The Top 5 Best States to Retire In

How to Decide Where to Retire

There are a lot of factors to consider when deciding where to settle down in retirement. Maybe you want to be close to family, find a beachside paradise or be within walking distance of a scenic golf course. No matter your retirement dreams, we think you should also consider the financial ramifications of your move. That’s why we put together a list of the best states for retirement.

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How We Chose The Best States For Retirement

Retirement taxes and cost of living are two great metrics to start your retirement dream hunting. However, it can sometimes feel overwhelming looking at the data alone. We looked at the metrics mentioned previously and more to find what we consider the five most retirement friendly states for your wallet. 

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Mississippi 

Mississippi earns a spot on our retirement friendly list because it has one of most retirement-friendly tax policies of all the states. While you do pay state income taxes on income in general, Mississippi does not collect taxes on social security, pensions, IRAs or 401(k) withdrawals — effectively making your retirement income tax-free. It also has low housing costs and property taxes, earning it’s #5 ranking of states with the most affordable cost of living in the U.S. In addition, Mississippi is a good place for your heirs because there is no estate or inheritance tax. Be warned, Mississippi does have rather high sales taxes so it isn’t financially perfect, but we think overall it’s pretty close to a home run. 

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Arkansas

It’s Arkansas’s low cost of living that makes it one of the best states for retirement. It’s ranked in the top states for affordability and consistently comes out in the top 10 when it comes to housing, groceries and transportation savings. Arkansas also offers no taxes on social security, low property taxes and relatively low state income tax. Basically, you can rest easy because you know you’ll be able to stretch your retirement savings a long way. 

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Tennessee

Tennessee offers retirees no state income taxes to speak of. No matter how you’re preparing for retirement, you won’t be taxed when you pull out your savings. It also has low property taxes and low housing costs. With a 10th place score in cost of living, Tennessee is an affordable place to buy a home, grocery shop and savor some of the finer things in life.  

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Georgia

Georgia is a little lower on our cost of living list, but still holds its own by ranking just outside the top 10. It has no social security tax or estate or inheritance taxes. While sales taxes are high, groceries are exempt from it, and property taxes are low. Combined with the overall low house prices, it’s pretty affordable overall. As an added bonus, people over the age of 65 can deduct as much as $65,000 in retirement income per person on their state taxes (if you’re 62-64, that deduction falls to $35,000).  It doesn’t quite make it as nice as no state income tax, but it does help make Georgia more affordable. 

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Oklahoma

Oklahoma is considered tax-friendly toward retirees with no social security income tax and only taxing withdrawals from retirement accounts partially. Plus, what you are taxed might not be that much. Oklahoma’s state income tax begins at just .25% and only goes as high as 4.75%. It also ranks well in cost of living, stealing the second spot overall. Plus, Oklahoma doesn’t tax inheritances and provides a $10,000 deduction at tax time toward other types of retirement income. Like other Midwest states, the sales tax is a little high, but the low property prices help to offset that hit. 

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Are You Ready to Go?

We found our winners when it comes to retirement savings, but don’t panic if your favorite destination isn’t on the list. While finances are important, there are a lot of factors that’ll go into choosing the best state for you. We simply think any choice should be a financially informed one.

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