Retiring does not mean retiring from life. No, for many people, it’s the beginning of a new life. It’s the beginning of your bucket list. You finally get to do all the things you’ve been longing to do for years! Free from the office, it’s your time to explore!
But how do you decide where to retire? It’s a big question that requires research. Do you go South to the warmth? West to the beauty of the mountains? The answer is: it depends.
We’ve done the hard lifting for you. We put together a comprehensive list of the best places to retire depending on your financial status, which usually the biggest factor for most people.
How to Know What U.S. States are Good for Retirement
In order to be a bit more objective, we’ve set some parameters for evaluating different locations. We need measurable ways to show what state (or country) is the ultimate permanent vacation spot.
So to figure out the best places to retire in 2018, we’ll look at two primary factors: financial and lifestyle.
Money affects a lot in our lives. Our house, what we drive, what we do on the weekends. And when you’re on a fixed income, money is precious. You think about the importance of every purchase. After all, you know that you can only spend so much, and once you spend it, it’s gone.
So let’s start with the most basic question: where are the cheapest places to retire in the United States?
Cost of Living
Here are the top five cheapest cities and states to live and retire in:
- Indianapolis, IN
- Grand Rapids, MI
- Des Moines, IA
- Fort Wayne, IN
- Huntsville, AL.
I know, probably not the places you expect to see on this list. So let’s talk about why these places.
In Huntsville, the average percentage of income that people spend on living expenses (meaning rent/mortgage, utilities, and taxes) is 22.56%. And the general rule of thumb is that you should allow about 30% for housing expenses.
Here’s that average percentage for the other four cheapest places to live:
- Indianapolis: 24.75%
- Grand Rapids: 24.6%
- Des Moines:23.52
- Fort Wayne: 22.86%
If you end up with an extra 6-8% in your budget, that’s fantastic. That’s money you can spend on special dinners, live music, or sightseeing.
Granted, you may not be super interested in sightseeing in Grand Rapids, but we’ll take that into account in the lifestyle section.
Pension and Social Security Tax
Yes, there are states that don’t have certain taxes. Not every state follows the same tax rules.
And as of right now, there are 13 states that won’t tax your pensions or your social security income. That means more money in your pocket to do with as you please.
- Alabama doesn’t tax Social Security income or traditional pension payments.
- Alaska is the only state with no income tax and states sales tax (Florida doesn’t have a personal income tax).
- Retirees in Illinois can exclude their Social Security income from the adjusted annual income, and federally qualified pension payments are normally exempt.
- Pension income in Mississippi is generally tax-exempt as is Social Security income.
- New Hampshire and Tennessee tax only dividends and interest.
- Social Security benefits are not taxable in Pennsylvania. Plus, if you’re over 59 and a half and have a traditional IRA or if you have a Roth IRA, distributions are not taxed.
- Florida, South Dakota, Wyoming, Nevada, Texas, and Washington have no income tax.
Keep in mind, some of these states will get their money elsewhere -- like sales or property taxes -- but when you’re a retiree, it’s good to know how much of your retirement fund or pension you’ll actually get.
Cost of Purchasing Land
When you retire, you probably don’t want to be paying someone else’s mortgage. You most likely want your own house and property. That’s why it’s important to consider which states have the cheapest land for sale.
Here are the five states with the cheapest land per square foot...
Tennessee has plenty of inexpensive land for sale. For example, the average cost for a 251,911 square foot property in the mountainous Unicoi County is $59,408. And then consider that, as more people move into that area, the value of your home will increase, providing an opportunity for you to make a profit.
Arkansas’ overall cost of living is low, and the property there is too. The most affordable property is in Clay County, which is in the northeastern part of the state. The average cost is $43,083 for an 830,617 square foot lot.
West Virginia’s economy is rapidly growing. The coal industry is the largest in the state, accounting for about 98% of the growth in recent years. With the growing economy comes deals on property. For a lot size of 277,623 square feet, the average cost is $29,450.
New Mexico boasts some beautiful landscapes, which alone is a good reason for retiring there. But you can also get a great deal on property. For example, land in Quay County costs about $1.96 per square foot and the average cost of land $55,918.
Arizona is another beautiful state, thanks to the constant sunshine and the Grand Canyon. It’s the sixth largest state in the U.S. and its population is skyrocketing. But not to worry, you can still find a great deal on land. Like in Santa Cruz County, near the Mexican border, you can find 91,088 square feet of land for just $45,420.
Not everything is about money -- you probably already know that. The day-to-day workings of your retired life are important. Maybe more important than the money.
Whether you want beautiful landscapes, an exciting city life, or the ideal suburbia experience, your retirement lifestyle is one factor you must consider when deciding where to retire.
The Best States for an Active Retirement
Many retirees want to stay active in their older age, so let’s talk about the top five best states for those who want an active retirement.
First, there’s Portland, Maine. This New England town sits on the coast and has an exciting downtown area, including great restaurants and art galleries. If you go a little outside of downtown, you’ll find recreational options, like hiking, fishing, or a nice walk in the park.
Next, we have Boulder, Colorado. This one is on everyone’s list of best places to retire, and for good reason. You have a plethora of things to do, regardless of how active or home-body you want to be. You can hike, bike, ski, eat at great restaurants, and visit art galleries.
Sarasota, Florida, is right on the state’s Gulf Coast and it’s the go-to place for snowbirds. The city has warm weather and lots of beaches, including Sarasota’s Siesta Public Beach, which TripAdvisor’s 2015 Travelers’ Choice Awards named the number one beach in the U.S. And obviously, the beach life is not the only life -- you can play tennis, go golfing, fishing or boating.
Going north a bit, Brevard, North Carolina, is the desired retirement town. It sits among the Blue Ridge Mountains and has very low crime rates, inexpensive property, and a ton of friendly people. You can hit up the hiking trails, check out the waterfalls, and go kayaking on the water. This town is sure to keep you active.
Last, we have Scottsdale, Arizona, a long-known hotspot for retirees. In the Phoenix suburbs, you might feel like you’re at a resort when you see all of the golf courses and country clubs. You can also go hiking, whitewater rafting, and fishing. Plus, the healthcare in that area is top-notch, thanks to the numerous nearby hospitals.
Best Places to Retire Overseas
Let’s say you want to get out of the country, whether it’s to experience a different culture or because you’re not happy with where the U.S. is headed. Here are the top three places outside of the country that are great retirement spots.
Ecuador has it all -- history, beautiful mountains, coastal towns, you name it. It’s the land of variety. You can live a metropolitan lifestyle, you can live in the mountains, or you can live the coveted beach life. And the country is about the size of Nevada, so it’s easy to explore the whole thing.
And no matter what way of life you choose for retirement, it will be affordable. Two people could easily live on a fixed monthly income of $1,000 to $1,200, and fresh groceries cost very little.
Mexico, too, offers many different climates, from tropical areas to mountains to beaches. Yes, it can get very hot, but it’s also a very pretty landscape.
The culture is really the best part of Mexico. It has plenty of music, true Mexican restaurants, and just a general vibrancy.
Also, healthcare in Mexico is very good and it costs 25-50% what you would pay in the States. You also have the option to sign up for the country’s public healthcare, which can cost as little as a couple hundred dollars per year. In fact, if you’re over 60 years old and a legal resident, it’s free.
Costa Rica is sort of like the underdog. It’s been slowly growing, economically (Amazon and Microsoft have headquarters there) and population-wise. And yet it’s maintained a relatively low crime rate, thanks to their focus on community and family.
The government and the country as a whole are dedicated to preserving the environment. They are seeking to power the country entirely on renewable energy, like hydroelectricity and wind. This helps it be one of the most affordable places to retire.
The Best Places to Retire in The Entire World
Now for the final question: where are the best places to retire in the whole world? After reviewing the best retirement places in the U.S. and abroad, we should be able to answer this critical question.
Drum roll, please…
Out of all the places outside the U.S., Costa Rica beats them all out. Whether it’s cost of living, healthy living, things to do, or the weather, it ranks number one in all the categories.
If you’re looking to stay in the States, Sarasota, Florida, or the surrounding area is the place to go. The weather, the low cost of living, the beaches -- it has what most retirees want.
Ultimately though, the decision is going to be up to you. You’ll need to evaluate the financial factors, lifestyle factors, as well personal factors such as proximity to family.
Wherever you choose to live out your retirement, you can make it fun. You can make it worth it. Really, the quality of your retirement is up to you, so don’t stress about choosing the right place.
Any place is the right place if you want it to be.