You were diligent about contributing to your 401(k) and savings and are ready to make the most of your golden years. But your wallet might be in for a shock.
The average cost of retirement is over $700,000, according to Merrill Lynch’s 2017 “Finances in Retirement” study. That’s more than any other major life expense, including taking out a mortgage on a house, raising children, or borrowing student loans to pay for college.
Since you spent all those years working, you’ll want to find one of the best places to retire, where your hard-earned dollar goes a bit further. But you also want to set up shop somewhere you can be happy and active.
Here’s our roundup of the top five states for you (or your parents) to enjoy retirement.
5 best places to retire in the US
To determine the best places to retire, we analyzed data from several studies across four key factors:
Cost of living: home, food, utility prices, etc.
Tax implications: income tax exemptions, property taxes, sales taxes, etc.
Health care: doctors per capita, health care facilities per capita, number of top-rated geriatric hospitals, life expectancy, etc.
Entertainment and leisure: average weather, cultural identity, access to activities, etc.
We then used that data to compile our list of the best states to retire. Here’s some info on the top five states and why they made the cut.
5. South Dakota
South Dakota boasts some of the best tax benefits and health care for retirees. It took the No. 3 spot on Kiplinger’s list of the most tax-friendly states for retirees. There’s no state income tax, sales taxes are low, and property taxes aren’t outrageous.
The state also cracked the top 10 for health care in WalletHub’s 2018 study of the best and worst states to retire, coming in at No. 6.
The cost of living isn’t awful either. The state ranks No. 27 on a 2017 cost-of-living list from the Missouri Economic Research and Information Center (MERIC).
But you should be a fan of chilly and snowy weather. The average high temperature between December and February in Pierre, the state’s capital, is 32 degrees. The city also sees an average of 31 inches of snow a year.
That’s great if your family spends time ice fishing and skiing, but not if you or your parents want to get a tan. Although the warmer months are great for those who love to hike or hunt.
The Lone Star State does well when it comes to cost of living and access to entertainment. It ranks No. 11 on MERIC’s list and No. 9 in WalletHub’s study.
Cities such as Fort Worth and San Antonio are great places to retire. Both cities have museums, charming downtowns, and extensive park systems, and you’ll see plenty of sunshine.
You score with taxes too. There’s no state income tax on retirement income. But the state’s property and sales taxes are higher than in most states in the country. WalletHub also ranked Texas No. 38 for health care.
Utah is another state that wants you to stay healthy and busy during your golden years. It came in at No. 12 for health care on WalletHub’s study and No. 9 overall. And there’s plenty to do with your good health.
The state is known for its dry, sunny weather and diverse landscape, making it perfect for both golf and nature lovers. That’s why TopRetirements.com named St. George one of the best places to retire.
Be aware that you might have to pay a little more to live in retirement paradise. The state doesn’t crack the top 20 on MERIC’s cost-of-living list; it ranks No. 22.
Taxes aren’t ideal either since Social Security retirement benefits and pension income are taxable. But seniors can get a minimal credit for some of those taxes.
The Sunshine State might seem like a cliche as one of the best places to retire. But it’s a great place to live.
Florida ranked No. 5 on Kiplinger’s list of tax-friendly states for retirees. There’s no state income tax, meaning you won’t pay taxes on your Social Security retirement benefits, pension, IRA, or 401(k) income.
And although it doesn’t fall into the top 20 on MERIC’s cost-of-living list, the state comes in near the middle, at No. 26.
Of course, there’s a lot of sunshine, leisure activities, and entertainment. Sarasota is a top spot that’s known for its beaches, golf courses, and art scene.
WalletHub agreed, giving the state the No. 1 spot overall. It also finished first for affordability and fifth for quality of life.
There’s a reason this western state is attracting young families, and it’s the same reason why it’s a great place to retire. Colorado is about living a good life in the great outdoors and staying healthy to enjoy the amazing activities it has to offer.
Grand Junction was named one of the best places to retire by TopRetirements.com. It not only has a diverse landscape for activities ranging from golfing to hiking but has a charming downtown area. And this is true across the state.
Denver, Fort Collins, and other cities have similar setups, making them great places to live and for your family to visit.
Colorado ranked No. 2 for health care on WalletHub’s study, also landing in the same spot overall.
The tax benefits also are good. Retirees can get a large deduction on all retirement income. Property taxes are also among the lowest in the country. Sales tax is high, but food and medicine are exempt.
One downside is the cost of living. It’s a bit higher than in other places, coming in at No. 34 on MERIC’s list.
Deciding where to retire
Choosing a spot to settle down for retirement is based on a mix of financial factors and personal preferences. If being active is more important than home prices, you could suggest a more expensive location with a ton to do.
If you or your parents are content spending time away from the hustle and bustle, a more affordable destination might be a better choice.
All of the states on this list check most of those important boxes, so you have a plethora of options without feeling like any are a sacrifice. Mom and Dad should enjoy that glass of wine or round of golf. They’ve worked hard for it.