Interest rates and the cost of living are on the rise. The stock market has opened at a 50 year low, and your dollar isn’t stretching as far as it used to.
In this current economic climate, you might have concerns about how far your retirement savings will take you.
But finding a cheaper place to retire could help alleviate some of the strain.
Without an employment income, you’ll be relying on your 401(k), IRA, and other retirement savings for day-to-day living. To live comfortably in retirement, generally you’ll need about 80% of your income annually, according to the American Association of Retired Persons (AARP).
You might worry that despite all your hard work, you haven’t saved enough for retirement. But since you’re going to need less income, you might consider moving from your current home state to a more affordable one.
Not only can this be an exciting way to start a new chapter in your life, but it can also help you stretch your retirement savings.
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How we calculated the cheapest states
To determine the cheapest states to retire in, we looked at the typical home value of Zillow’s home value index for May of 2022, the Missouri Economic Research and Information Center’s Cost of Living Index for the first quarter of 2022, per capita personal consumer expenditures, and the average cost of Medicare. We also looked at the national population of people 65 years and over.
Here are five of the cheapest states to retire in, where you can make your hard earned retirement money go further.
5. West Virginia
Cost of living index: 9.5% less than national average
Personal expenditures: $37,206
Typical house cost: $136,675
Average medicare premiums: $59.74
Percent of population 65+: 20.48%
The Mountain State offers a low average combined sales tax of 6.52%, and starting this year, the state tax on Social Security benefits for seniors has been eliminated. West Virginia has the lowest typical house cost in the Nation, but just misses the top 10 of lowest cost of living.
The Nation’s newest national park, New River Gorge, offers everything from hiking trails to fishing, hunting, rafting, and rock climbing. It’s the perfect place to visit either for a day-trip or a camping vacation.
According to the state’s website, West Virginia also boasts a homeownership rate that is 12.8% higher than the national average, as well as one of the lowest property tax rates in the country.
4. Arkansas
Cost of living index: 10.1% less than national average
Personal expenditures: $34,479
Typical house cost: $176,293
Average medicare premiums: $44.34
Percent of population 65+: 17.36%
In Arkansas, social security benefits are tax-exempt, as well as the first $6,000 of your IRA distribution if you received this after turning 59 ½ years old.
It ranks in the top-ten of the lowest cost living index, but it does have one of the highest average combined local and state sales tax rate at 9.47%.
The Natural State offers over 250 days of sunshine a year, and there’s always something to do outdoors. With the lower-than-average cost of living, you’ll be able to maximize your retirement dollar while always finding a new adventure. Outdoor lovers can experience the vistas of the Ozark Mountains or visit one of the 47 thermal-water springs in the resort city of Hot Springs.
If you prefer arts and culture, Crystal Bridges Museum of American Art features works from over five centuries of American Art in its permanent collection, or you can visit the birthplace of Johnny Cash in Kingsland.
3. Iowa
Cost of living index: 11.9% below national average
Personal expenditures: $37,586
Typical house cost: $189,531
Average medicare premiums: $49.07
Percent of population 65+: 17.53%
In March of 2022, Iowa established a 3.9% flat income tax rate, which will bring the state from having the sixth highest individual tax rate to the fourth lowest.
To further sweeten the deal, starting next year residents aged 55 and over will be exempt from state tax on their retirement income from their taxable pensions, annuities, and IRAs, according to the state government.
Additionally, the AARP places Iowa in the top half of communities in the states, and voted Cedar Falls one of the best places to retire in the U.S.
2. Oklahoma
Cost of living index: 15.2% below national average
Personal expenditures: $34,533
Typical house cost: $178,378
Average medicare premiums: $47.49
Percent of population 65+: 16.05%
If you’re looking for a budget-friendly state to retire in, Oklahoma may be for you. The Sooner State has the second-lowest cost of living in the U.S., so your hard-earned retirement money will take you further.
Social security income is entirely tax-deductible, and the first $10,000 of your retirement benefit is exempt from taxation.
Many cities in Oklahoma offer easy-access to hospitals and shopping, and the state is also home to some outstanding public golf courses.
1. Mississippi
Cost of living index: 16.9% below national average
Personal expenditures: $32,358
Typical house cost: $161,862
Average medicare premiums: $48.87
Percent of population 65+: 16.35%
Mississippi is ranked as the most affordable state to retire. With low cost of housing and the lowest rate of personal expenditures in the nation, retirement life in the Magnolia state offers plenty to do.
The birthplace of the blues, the historic state offers plenty of museums to explore along the Blues Trail. You can take advantage of the great fishing along the Gulf Coast or spend time at the famous Beau Rivage Resort & Casino.
Not only does Mississippi offer a wide range of activities, but you can also enjoy greater flexibility with the low cost-of-living and excellent property tax incentives.
What to read next
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
Source: https://finance.yahoo.com/news/stretch-retirement-savings-5-cheapest-120000445.html