Cost of Living Comparison: Top 10 Retirement States

Where you retire may matter more to your financial security than how much you've saved. Two retirees with identical nest eggs can have vastly different financial outcomes depending on the state they choose. This guide breaks down the real cost of living — housing, taxes, healthcare, and daily expenses — in the 10 most popular retirement states.

The Four Levers That Matter Most

When comparing retirement states, focus on these four cost drivers:

1. Housing costs — typically the largest expense
2. State income tax — especially how Social Security and pensions are treated
3. Healthcare costs — insurance premiums, provider availability
4. Property taxes — annual carrying cost of home ownership

1. Florida — The Gold Standard (With Trade-offs)

Florida is the most popular retirement destination in America for good reason. There's no state income tax, no tax on Social Security, and no estate tax. The climate is warm year-round and the 55+ community infrastructure is unmatched anywhere in the country.

The trade-offs: Florida homeowners insurance has become extremely expensive following hurricane seasons, and coastal areas carry real flood risk. Property taxes vary widely by county. Inland markets (Ocala, The Villages, Lakeland) offer significantly lower costs than coastal metros.

Typical HOA range in 55+ communities: $200–$600/month
Median home price (active adult): $280,000–$450,000
State income tax: None

Browse Florida 55+ communities on Where55.

2. Arizona — Value in the Desert

Arizona has become one of the top-value retirement states. Housing costs in Phoenix, Mesa, and Chandler are lower than comparable Florida markets. The state has a flat income tax (2.5% as of 2023) and does not tax Social Security income. Property taxes are among the lowest in the Sun Belt.

The challenge: summers are extreme (110°F+ in Phoenix), which drives up cooling costs and makes outdoor activities limited from June through September. Snowbirds who leave in summer get the best of both worlds.

Typical HOA range in 55+ communities: $150–$450/month
Median home price (active adult): $250,000–$400,000
State income tax: 2.5% flat

Browse Arizona 55+ communities on Where55.

3. North Carolina — The Southeast Value Play

North Carolina has emerged as one of the best value retirement states in the Southeast. The state exempts Social Security from income tax and has been lowering its flat income tax rate (currently around 4.5%). Asheville, the Research Triangle, and the coast each offer different lifestyle options at prices below Florida or South Carolina equivalents.

Typical HOA range: $150–$400/month
Median home price (active adult): $240,000–$380,000
State income tax: ~4.5% flat (declining)

Browse North Carolina 55+ communities on Where55.

4. South Carolina — Coastal Value

South Carolina exempts a significant portion of retirement income (up to $15,000/year per person in certain retirement income types) and has lower property taxes than North Carolina. Myrtle Beach, Hilton Head, and the Upstate region offer diverse options. The climate is milder than Florida in summer.

Typical HOA range: $150–$500/month
Median home price (active adult): $250,000–$420,000
State income tax: Up to 7% (with retirement income exclusions)

Browse South Carolina 55+ communities on Where55.

5. Texas — No Income Tax, High Property Tax

Texas has no state income tax — full stop. Social Security, pension distributions, and 401(k) withdrawals are all untaxed. The trade-off is property taxes, which are among the highest in the nation (often 1.5–2.5% of assessed value annually). Texas also offers a homestead exemption that helps, and seniors over 65 get an additional exemption.

Typical HOA range: $150–$400/month
Median home price (active adult): $230,000–$380,000
State income tax: None

Browse Texas 55+ communities on Where55.

6. Nevada — Tax Haven in the Desert

Nevada has no state income tax and generally low property taxes. Las Vegas and Henderson have a large active adult community infrastructure, and costs are lower than California equivalents. Reno/Sparks offers milder summers with Sierra Nevada access.

Typical HOA range: $100–$350/month
Median home price (active adult): $260,000–$420,000
State income tax: None

Browse Nevada 55+ communities on Where55.

7. Tennessee — Zero Income Tax on Earned Income

Tennessee has no state income tax on wages or retirement distributions (Social Security, 401(k), pensions are all state-tax-free). Nashville, Knoxville, and Chattanooga offer diverse living options at costs well below major metros. The climate is moderate with four seasons but mild winters.

Typical HOA range: $100–$300/month
Median home price (active adult): $220,000–$360,000
State income tax: None

8. Georgia — Underrated Southern Option

Georgia exempts up to $65,000 per person (over age 65) in retirement income from state income tax — one of the most generous exclusions in the country. Atlanta's sprawling suburbs and coastal areas like Savannah and Brunswick offer a range of lifestyles. Costs are generally below the national average.

Typical HOA range: $100–$350/month
Median home price (active adult): $200,000–$350,000
State income tax: 5.49% (large retirement income exclusion)

Browse Georgia 55+ communities on Where55.

9. Pennsylvania — Northeast Exception

Pennsylvania is unusual for a Northeast state: it fully exempts Social Security, pensions, and retirement account distributions from state income tax. Property taxes vary widely by county but are often offset by senior homestead programs. Costs are lower than New York, New Jersey, or Maryland.

Typical HOA range: $150–$400/month
Median home price (active adult): $200,000–$350,000
State income tax: 3.07% (retirement income fully exempt)

10. Delaware — The Small State with Big Tax Advantages

Delaware has no sales tax, low property taxes, and a generous retirement income exclusion ($12,500 per person). It's small enough that everything is accessible, and proximity to Philadelphia and the Mid-Atlantic coast is a draw for retirees wanting to stay near family in the Northeast.

Typical HOA range: $100–$350/month
Median home price (active adult): $250,000–$380,000
State income tax: 6.6% (with retirement income exclusion)

Summary: Which State Has the Lowest Total Cost?

*Within the $65,000/person retirement income exclusion

Frequently Asked Questions

Which states have no income tax for retirees?

Florida, Texas, Nevada, Washington, Wyoming, South Dakota, and Tennessee have no state income tax. This is particularly valuable for retirees with significant Social Security income, pension distributions, or 401(k) withdrawals, as those income streams are not taxed at the state level.

Is Florida or Arizona cheaper for retirement?

Arizona typically has a lower overall cost of living than Florida, particularly for housing in cities like Phoenix, Tucson, and Mesa. However, Florida has no state income tax and no tax on Social Security income. Both states are competitive retirement destinations — Arizona tends to win on housing costs while Florida wins on income tax treatment.

What is the most affordable warm state for retirement?

New Mexico and Mississippi consistently rank as the most affordable warm-climate states for retirees. New Mexico has mild winters in the south, low housing costs, and a relatively low cost of living. Mississippi has the lowest cost of living of any US state and no tax on retirement income for residents over 65.

How does state income tax affect retirement income?

State income tax can significantly reduce your spendable retirement income. For a retiree withdrawing $60,000/year from a 401(k) in a state with a 5% income tax rate, that's $3,000/year in additional tax versus living in a no-income-tax state. Over 20 years of retirement, that's $60,000 — before accounting for investment growth on that saved money.