When choosing retirement destination cost of living is an important factor to consider so today we present you the cheapest states to live in the US for seniors. On this ranking you can find places where median home price does not exceed $150,000 and where healthcare costs are from 12% to 1% below America’s average. All of the ranked states are tax friendly toward retirees – seniors do not have to pay taxes on money coming from social security while others types of retirement income are completely or partly exempt from taxation. Moreover, in many of them property and sale taxes are below the national average.
Although low costs of living go with fuller wallet they do not guarantee high quality of life. Many of ranked states struggle with physicians shortfall and overall poor quality of healthcare – five of 10 states with worst healthcare in the US are present on this list. The health care quality ranking, which was made by US news, shows that residents of the southwestern region receive poorer medical care compared to people living in other parts of America. A similar conclusion can be drawn from AHRQ research. However, since southwestern states are among the cheapest ones in America and on of our criteria was cost of living, they found a place on our ranking. Other downsides of living in cheap states can be high crime and poverty rates. Still, crime and poverty greatly vary across individual states, and it is always possible to find small safe towns to enjoy retirement days.
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Besides affordability the states ranked here attract seniors with natural beauties and abundance of opportunities for outdoor activities from hiking, golfing, exploring hidden places to boating, fishing, swimming. If you dream of spending retirement near an ocean you can check our previous list of the Cheapest Places to Live in the World on the Beach.
In creating the list of 16 Cheapest states to live in the US for seniors we took into account three criteria – median home prices and healthcare costs, which we found at Sperling’s best places, as well as tax friendliness as determined by Smart Asset.
16. South Carolina
Median home price: $138,400
Health care costs: 1% below the national average
Tax friendly
We start the list with South Carolina, which has the highest health care costs and third highest real estate prices on this ranking. Still, compared to many other places in America, Palmetto Sate is pretty affordable, especially if we take into account taxation. The state does not tax social security income, while pensions, both private and public, are partly taxed. Moreover, the state has very low property taxes (for $100,000 home value owners pay around $570). There are a few things that attract retirees to SC – slow pace of life, beautiful nature and sandy beaches, mild winters… Costs of living vary across the state and those who are looking to put some money aside should avoid Hilton Head Island, one of the favorite destinations of former America’s president Bill Clinton.
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15. Missouri
Median home price: $135,700
Health care costs: 4% below the national average
Moderately tax friendly
Only a few moderately tax friendly states found the place on this list, and one of them is Missouri. The state partly taxes social security income (in cases when a retiree’s yearly income exceeds $85,000 to $100,000) and public pensions, while private pensions are fully taxed. Property taxes are below the national average but they are still higher compared to previously mentioned South Carolina (homeowners pay $990 for $100,000 home value). However, residents of Missouri benefit from low healthcare costs, home prices and overall costs of living which are 19% below US’s average. Those who are searching for tranquility can settle in some of many small towns in rural counties while others can move to urban centers such as St. Louis or Kansas City.
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14. Louisiana
Median home price: $145,200
Health care costs: 6% below the national average
Tax friendly
In Louisiana, retirees do not have to pay taxes on social security income and public pensions while private pensions are partly taxed. Moreover, the state has the third lowest property tax rates which are 0,48%. Health care costs and costs of living are also below US’s average. Pelican State is a vibrant place with diverse culture, great cousin, and numerous festivals. The downsides of living in Louisiana include humid weather, so the state is not the best option for people with respiratory problems, and very high poverty and crime rates, especially in New Orleans.
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13. Georgia
Median home price: $147,800
Health care costs: 3% below the national average
Very tax friendly
Georgia has the highest real estate prices among ranked places. However, it is also very tax friendly state which means that it does not tax social security income. Moreover, all people older than 64 are eligible for a deduction of $65,000 on all types of retirement income, and property and sale taxes are below the national average. Mountains, rivers, lakes and the Atlantic ocean attracts retirees looking for outdoor adventures to Georgia.
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12. Kentucky
Median home price: $128,100
Health care costs: 3% below the national average
Tax friendly
Kentucky, which is known for its many bourbon distilleries (95% of the drink consumed in America is produced here) and horse farms, has pretty low home prices and costs of living. It belongs to a group of tax friendly states which do not tax social security income, while it also offers a deduction of up to $41,100 on all types of retirement incomes. Seniors in Kentucky can enjoy many outdoor activities – hiking, fishing, boating, even cave exploring as the state is a home to Mammoth Cave, the largest cave system in the world.
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11. Iowa
Median home price: $128,100
Health care costs: 3% below the national average
Moderately tax friendly
Compared to previously mentioned states, Iowa, the number 11 on our list of cheapest states to live in the US for seniors is less tax friendly – social security is not taxed but retirees pay taxes on all other types of retirement income. In addition, Hawkeye state has inheritance tax and above average property tax. Still, real estate prices are pretty low, so homeowners pay less to government compared to residents in some other parts of America. Iowa is a heaven for fishermen who enjoy Great Lakes, a group of glacier lakes, which are located in the north, near Minnesota. Moreover, the state boasts above the national average quality of air and water so it could be seen as one of the healthiest places on this list.
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10. Tennessee
Median home price: $136,300
Health care costs: 8% below the national average
Tax friendly
All types of retirement income, including social security, are exempt from taxation in Tennessee. Moreover, property taxes are relatively low. The reason why Tennessee is not named “very tax friendly” is sales taxes which are the highest in the US. Still, the overall cost of living puts Tennessee into a group of affordable places. Cities like Nashville and Memphis have much to offer to music lovers and Elvis Presley admirers, while the Appalachian Mountains and Mississippi River are perfect destinations for outdoor enthusiasts.
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9. Ohio
Median home price: $123,500
Health care costs: 2% below the national average
Moderately tax friendly
Ohio is not as tax friendly as other places on this list of cheapest states to live in the US for seniors. While social security income is exempt from taxation other types of retirement income are partly taxed. Moreover, sale and property tax rates are a bit higher compared to US average. On the bright side, real estate prices and overall costs of living are well below the national average. Besides affordability, Ohio is attractive to seniors because of diverse cultural offer, beautiful nature and outdoor opportunities in the area of Lake Erie, Ohio River, and Miami River.
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8. Michigan
Median home price: $124,900
Health care costs: 4% below the national average
Tax friendly
With the median home price of $124,900, health care costs 4% below US average, and sales taxes below average as well, Michigan ranks as eight on our list of 16 Cheapest states to live in the US for seniors. The state does not tax social security income while seniors older than 68 can apply for deduction of $49,027 on other types of income (those who are old between 63 and 68 can count on deduction of $20,000). Although property taxes are high in Michigan that should not worry you since real estate prices are pretty low. Michigan is a perfect choice for seniors who want to spend their retirement days surrounded by water. The state has the most freshwater coastline in America, and thousands of lakes and streams. It is also known as a state with the highest number of golf courses in the US.
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7. Indiana
Home median price: $119,100
Healthcare costs: 3% below the national average
Tax friendly
In Indiana, that ranked 7th on our list of cheapest states to live in the US for seniors, only social security is exempt from taxation while other types of retirement income are taxed at the rate of 3.3%. Still, the state has fourth lowest costs of living so the money you pay to government won’t empty your wallet. Compared to some other places on this list, the Hoosier State offers relatively solid healthcare, especially in Indianapolis which is a home to a few well-known hospitals. The state is the right choice for culture lovers who can enjoy diverse artistic sites even in small towns.
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6. Kansas
Home median price: $124,000
Healthcare costs: 9% below the national average
Tax friendly
The 6th place on our list of cheapest states to live in the US for seniors is Kansas that does not tax social security and public pensions while other types of retirement income are taxed at rates of 2.7% and 4.8%. The state also has relatively high sales and property tax rates, but costs of living are low. Healthcare costs are 9% below the national average, and even more importantly Kansas’s residents can count on good medical care – on the US News ranking Kansas is the 18th state with the best healthcare in America. With hundreds of lakes and thousands of miles of rivers the state is a perfect destination for fishermen and water lovers.
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5. Oklahoma
Home median price: $115,800
Healthcare costs: 4% below the national average
Tax friendly
Social security income is not taxed in Oklahoma, the next one on our list of cheapest states to live in the US for seniors, while seniors can apply for a deduction of $10,000 on other forms of retirement income. Real estate prices and property taxes are low and only sale taxes exceed America’s average. Oklahoma is one of the most naturally diverse states and retirees have plenty of opportunities for outdoor activities. Note though that Oklahoma belongs to a group of states where low costs of healthcare are equal to the low quality of medical care. The state is ranked among bottom ones in the country by AHRQ and by US News.
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4. Alabama
Home median price: $123,600
Healthcare costs: 12% below the national average
Tax friendly
We are continuing our list of cheapest states to live in the US for seniors with Alabama that has the lowest healthcare costs which are 12% below America’s average. At the same time, it belongs to a group of states whose residents receive relatively solid medical care, especially in urban centers. Like many other places, it struggles with physician shortfall, so the quality of health care varies across the state. Public and private pensions, as well as social security income, are all exempt from taxation in Alabama. The “Heart of Dixie” cannot be called a tax heaven only because of sales taxes which are third highest in America.
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3. West Virginia
Home median price: $100,800
Healthcare costs: 6% below the national average
Tax friendly
For those who are looking to spend as little as possible on buying a new home, West Virginia, the number three on our list of cheapest states to live in the US for seniors is one of the best choices since the median home price is little above $100,000. Other costs of living, including sale and property taxes, are much lower compared to many other parts of America. Mountain State is one of the rare states that taxes social security income but only if your overall income exceeds a certain amount. Public and private pensions are partly taxed and retirees can apply for a deduction of $8,000.
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2. Arkansas
Home median price: $114,100
Healthcare costs: 10% below the national average
Tax friendly
Seniors in Arkansas, the second on our list of cheapest states to live in the US for seniors do not have to pay taxes on social security while other forms of pensions are partly taxable (retirees are provided with a deduction of $6,000). Besides affordability, the state boasts mild climate and great natural diversity with mountains on the north and Mississippi River on the east. On the negative side, Arkansas is named as the state with the worst quality of healthcare in the US, so it is not the best choice for people with chronic conditions who need frequent medical care.
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1. Mississippi
Home median price: $111,200
Healthcare costs: 12% below the national average
Very tax friendly
Elvis Presley’s home state, Mississippi, is the most affordable place on our list of cheapest states to live in the US for seniors. The state does not tax any type of retirement income, it has low property tax rates while sale rates are near US’s average. Seniors living in Mississippi, which was named the most religious state in America by Gallup, enjoy warm winters, beaches, and a great cuisine. Life in the state has its downsides as well – Mississippi has one of the greatest poverty rates in America, summers are hot and humid, mosquitoes can not be avoided, and in some parts, the state faces a serious shortage of doctors (it has 154 physicians per 100,000 residents while America average is 210).
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