and no taxes on retirement income,” said Michael Collins, founder and CEO of WinCap Financial.

While Florida does have a sales tax of 7%, most general grocery items and health, medical and prescription items are nontaxable.

“With its booming real estate market and industries like tourism, finance and healthcare, Florida provides ample opportunities for financial success,” Collins said. 

The permanent vacation vibes don’t hurt, either. 

Pros: 

• No state income tax 
• Average home value: $3899,130
• No state tax on lottery winnings (good luck!)

Cons: 

• Extreme weather: heat and hurricanes 
• Skyrocketing home insurance: Annual average premiums in 2023 were $10,996, compared to a national average rate of $2,377.

North Carolina may not top the list of affordability — it ranks No. 24 for cost of living, according to U.S. News & World Report. But Catanzaro said it’s still one to consider.

“North Carolina, while slightly more expensive, provides a mix of affordable living with access to top-notch healthcare facilities and a welcoming community atmosphere,” he said. 

Housing affordability is one area where North Carolina does shine. Median monthly rental and mortgage rates in cities like Greensboro, Raleigh, Asheville and Charlotte range from around $850 to $1,250, according to U.S. News & World Report.

Pros: 

• Ocean beaches and the Blue Ridge Mountains
• Average home value: $335,760
• Free college for seniors: Those 65 and over may audit classes (for no credit) at community colleges and UNC campuses with tuition waived.

Cons: 

• Taxes: Retirement income is taxed at a rate of 4.5% (though Social Security benefits are exempt) 
• Hurricane risk