These Are the Best States to Retire In to Make Your Savings Last

There are a lot of factors to consider when deciding where to settle down in retirement. Maybe you want to be close to family, find a beachside paradise or be within walking distance of a scenic golf course. No matter your retirement dreams, we think you should also consider the financial ramifications of your move. That’s why we put together a list of the best states for retirement for 2026.

How We Chose The Best States For Retirement 

Different states offer different benefits for retirees, and it can make a big difference on how long your savings last. We studied the numbers and compiled a list of the best states for each financial consideration to help you decide where you want to spend your golden years. You can skip to the end to see our overall financial winners, but first, here’s what you should consider before you move. 

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Taxes 

Taxes have a big impact on the longevity of your retirement savings. With considerations for income taxes and property taxes, you’ll want to examine if where you want to move will protect your investment.  

First off, if you’re wondering if you pay taxes on retirement incomes, the answer is yes. According to the IRS, most retirement accounts count as taxable income. This includes, but is not limited to, military retirement pay, pensions, IRAs, 401(k) withdrawals and unemployment benefits. This income will be taxed federally just like when you were employed and is subject to the same tax brackets as regular earned income. 

Social Security is also taxed on the federal level depending on your income, but with a different formula than other retirement income. Depending on your income, you’ll pay taxes on up to 85% of your Social Security benefits. Basically, if you’re living purely on your Social Security, you’ll probably avoid paying too much in taxes, but if you have additional retirement income, you’ll need to plan on paying the federal government some.

The ‘One Big Beautiful Bill’ also changed tax deductions for most Americans, including seniors. People over the age of 65 can now claim an additional tax deduction of up to $6,000 per person. This temporary deduction (ending 2028) will be added to any other deductions that you’re already claiming. Like always, a deduction doesn’t change whether or not something is taxed, but it does lower your overall taxable income. 

So in short, everyone pays federal income taxes on retirement withdrawals, but state income taxes are not as simple. Depending on each state’s laws, your tax payments will vary greatly. For example, you’ll pay nothing on your annual retirement income to the state of Texas. But depending on how much you withdraw, you could be responsible to pay up to 13.30% of that same income in California in taxes. 

If your goal is to pay nothing in taxes on your retirement income, below is the list of states that have no income tax.

States with No Income Tax

• Alaska
• Florida 
• Nevada 
• New Hampshire 
• South Dakota 
• Tennessee
• Texas
• Washington
• Wyoming

Of course, there are often other costs to consider when moving to some of these no-income tax states. Many of these states have high property taxes to recoup revenue forgone by not taxing income. They may have high costs of living or other non-financial “costs” like long winters and isolation (we’re talking about you, Alaska). Still, if somewhere on the list floats your boat, then the lack of income tax can be a real boon. 

If the state you’re considering is not on the no-income tax list, it isn’t hopeless: you’ll just want to be informed. There are many states that are labeled “retirement friendly” even with state income tax. Just be sure to check things like taxes on Social Security benefits, any deductions for retirement income or required inheritance or estate taxes. Plus, you’ll want to check other tax ramifications like property tax and sales taxes in order to make an informed decision on how taxes will affect your retirement. 

Cost of Living 

The other financial consideration in our list of best states for retirement is the overall cost of living.  You’ll notice tax friendly doesn’t always mean financially friendly. In fact, some of our more tax friendly states have issues with affordability. Different states have vastly different costs when it comes to housing, groceries, health care and transportation, and these differences can really stunt or stretch your budget. 

Cost of living will vary from city to city, but the Missouri Economic Research and Information Center gathered information from many of these cities to create an average cost of living index for each state. This data takes into account everything from daily expenses like groceries and transportation to large costs like health care and housing to create an idea of which state has the most affordable living and which does not. 

Best States for Cost of Living 

1. Oklahoma
2. Mississippi
3. Alabama
4. West Virginia
5. Kansas
6. Missouri
7. Arkansas 
8. Tennessee
9. Iowa
10. Indiana

Cost of living reflects the 2025 third quarter data gathered by MERIC through voluntary surveys from cities throughout the US.

Source: Cost of Living Data Series | Missouri Economic Research and Information Center (mo.gov)

Overall, the most affordable states are found in the Midwest or South. The more expensive states are in the Northwest and Northeast. It probably comes as no surprise Hawaii and Alaska have some of the highest cost of living overall. Again, just because your desired state isn’t on this list doesn’t mean it’s a no-go. It just means you might have to save more now or budget more later.

The Best States for Retirement: Our Results   

Retirement taxes and cost of living are two great metrics to start your retirement dream hunting. However, it can sometimes feel overwhelming looking at the data alone. We looked at the above metrics and more to find what we consider the five most retirement friendly states for your wallet. 

1. Mississippi

Mississippi earns a spot on our retirement friendly list because it has one of most retirement-friendly tax policies of all the states. While you do pay state income taxes on income in general, Mississippi does not collect taxes on Social Security, pensions, IRAs or 401(k) withdrawals — effectively making your retirement income tax-free. 

It also has low housing costs and property taxes, earning it’s No. 2 ranking of states with the most affordable cost of living in the U.S. In addition, Mississippi is a good place for your heirs because there is no estate or inheritance tax. Be warned, Mississippi does have rather high sales taxes, so it isn’t financially perfect, but we think overall it’s pretty close to a home run. 

2. Arkansas

The state’s low cost of living that makes it one of the best states for retirement. It’s ranked in the top states for affordability and consistently comes out in the top 10 when it comes to housing, groceries and transportation savings. Arkansas also offers no taxes on Social Security, low property taxes and relatively low state income tax. It’s not a tax-free state, but it is tax friendly. Retirees can claim a $6,000 deduction on retirement income ($12,000 for those filing jointly) each year. Other states do offer better deductions for seniors, but the cost of living does allow you to stretch your retirement savings a long way.

3. Tennessee

Tennessee offers retirees no state income taxes to speak of. No matter how you’re preparing for retirement, you won’t be taxed when you pull out your savings. It also has low property taxes and low housing costs. It moved into 8th place for cost of living this year, so Tennessee is an affordable place to buy a home, grocery shop and savor some of the finer things in life.  

4. Wyoming 

Wyoming might feel like a cold choice for retirement, but living there can make your savings last. First off, Wyoming has no state income tax, so you won’t pay state taxes on your retirement funds. It also has relatively low housing costs and property taxes — especially for a “no income tax” state — making home ownership a real possibility for those on a fixed income. 

It is worth noting that health care can be more expensive and not easily accessible, so if you have specific health concerns, you might want to look at the other options on our list. 

5. Georgia

Georgia is a little lower on our cost of living list, but still holds its own by ranking just outside the top 15. It has no Social Security tax or estate or inheritance taxes. While sales taxes are high, groceries are exempt from it, and property taxes are low. Combined with the overall low house prices, it’s pretty affordable overall. 

As an added bonus, people over the age of 65 can deduct as much as $65,000 in retirement income per person on their state taxes (if you’re 62-64, that deduction falls to $35,000). It doesn’t quite make it as nice as no state income tax, but it does help make Georgia more affordable. 

Honorable Mentions

Turns out, we couldn’t limit ourselves to just five. Here are some honorable mentions.

Oklahoma  

Oklahoma is considered tax-friendly toward retirees with no Social Security income tax and only partially taxing withdrawals from retirement accounts. Plus, what you are taxed might not be that much. Oklahoma’s state income tax begins at just .25% and only goes as high as 4.75%.

It also ranks well in cost of living, stealing the top spot overall. Plus, Oklahoma doesn’t tax inheritances and provides a $10,000 deduction at tax time toward other types of retirement income. Like other Midwest states, the sales tax is a little high, but the low property prices help to offset that hit. Oklahoma has seen rising insurance costs — some of the highest in the nation — which is why it only makes our honorable mention lists. 

Florida  

We couldn’t have a retirement list without Florida. It offers warm sunny days, no state income tax, and no state estate or inheritance tax. Its cost of living is high, especially the housing in coastal areas. It still might be a great choice, you just might have to live a little more inland than you expected.

Are You Ready to Go?  

We found our winners when it comes to retirement savings, but don’t panic if your favorite destination isn’t on the list. While finances are important, there are a lot of factors that’ll go into choosing the best state for you. We simply think any choice should be a financially informed one. In fact, if the state you’re considering is a little more expensive, you can still have an awesome retirement. Above all, we hope you can glide into your golden years financially prepared.

Contributor Whitney Hansen covers banking, credit cards and investing for The Penny Hoarder. She also writes on other personal finance topics.