The Most Affordable U.S. States to Retire in 2025

Finding the cheapest states to retire is important because people who retire are generally on a fixed income. Whether you'll be living on savings, Social Security, investments, a pension, or all of the above, budgeting is important. Keeping a handle on housing, grocery, and healthcare costs can spell the difference between an enjoyable retirement and endless worry about finances. Planning for retirement is essential.

In one important way, retirement is like real estate: It can be all about location, location, and location. When it comes to expenses, not all states are created equal. (Otherwise, Hawaii would probably be a much more crowded state.)

In determining the most affordable states for retirees to live in, Seniorly primarily considered a state's cost of living, personal income taxes, and Supplemental Security payments.

The table below features the top five most affordable U.S. states to retire, according to Seniorly's findings. We've also included Seniorly's overall rankings for these states regarding the best and worst states to retire. Seniorly's study included all 50 states plus the District of Columbia.

The Motley Fool's study also used numerous factors to gauge affordability, including both housing and nonhousing costs of living. Examples of nonhousing costs of living include the cost of groceries, utilities, transportation, healthcare, miscellaneous goods, and services.

The study assigned an overall cost of living score to each state, with factor scores normalized on a 0 to 100 scale. Other factors that affect affordability, including cost of housing and taxes, were also scored and are included in the table below.

As the table shows, Tennessee, Kansas, and South Dakota ranked the most affordable for the overall cost of living, even as other expenses that impact retirees, such as the cost of housing and taxes, varied widely.

The table below shows additional findings from The Motley Fool's study that break down the data for the top 10 states with the most affordable homes for retirees.

The Motley Fool also compiled data for states with the lowest overall cost of living, excluding housing costs. The table below compares the cost of living scores from The Motley Fool's survey of over 1,500 Americans to scores from the Council for Community & Economic Research's 2024 cost of living index.

Another study by Statista recorded the top 10 U.S. states with the highest levels of Medicare spending in the country. An aging population, rising healthcare costs, and increased utilization of services are all factors affecting the dynamic of healthcare spending across the country.

According to data published in 2023, the CMS spends the most per enrollee in New York, California, and New Jersey. Medicare spent an average of more than $13,139 per enrollee in New York, $12,586 per enrollee in California, and $12,394 per enrollee in New Jersey during the recorded period.

According to the most recent data from the CMS, national healthcare expenditures on the whole grew 7.5% to $4.9 trillion in 2023, or $14,570 per person, and accounted for 17.6% of gross domestic product that year. Meanwhile, Medicare spending grew 8.1% to over than $1 trillion in 2023, or 21% of total national healthcare expenditures.

The table below features findings from The Motley Fool's retirement survey along with data from the annual America's Health Rankings Senior Report published by the United Health Foundation in 2024. The score in that report was calculated using a number of factors that represent quality, availability, and cost of healthcare, in addition to outcomes.

The United Health Foundation's report uses a number of factors to evaluate the best states to retire to for healthcare, including the quality, availability, cost, and outcomes associated with that healthcare.

It's worth noting that the states that rank highest for retirees to access quality healthcare are not necessarily the cheapest in terms of cost of living or housing. That quality healthcare may also come at a significant cost, which can have a notable impact on access for seniors. The cost and quality of healthcare are important factors for retirees considering relocation options to weigh carefully.

For example, despite ranking in the top 10 on this list, Vermont's healthcare costs have skyrocketed in recent years, and it remains the state where poverty levels among seniors are among the highest in the nation.

Poverty rates for older adults declined in Alaska, Montana, South Dakota, and Wyoming in 2023. The overall poverty rate among adults aged 65 or more years was 11.3% in 2023. The poverty rate for this demographic increased 0.3 percentage points from 2022.

The following table contains the top five states with the lowest poverty rates nationwide for their older populations in 2023.

The 2023 poverty rate for the older population was highest in locations such as Washington, D.C. (17.7%) and Mississippi (15.8%). 

There are numerous factors to consider when determining the most tax-friendly for retirees, including state income, property, sales, motor fuel, and inheritance taxes for each state.

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Putting all the data together, the Motley Fool's analysis ranked Tennessee, Kansas, South Dakota, Missouri, and Oklahoma as the most affordable states for retirees based on overall cost of living scores. However, there are other factors to consider to assess a state's affordability.

For example, the study concluded that West Virginia, Mississippi, and Louisiana are among the top states with the most affordable homes for retirees. Considering healthcare, another metric that affects the long-term affordability of a state to spend one's older years in, Utah, Colorado, and Vermont were among the top states to retire to for healthcare.

Meanwhile, poverty rates for older adults in Arizona, Colorado, Georgia, Hawaii, and Iowa increased more in 2023 than in any other states. Conversely, Alaska, Wyoming, New Hampshire, Delaware, and Utah have the lowest poverty rates for senior citizens nationwide.

Obviously, each of the nation's almost 58 million senior citizens will have to make their own decisions about the cheapest state for retirement. Some people have made excellent retirement plans and will have the ability to relocate, regardless of the cost of living; others will have to carefully consider their retirement location.