For many, retirement means finding a destination that provides an ideal balance of a lower cost of living and a high quality of life. The cheapest states often stand out for their lack of state income tax, low property taxes, or affordable housing prices. However, a truly cheap and best place to retire is one that also offers access to quality healthcare, a pleasant climate, and social amenities that support a fulfilling lifestyle.
The Cheapest States to Retire in 2025
Several states consistently rank as the most affordable for retirees, offering significant financial advantages. These include Mississippi, West Virginia, and Alabama, which feature some of the nation's lowest overall living costs. In fact, one 2025 report identified West Virginia as the cheapest state to retire, based on a cumulative cost analysis. Beyond low living expenses, Mississippi is notably friendly toward retirees, exempting all forms of retirement income from state taxes, including Social Security, IRAs, and 401(k)s. Similarly, Alabama offers affordable housing and does not tax Social Security income. These states provide a baseline for maximizing retirement savings, but it's important to investigate specific cities and tax rules.
States with No Income Tax
Another strategy for lowering costs is to consider states with no state income tax, which can be a game-changer for those receiving pension or retirement account distributions. For 2025, the list of these tax-friendly havens includes Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. For example, Wyoming and South Dakota offer a potent combination of no income tax and low overall costs. Tennessee also features no income tax and has relatively low healthcare costs compared to some national averages. While these states offer significant tax savings, factors like property tax rates and sales tax should also be considered.
Top Affordable Cities for Retirees
Beyond statewide rankings, specific cities offer particularly strong value for retirees. In a recent Forbes report focusing on living well on less than $2,000 per month, several cities rose to the top. U.S. News & World Report also highlighted the most affordable places based on value. Some of the standout cities include:
- Tallahassee, Florida: Cited as a top affordable retirement spot with average monthly costs for homeowners significantly below the national average and a low cost of living overall.
- Fort Wayne, Indiana: Ranked most affordable city to retire in by U.S. News, with very low average rent and mortgage payments and a range of cultural and recreational amenities.
- Biloxi, Mississippi: Offers beach access and a low cost of living, especially beneficial for retirees in a tax-friendly state.
- Las Vegas, Nevada: Offers a combination of no state income tax, plenty of entertainment, and lower healthcare costs compared to the national average, making it an affordable option for many retirees.
- Omaha, Nebraska: With a cost of living about 9% below the national average, Omaha provides a mix of culture, recreation, and affordable living in the Midwest.
Comparison of Affordable Retirement Locations
To put these options into perspective, here is a comparison of a few popular choices, based on data from various 2025 reports:
| Feature | Tallahassee, FL | Biloxi, MS | Fort Wayne, IN |
|---|---|---|---|
| Cost of Living | ~10% below national average | ~17% below national average | Notably low |
| Housing Costs | Rent: ~$995/month. Mortgage: ~$1,248/month | Rent: ~$1,245/month. Home Value: ~$229,300 | Rent: ~$1,017/month. Mortgage: ~$1,212/month |
| Retirement Tax | No state income tax on any retirement income | No state income tax on any retirement income | Does not tax Social Security |
| Healthcare Access | Lower quality according to some reports | Memorial Health System & Merit Health | Easy access to hospitals |
How to Evaluate a Location Beyond the Price Tag
Affordability is only one piece of the puzzle. The “best” location depends on personal priorities, and several factors should be carefully considered to ensure a happy and healthy retirement.
- Healthcare Access and Quality: While some areas might be cheaper, they may have lower-rated healthcare facilities. It is vital to research the quality of hospitals, clinics, and specialists, particularly if you have specific medical needs.
- Safety and Community: Evaluate crime rates and the sense of community. The ideal location should make you feel safe and offer opportunities for social engagement, whether through clubs, volunteer work, or community events.
- Tax Burden: Beyond income tax, look at property and sales tax rates. In some low-income-tax states, property taxes or sales taxes can be high, offsetting some of the savings.
- Climate and Amenities: A warm climate is a draw for many retirees, but consider the full picture, including humidity, extreme weather risks, and the cost of utilities. Think about the amenities that matter to you, such as parks, museums, or proximity to family.
- Walkability and Transportation: As you age, reliance on a car may decrease. A location with accessible public transportation, walking paths, and proximity to daily necessities can be a significant plus.
Conclusion: Balancing Your Budget and Lifestyle
There is no single answer to where is the best and cheapest place to retire in the United States, as it depends on individual needs and priorities. The key is to find the right compromise between financial practicality and personal fulfillment. While states like Mississippi, West Virginia, and Wyoming offer substantial financial benefits through low costs or favorable tax policies, you must weigh these against other considerations like healthcare and community. For many, a city like Fort Wayne, Indiana, or Biloxi, Mississippi, might offer the sweet spot of affordability and lifestyle. By researching thoroughly and using the available data on cost, taxes, and quality of life, you can identify the perfect location to begin your new chapter. For more insights on affordable retirement locations, resources like U.S. News Real Estate's rankings can provide additional perspectives.
