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Which States Are Best For Retirement?

Retiring In Hawaii
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Hawaii, obviously?

Are you wondering which states are best for retirement? Clearly a state like Hawaii is in the top 5 due to its amazing weather and wonderful pace of life.

However, let’s determine the best states for retirement with a little more objectivity using taxes and lifestyle as key variables.



Relocate For A Better Retirement

America is amazing because we’re free to relocate anywhere in the country that suits our desires. A lot of people scoff at the idea of just moving because of family and job responsibilities.

But when you can take a plane anywhere in the continental US in under six hours, telecommute from home, and FaceTime with people you care about, why wouldn’t you at least give moving to a nicer place a shot? There are now plenty of flexible work from home opportunities thanks to the global pandemic.

The best states to live in have a combination of low taxes and incredible weather. California is awesome, but our taxes are horrendous. Hawaii is also amazing, but food and housing are also costly. At least Hawaii’s sales tax is only 4-4.5% and pensions are state tax-free.



I’ve been to a large majority of the 50 States and hav spent 10 years on the East Coast before moving out West in 2001. I’m biased for California and Hawaii. However, it’s time to get objective for the greater good of all Americans.

Taxes Are Important

When we calculate cost of living, we typically think of 1) Housing (rent or mortgage), 2) Car (loan payments and interest), and 3) Education and Child Care (student loans or child schooling). However, in actuality, taxes are usually the number one largest ongoing expense.

Let’s take a look at the Federal Income Tax brackets for 2021. Let’s hope they don’t go up too much in 2021 under a new presidency.

 2021 Federal Income Tax Brackets - Which States Are Best For Retirement?

State Income Tax Rates

From a previous post regarding our polled incomes (2,400+ votes), the vast majority of readers here are going to be taxed at the 25%-33% rate federally. After Uncle Sam gets his cut, we need to take a look at individual states and the associated income tax.



Let’s take a look at state income tax rates to get an idea of how much citizens are taxed around the country.

Top State Income Tax Rates Map Of USA

As we can see the grey states represent those with no state income tax and the lighter the purple, the less overall income tax for the top brackets. However, we also need to take into account that some states with no income taxes are going to make it up at the gas pump or via higher property taxes i.e. Washington State, Texas, and New Hampshire.

Overall, the cost of living tends to be a lot more in cities where people would like to live and be by the coasts. We also need to consider our #1 largest expense aside from taxes, which is housing. Median home prices vary significantly from state to state.

Cheapest And Most Expensive States For Home Prices

The bottom 10 range from $125k-155k and include (cheapest to most expensive): Ohio, Michigan, West Virginia, Tennessee, Kentucky, Arkansas, Nebraska, Oklahoma Georgia and Iowa.



The top 10 range from $237k-471k and include (cheapest to most expensive): Oregon, Maryland, Colorado, Washington, New Jersey, Virginia, New York, California, Hawaii, and Washington D.C.

The following chart below is the median household income by state.

Median household income by state

Money is basically made on the coasts with lots of it coming in from San Francisco, NYC, Boston and D.C. Therefore, it costs an arm and a leg to live around these metros. A median house in SF is going for around $1.1 Million, for example. It would be damn hard to make a living and reside in the SF Metro if one isn’t making $200,000 or more.

I really like the $200k figure, as it also represents roughly the current median household price in America. The American dream is pretty much about home ownership, freedom, and comfortable living. We want to be able to work hard and be free with a roof over our heads that we own. So with that said, let’s delve into some states really worth exploring if our income isn’t specific to a geographic region.

Average house price by state  2021
Average house price by state 2021

The Most Attractive States For Retirees

Let’s first take a look at the states with the lowest tax burden for residents according to the US Census Bureau.

States With The Lowest Taxes

Top 10 States With Lowest Tax Rates
Source: US Census Bureau compiled by FinancialSamurai.com


Florida – No income tax, low cost of living, and warm weather.

Arizona – Low state income tax, low cost of living, and warm weather.

Nevada – No income tax, low cost of living, and warm weather.

Texas – No income tax, super low cost of living, and warm weather.

Wyoming – Wyoming is unique in that it doesn’t tax any income, including retirement and social security. Sales tax is a mere 4%, there is low cost of living and wide open spaces.

South Dakota – If freezing temperatures and being in the middle of the U.S. don’t bother you, in similar fashion to Wyoming, this is one of the best states for retirement.



Alaska – Also has no income tax, but it’s far away from the mainland, cold, dark, and not cheap due to the importation of goods.

States With The Most Millionaires

Now let’s look at the states where there are the most millionaires. Millionaires are more mobile than others, all else being equal. Therefore, it is logical to conclude that states with more millionaires provide better lifestyles. After all, if you’re a millionaire, you’ll want to use your resources to live the best life possible.

To nobody’s surprise, Hawaii has the most number of millionaires per 1,000 household in the country. New Jersey and Connecticut have a lot of millionaires given a lot of residents make their money from NYC.

Most Millionaires By State In America
Source: US Census Bureau compiled by FinancialSamurai.com

States With The Lowest Taxes And Most Millionaires

The final step is to compile the highest ranked states on both charts to come up with the best states for retirees! Below are the states with the lowest taxes and the most number of millionaires.

Best States For Retirees
Analysis by FinancialSamurai.com

Live In A Nicer State Already

If you’ve spent a lifetime saving, investing, and working, it’s time to reward yourself with a fantastic retirement. Please don’t live in a state with high taxes and a higher amount of crime and poverty. America is a big country. Time to move to a better state!

Given I’m OK with paying a lot more taxes than the average citizen, Hawaii continues to be my number one state for retirement. Every time I go back to Hawaii, I get happier. My stress level goes from a moderate 5 or 5 out of 10 to a 2 or 3.



If you want a combination of lower taxes and a nicer lifestyle, Florida is a great state for retirees. But I wouldn’t count out Nevada, since Nevada also has no state income taxes. Given how slow Nevada was in counting the ballots during the 2021 presidential election, its extremely slow pace of life might be exactly what retirees want!

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