How to Choose the Best Retirement Destination for Your Budget and Lifestyle

With 50 states to choose from, there are dozens of options for where to retire in the United States. Think you don’t have the freedom or finances to explore all 50 options? Think again: affordable places are available coast to coast. It’s all in how you define affordability — and what your priorities are.

 

With that in mind, here are two questions to kick off your discussions around where to retire.

 

Cost of living generally refers to expenses around the basic necessities of life, like clothing, food and shelter.

 

A standard “cost of living” amount looks different for everyone. Imagine how a Californian looks at their monthly food expenses versus an Ohioan, or someone who was raised by Depression-era parents versus someone whose family had considerable wealth. 

 

Also, there will always be changes in basic life costs — not all of which are in our control. For example, taxes and healthcare are vital expenses, but their costs vary based on income, insurance and other factors.

 

That said, take a long, hard look at the state’s tax structure. Does the state tax pension income (including civil service or military pension income)? If so, by how much? What about taxes on Social Security income? And how high are the property tax rates?

 

Tax considerations may sound complicated, but they don’t have to be. Just remember that in your search for the most affordable state, the lowest price tag isn’t the whole story. If you have your heart set on a certain place, don’t let the cost of living be the only reason you turn it down.

Whether you’re deciding as an individual, a couple or a family, determining where to put down retirement roots is about more than the bottom line. 

 

Some retirees are choosing life on the road instead of roots at all. In fact, half of the current 11.2 million RV owners are 55 and over, according to the RV Industry Association. Others opt for dual residency, like a beach house down south and a condo or apartment up north near the grandkids or aging parents.

 

If you’re moving across the country for affordable housing but leaving friends, relatives and your long-time family doctor behind, consider the “hidden” costs of uprooting.

 

Moving somewhere new can be exciting, but it might also be lonely or more costly than you expected.

 

For example, even if your cost of living decreases, your travel budget might increase. If good healthcare isn’t available nearby, you may have to pay more to travel for care.

 

Thinking about your time and activity budget is an equally important consideration in selecting a retirement location. As you think about your financial spending habits, consider also how you’ll spend your time once you settle in a new place. 

 

Want to volunteer somewhere or take college classes? Work in a bookstore or tinker in your workshop? Hike or camp every weekend? Walk the dogs on the beach every morning? These activities vary in cost, so you’ll have to factor that into considerations too.

Deciding where to retire is about more than the dollars and cents. Let’s dig into the specifics of what makes your retirement destination a home.

 

What good is an affordable home if you don’t have people or pets to share it with? If you love animals, check out whether a city is pet-friendly or if the house has adequate outdoor space for animals to roam. If you want to live in a remote cabin with no neighbors for miles, be prepared for the potential feelings of isolation and the transition if you’re used to the hum of a city or close-knit neighborhood. Hoping the kids, grandkids, and friends will come visit often? Make sure your new property has adequate guest space.

 

From spotty cell phone reception to driving at least an hour to Costco, Starbucks, or whatever stores and restaurants you love frequenting, don’t forget the daily modern conveniences you’ve come to depend on. Maybe you’re tired of small town life where stores and restaurants close at 5pm, and you’re eager for the adventures of a walkable city or busy metropolitan area.Remember, if you’re hoping for a steady stream of visitors, check out proximity to airports and activities they’ll enjoy.

 

When it comes to engaging in community service opportunities, being part of a church or faith-based organization and talking to people who share your values — community matters. Banks and barber shops, libraries and parks, high school sporting events and greasy spoon diners: culture and community are hard to quantify, but for many people, these factors are worth more than all the cost savings in the world.

 

This goes beyond how far you’ll have to drive for a routine — or emergency — procedure. If you need home healthcare services, many rural areas are severely understaffed. Nursing homes, assisted living communities and other types of outpatient health centers (for things like infusions, physical therapy or occupational therapy) may be only a half hour away, but if you drive there regularly, the miles add up fast. What if boomerang children or an aging relative needs to move in? What if you find yourself raising young grandchildren, or housing an older grandchild who wants to attend college nearby? While you can’t prepare for every curveball or contingency, keep in mind that you might one day care for a loved one or require care yourself.

 

If you want to be as independent as possible in your new location, consider things like weather, emergency preparedness, and the nature of home maintenance due to the surrounding environment. Will you have to shovel snow often? Will you have to evacuate for hurricanes or tornadoes? Is the home in a flood zone? Think of your health, too: Will warm weather aggravate your allergies, or will it alleviate them? Do you enjoy outdoor activities year-round, or just in the summer? 

Looking for a little extra insight on a particular state? Let’s take a look at two lists that break things down, remembering that numbers and rankings don’t tell the whole story.

 

Every year, rankings from Bankrate size up every U.S. state using data across five categories: affordability (40 percent), overall well-being (25 percent), the cost and quality of health care (20 percent), weather (10 percent) and crime (5 percent).

 

Here’s the Bankrate list from 2024.

 

Meanwhile, in WalletHub’s 2024 best and worst report, Florida tops the list due to its lack of estate or inheritance taxes, low-cost adult day health care and homemaker services, and of course the warm weather, beautiful beaches, and plethora of activities. Next on their list was Colorado, Virginia, Delaware and Wyoming.

 

At the bottom of the WalletHub list was Oklahoma, Rhode Island, Mississippi, New Jersey and Kentucky.

 

From sunny southern states to the most northern elevations, everyone’s idea of a perfect retirement destination is unique. Lists and rankings are a good starting point: They might open your eyes to a state you’d never considered, make you think twice about an idealized place — or provide a tie-breaking option between partners!

 

But remember, there’s much more to consider than lists, data and dollar signs as you decide to retire. Don’t underestimate the value of a destination that aligns with your personal needs and preferences.