Most people who plan to retire choose where they want to live based on the weather or proximity to their family and friends. That may sound logical, but it’s not always the best choice for your bank account. Choosing places to retire might be the single most significant financial decision you’ll make after your career ends. However, beware, as the wrong locale can drain your retirement income and cost you hundreds of thousands of dollars over the years. The right one can stretch your nest egg by years.
Consider this math: A retiree with $80,000 in annual income moving from California to Nevada saves $6,400 yearly on state taxes alone. Over 20 years, that’s $128,000 before compound growth. Consider property tax differences, healthcare costs, and daily expenses, and location choice becomes a powerful tool for a successful retirement.
Some places are particularly great at protecting your money from taxes. Others might slash your healthcare bills or housing costs. The smartest retirees don’t chase perfect weather. They chase financial advantages.
Here are ten destinations that dominate specific money categories, each offering a clear path to making your retirement dollars work harder.
1. Nevada — The No State Income Tax Champion
Nevada doesn’t tax your retirement income. Period.
While other states grab chunks of your 401 (k) withdrawals, IRA distributions, and pension payments, Nevada lets you keep every dollar. This matters significantly if you’re withdrawing substantial funds from retirement accounts.
Take Sarah, who moved from Oregon to Reno with $90,000 in annual retirement income. Oregon would have taxed her $8,100 yearly. Nevada? Zero. Over 15 years, she has saved $121,500 in state taxes alone.
Math skills improve with higher incomes. A couple withdrawing $120,000 annually from their retirement accounts saves roughly $10,800 per year compared to high-tax states like California or New York.
Nevada works best for retirees with large 401 (k) balances or substantial pension income. If most of your retirement money sits in taxable accounts, this advantage shrinks considerably.
The state also skips inheritance taxes, protecting wealth transfers to your heirs. Las Vegas and Reno offer urban amenities without the coastal price tags.
2. Tennessee — Healthcare Cost Leader
Healthcare costs destroy retirement budgets faster than market crashes. Tennessee fights back with some of the nation’s lowest medical expenses.
Medicare supplement premiums are 20 to 30 percent below the national average. A Plan F supplement that costs $180 monthly in Florida runs about $125 in Tennessee. That’s $660 yearly in your pocket.
Hospital stays cost less, too. The average daily rate is roughly $400 below that of states like Massachusetts or California. Specialist visits, diagnostic tests, and prescription drugs tend to be more affordable.
Nashville’s Vanderbilt University Medical Center and Memphis Medical facilities offer world-class care at affordable rates. Smaller cities like Knoxville and Chattanooga provide quality healthcare at even lower costs.
Tennessee works best for retirees managing chronic conditions or those expecting significant medical expenses. If you’re spending $15,000 annually on healthcare, moving here could cut that to $11,000. The state also exempts most retirement income from taxes, adding another layer of savings for healthcare-focused retirees.
3. Delaware — The Hidden Property Tax Gem
Delaware keeps property taxes remarkably low while other states crush homeowners with rising bills.
The statewide average effective property tax rate sits at 0.43 percent. Compare that to New Jersey’s 2.21 percent or Illinois’s 1.95 percent. On a $400,000 home, Delaware owners pay roughly $1,720 annually while New Jersey residents shell out $8,840.
Senior citizens get additional breaks. Delaware exempts the first $20,000 of assessed value for homeowners who are 65 years or older. Many qualifying seniors pay very low property taxes on modest homes.
The state offers something rare: predictable housing costs. Property tax increases stay modest compared to other East Coast locations.
This setup works perfectly for retirees downsizing from expensive northeastern markets. Sell your $600,000 Connecticut home, buy a $350,000 Delaware property, and watch your annual property taxes drop by thousands.
Delaware’s location provides easy access to major cities while keeping housing expenses manageable. No state sales tax further sweetens the deal.
4. Portugal — International Dollar Stretcher
Your American retirement dollars buy substantially more in Portugal. We’re talking 40 to 50 percent more purchasing power across housing, food, and services.
A comfortable two-bedroom apartment in Lisbon can be rented for $1,200 monthly. Similar quality in Boston costs $3,500. Restaurant meals cost $12, compared to $25 back home. Even Portuguese wine costs less than California bottles.
Healthcare quality surprises most Americans. Portugal ranks ahead of the United States in major health indices while charging a fraction of American prices. A doctor visit can cost $30 without insurance.
The D7 visa welcomes retirees with passive income sources, such as pensions or Social Security. You need roughly $8,500 annually in guaranteed income to qualify.
Portugal is ideal for retirees with $300,000 to $500,000 in savings who want European culture without the high prices. Language barriers exist, but English is widely spoken in major cities.
Tax treaties prevent double taxation on American retirement income, protecting your nest egg from both countries.
5. North Carolina — The Perfect Tax Balance
North Carolina offers retirees a middle ground on the taxes they face. Many other states either impose higher taxes on retirees or provide less robust services to justify lower taxes.
This state taxes your retirement income, but it gives you meaningful exemptions. People over 65 can exempt up to $4,000 of their retirement distributions annually. Social Security is entirely tax-free.
One advantage is that property taxes are reasonable at 0.84 percent here. Sales taxes are 6.75 percent, which is a decent rate compared to those in nearby states. The tax on your income tops out at 4.75 percent, which is significantly lower than the rates faced by people living in the Northeast.
This arrangement works perfectly for retirees who want tax efficiency without significantly altering their lifestyle. You get four seasons, reasonable living costs, and quality healthcare systems.
Cities like Asheville, Charlotte, and Raleigh offer urban amenities while smaller towns provide affordable retirement havens. Mountain regions and coastal areas offer retirees geographic variety within a single tax-friendly state.
North Carolina attracts retirees seeking a balance between financial advantages and a high quality of life, without making extreme compromises on either front.
6. Arkansas — Low Cost of Living Winner
Arkansas makes retirement money stretch further than almost anywhere else. Overall living costs run 15 to 20 percent below national averages across every major category.
Housing leads the savings charge. Median home prices hover around $140,000 while the national average hits $350,000. Rent a decent two-bedroom apartment for $650 monthly in cities like Little Rock or Fayetteville.
Utilities stay cheap thanks to abundant natural resources. Electric bills average $85 monthly compared to $120 nationally. Gasoline consistently costs 10 to 15 cents less per gallon than neighboring states.
Groceries, restaurants, and services all trend cheaper. A dinner for two at a mid-range restaurant costs $35 instead of $55 elsewhere.
Arkansas works perfectly for retirees with modest savings who refuse to compromise on lifestyle. A $400,000 nest egg provides a comfortable living here while struggling in expensive coastal markets.
The state offers natural beauty through the Ozark and Ouachita mountains, as well as friendly communities that welcome newcomers with a genuine, non-condescending attitude.
7. Arizona — The Medicare Advantage Hub
Arizona attracts Medicare Advantage plans like no other state. Competition drives down premiums while increasing benefits for retirees, prioritizing access to healthcare.
Phoenix and Tucson offer 30 to 40 different Medicare Advantage options. Some states only provide 10 to 15 choices. More competition means better deals for consumers.
Monthly premiums often reach zero dollars while providing coverage for dental, vision, and prescription needs. Copays for specialist visits range from $15 to $25, compared to $40 to $60 in other markets.
Major healthcare systems, such as the Mayo Clinic, Banner Health, and HonorHealth, concentrate top medical talent throughout the state. Access to specialists remains excellent, without the wait times that plague other regions.
Winter weather draws retirees, but year-round residents also enjoy the healthcare benefits. Summer heat tends to deter some people, reducing demand and maintaining competitive pricing.
Arizona is best suited for Medicare-eligible retirees seeking healthcare options with lower healthcare costs. The combination of plan variety and medical excellence creates real value.
8. Texas — Housing Arbitrage Opportunity
Texas combines zero state income tax with housing markets that make coastal refugees wealthier overnight. The arbitrage opportunity creates instant windfalls for retirement.
Consider Jim and Linda from San Jose. They sold their modest three-bedroom home for $1.2 million and bought a larger Austin property for $450,000. That $750,000 difference funds their entire retirement while eliminating state income taxes forever.
Housing costs vary dramatically across Texas. Austin and Dallas run pricier, while Houston, San Antonio, and smaller cities offer serious bargains. A $300,000 budget typically buys a substantial home in most Texas markets.
Property taxes run higher than in other states, typically 1.5 to 2 percent annually. However, homestead exemptions reduce the burden significantly for primary residences.
Texas works very well for retirees looking to escape the high housing costs of California, New York, or Massachusetts. The combination of home equity release and tax elimination creates powerful wealth preservation.
Major cities offer urban amenities, while smaller towns provide authentic Texas charm without the inflated costs of tourism.
9. Costa Rica — The Expat Value Leader
Costa Rica treats retirees exceptionally well through its Pensionado visa program. Prove $1,000 monthly guaranteed income from Social Security or pensions, and residency becomes straightforward.
Living costs are 40 to 50 percent lower than American standards. Rent a modern two-bedroom apartment near the beach for $800 monthly. Inland mountain towns offer even more affordable options while providing perfect weather year-round.
Healthcare quality rivals American standards at substantially lower costs. Private insurance covering everything costs between $100 and $200 per month for comprehensive coverage. Doctor visits run $30 without insurance.
The country maintains political stability, uses American dollars alongside local currency, and welcomes English speakers throughout tourist and expat areas.
Costa Rica is ideal for retirees seeking an international adventure without the associated risks. Beaches, mountains, and rainforests offer natural beauty, while modern infrastructure provides a comfortable living experience.
Direct flights from major American cities keep family connections manageable. Many retirees spend summers in the United States and winters enjoying a Costa Rican paradise affordably.
10. Pennsylvania – The Pension Protection State
Pennsylvania exempts all retirement income from state taxes. Every dollar from pensions, 401 (k) withdrawals, and IRA distributions stays in your pocket instead of going to Harrisburg.
This protection extends beyond typical retirement accounts. Military pensions, government benefits, and corporate retirement plans are all exempt from state taxation. Social Security remains untaxed, too.
Property tax relief programs help seniors manage housing costs. The Property Tax/Rent Rebate Program provides up to $975 annually to qualifying residents aged 65 and older. Additional local programs vary by county but often significantly reduce property tax burdens.
Pennsylvania works perfectly for government employees and corporate retirees with substantial pension income. A retired teacher receiving $45,000 annually in pension benefits saves $1,350 per year compared to states that tax retirement income at 3 percent.
Cities like Pittsburgh and Philadelphia offer urban culture, while smaller towns provide affordable retirement havens. The state experiences four distinct seasons and has reasonable living costs throughout most regions.
East Coast location keeps family connections manageable while protecting retirement income from excessive taxation.
Get to Know Your Chosen Destination
Weather is significant, but it’s not the only thing to consider when planning where to live in retirement. Know the specific financial advantages, whether you’re prioritizing tax savings, healthcare costs, or the affordability of the place overall. Get to know the states that rise to the top in the financial categories you care about using tools like SmartAsset’s cost of living calculator and AARP’s state tax guides.
One of the best ways to get a feel for these different locations is to visit them and spend time in them. If you want to buy, make sure to rent first to see what living there is like in reality. Select a location that is close to family and also offers reliable healthcare to make the most of your golden years. The right move today could safeguard your money for decades to come.
