While there isn't one single state universally identified as the cheapest to live in when you retire, a significant factor contributing to affordability for retirees is a state's tax-friendliness. Several states are consistently recognized for offering favorable financial conditions due to their tax policies.
A 2022 analysis by Kiplinger ranked a number of states as the most tax-friendly places in the country for retirement. These states often present compelling options for retirees looking to maximize their retirement savings due to lower tax burdens on income, Social Security, and other retirement benefits.
States Ranked as Most Tax-Friendly for Retirement
Based on the 2022 Kiplinger analysis, the following states are considered highly tax-friendly for retirees, making them strong contenders for affordability:
| State | Financial Considerations for Retirees |
|---|---|
| Alaska | Ranked among the most tax-friendly places, often appealing due to no state income or sales tax. |
| Florida | A popular retirement destination, recognized for its tax-friendly environment, including no state income tax. |
| Iowa | Identified as tax-friendly for retirees. |
| Mississippi | Ranked among the most tax-friendly states for retirement. |
| Nevada | Known for its lack of state income tax, making it a financially appealing option for retirees. |
| Pennsylvania | Listed among the most tax-friendly places for retirement. |
| South Dakota | Offers a highly tax-friendly environment, with no state income tax. |
| Tennessee | Recognizable for its tax advantages, particularly with no state income tax on wages and no state property tax. |
| Texas | A state with no income tax, which can lead to significant savings for retirees. |
| Wyoming | Ranked highly for its tax-friendliness, including no state income tax. |
These states stand out because their tax structures are designed to be advantageous for individuals living on retirement income, allowing retirees to retain more of their pensions, Social Security benefits, and other sources of income. When considering the "cheapest" state, a lower tax burden is a crucial component that directly impacts overall living costs for those in retirement.
