This article takes a look at the 15 states for couples retiring on just social security in the US.
Couples’ Guide to Budget Retirement Living in The United States
If you’ve got a car or a van and a good parking spot, living on just social security seems pretty doable. This perception aligns with the expectations of the typical retiree in the United States as they envision navigating their retirement years on a fixed income. A modest 3.2% Cost-of-Living-Adjustment may be partly to blame for this pessimistic outlook, or it may be the swirling speculations regarding the depletion of social security funds.
As of January 2024, the majority of Americans enrolled in Original Medicare (Part A and Part B) or a Medicare Advantage plan have also begun paying a standard monthly premium for Part B at $174.70. Additionally, they have been subject to a Part B annual deductible of $240. Compared to figures from 2023, this is a significant uptick of $9.80 (5.9%) in the premium and a $14 (6.2%) increase in the deductible. Whether it’s the modest Cost-of-Living Adjustment (COLA), depleting funds, or the escalating costs of healthcare, the idea of retiring on Social Security alone seems rather distant for majority of Americans today.
Interestingly, this fear appears to be propelling potential retirees in the right direction, statistics suggest. According to the Retirement Survey & Insights Report 2023 by Goldman Sachs Asset Management, a division of The Goldman Sachs Group, Inc. (NYSE:GS), more US workers have been saving further for retirement, with many even confident that their retirement savings are on track. As of 2022, only 57% of workers were confident that they would be able to meet their retirement savings goals. However, this number reached 65% the following year, highlighting how potential retirees are now quite proactive regarding their future.
Nevertheless, a potential “financial vortex” seems to be eroding savings for many US workers saving towards their retirement goals, reveals The Goldman Sachs Group, Inc.. For a majority of US workers saving for retirement; savings for college, credit card debts, and even caring for family members can affect how much they are saving for their retirement years.
“Only 36% of US workers have three months of income or more saved for emergencies. Unplanned and often unpredictable financial challenges push too many of us off track, and catching up may be difficult. Saving for retirement must remain a top priority”.
– Chris Ceder, Senior Retirement Strategist at Goldman Sachs Asset Management, The Goldman Sachs Group, Inc.
Despondently, the BlackRock, Inc. (NYSE:BLK) Read on Retirement report reveals only 56% of respondents believe they are on track with their retirement savings to retire with the “lifestyle” they desire. According to BlackRock, Inc. CEO, one reason may be that workers are “over-saving”, yet “under-investing”.
“In some countries, people are actually over-saving but under-investing. If they are keeping their money in the bank rather than investing in the market, they won’t generate the returns necessary to retire with dignity,”
– Larry Fink, CEO of BlackRock, Inc.
Due to the many above reasons, retirees often end up having little to no savings for their so-called golden years. Their only option now is to move to some of the best states to live on Social Security, the benefits majority of American retirees rely on. Given that the average social security for 2024 is $1,906, and that for a couple is an estimated double; moving to an affordable state to retire seems only wise. But what constitutes an affordable state? According to The Charles Schwab Corporation (NYSE:SCHW), there are many factors one should look at before making a move.
“Whether you’re a retiree, a remote worker, or just looking for a change of scenery, the idea of pulling up stakes for purportedly greener pastures isn’t that unusual these days”.
-Hayden Adams, CPA, CFP®, director of tax and financial planning at the The Charles Schwab Corporation Center for Financial Research.
According to The Charles Schwab Corporation, looking at only one factor, for instance, taxes, isn’t the right way to calculate a move.
“Florida’s lack of an income tax may seem like a bargain, but property tax there is high, and the government raises the bulk of its revenue through state and local sales taxes. That’s why it’s important to consider your entire tax burden.”
The giveaway? The best state to live in if you’re on social security may not be your what you think it is. So the question is, which ones are? Now that you know what the worst states to retire on social security are, let’s move on to discover some of the best ones.
f11photo/Shutterstock.com
Methodology
To compile the list of states for couples retiring on just social security in the US, we have used our previous work on the best states to live in for retirement, states that don’t tax your retirement income, and best states to retire on social security. Next, we listed down all these states and scored them on their overall cost of living index, healthcare cost of living index, tax-friendliness, and average rent. This allowed us to come up with the best states to live on Social Security alone. Cost of living index and health index has been sourced from Missouri Economic Research & Information Center, tax-friendliness from Smart Asset, and average rents from Renthop, Rent Data, etc. Scores were summed up and places have been ranked in an ascending order from the lowest to the highest scores.
By the way, Insider Monkey is an investing website that tracks the movements of corporate insiders and hedge funds. By using a similar consensus approach, we identify the best stock picks of more than 900 hedge funds investing in US stocks. The top 10 consensus stock picks of hedge funds outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). Whether you are a beginner investor or a professional one looking for the best stocks to buy, you can benefit from the wisdom of hedge funds and corporate insiders.
Here are the top states for couples retiring on just Social Security in the US:
15. Michigan
Insider Monkey Score: 40
Cost of Living Index: 90.6
Tax Friendliness: Tax-Friendly
Health Index: 93.3
Average Rent (2-bedroom): $1,400
Coming in at 15th place on our list of states for couples retiring on just social security is Michigan. Michigan has earned a spot on our list owing to its cost of living, which is 9.4% lower than the national average. The state doesn’t tax Social Security retirement benefits, a relief for couples who rely solely on these benefits to survive. Traverse City, Marquette, Battle Creek, and Holland are some of the best places to retire within the state on a budget. Retirees who are old and sick can prefer retiring to Traverse City or Grand Rapids for good healthcare facilities. Ann Arbor, in particular, has also been highlighted as one of the most peaceful places in the US.
14. Louisiana
Insider Monkey Score: 48
Cost of Living Index: 91
Tax Friendliness: Tax Friendly
Health Index: 98.7
Average Rent (2-bedroom): $1,150
Ranking 14th on our list, Louisiana is one of the best states to retire for taxes and cost of living. A couple can rent a 2-bedroom apartment for an average of $1,150 in this state, and enjoy a cost of living that is 9% lower than the national average. The state has around 122 hospitals, according to Beckers Hospital Review.
13. Alabama
Insider Monkey Score: 50
Cost of Living Index: 88.3
Tax Friendliness: Tax-Friendly
Health Index: 87
Average Rent (2-bedroom): $1,160
One of the many states that don’t tax Social Security benefits is Alabama. Not only do retirees get to enjoy tax-free benefits in this state, but they also enjoy a cost of living that is 11.7% lower than the national average. The state of Alabama only has 89 hospitals. For retirees who prioritize good healthcare, Montgomery, Huntsville, and Mobile are good options.
12. Florida
Insider Monkey Score: 51
Cost of Living Index: 100.7
Tax Friendliness: Very Tax-Friendly
Health Index: 96.5
Average Rent (2-bedroom): $2,400
Who knew that the Sunshine State of Florida is one of the states for couples retiring on just social security in the US? Thanks to its absence of state income tax, a cost of living that closely aligns with national averages, and property and sales tax rates that also mirror national benchmarks, it has rightfully earned this position.
11. Iowa
Insider Monkey Score: 51
Cost of Living Index: 90.3
Tax Friendliness: Moderately Tax-Friendly
Health Index: 99.4
Average Rent (2-bedroom): $975
Those who already live in Iowa must know that the state promises its residents an affordable cost of living and rent. Not only that but Social Security benefits aren’t taxed in this state either.
10. Kentucky
Insider Monkey Score: 53
Cost of Living Index: 92
Tax Friendliness: Tax-Friendly
Health Index: 83.7
Average Rent (2-bedroom): $1,100
Kentucky emerges as an ideal retirement choice with its picturesque landscapes, diverse recreational opportunities, and a cost of living that allows retirees to enjoy a comfortable lifestyle. Additionally, the state’s friendly communities and favorable tax environment contribute to a satisfying retirement experience.
9. Oklahoma
Insider Monkey Score: 55
Cost of Living Index: 86.2
Tax Friendliness: Tax-Friendly
Health Index: 92.6
Average Rent (2-bedroom): $1,020
The low cost of living, scenic beauty, and a welcoming community atmosphere make Oklahoma another wise choice for those looking for the right state to retire on just Social Security in the US.
8. North Dakota
Insider Monkey Score: 56
Cost of Living Index: 94.6
Tax Friendliness: Moderately Tax-Friendly
Health Index: 111.2
Average Rent (2-bedroom): $900
North Dakota may be moderately tax-friendly for retirees, but it boasts affordable living expenses and good healthcare. The state also boasts low rents, a plus for couples trying to get by on social security.
7. Georgia
Insider Monkey Score: 58
Cost of Living Index: 90.8
Tax Friendliness: Very Tax-Friendly
Health Index: 100.3
Average Rent (2-bedroom): $1,649
Number 7th on our list of states for couples retiring on just Social Security is Georgia. The cost of living in this state is an estimated 9% lower than the national average. The state is also very tax-friendly, and Social Security benefits aren’t taxed in this state.
6. Nevada
Insider Monkey Score: 59
Tax Friendliness: Very Tax-Friendly
Cost of Living Index: 101
Health Index: 91.7
Average Rent (2-bedroom): $1,600
Another tax-friendly state, Nevada has a cost of living that is 1% higher than the national average. Nevertheless, many places within the state are very affordable for couples who wish to retire on social security alone. The state enjoys relatively low property taxes, and even though sales tax is high, seniors get to enjoy exemptions on prescription drugs, durable medical equipment, groceries, and newspapers.
5. West Virginia
Insider Monkey Score: 60
Cost of Living Index: 87.7
Tax Friendliness: Tax-Friendly
Health Index: 96.6
Average Rent (2-bedroom): $920
Coming in at 5th position is West Virginia. West Virginia boasts a cost of living that is 12.3% lower than the national average. The state also has low property and sales taxes, making it a tax-friendly state. It has been phasing out the tax on Social Security benefits as well. Presently, the state grants a tax deduction on all Social Security benefits for individuals with a federal adjusted gross income of less than $50,000 or married couples with a federal adjusted gross income below $100,000.
4. Arkansas
Insider Monkey Score: 61
Cost of Living Index: 89
Tax Friendliness: Tax-Friendly
Health Index: 87.5
Average Rent (2-bedroom): $857
Coming in at number 4 on our list is Arkansas. Arkansas is a tax-friendly state for retirees and boasts a cost of living that is 11% lower than the national average. The state also has low property taxes. Even though sales taxes are quite high, groceries are taxed at a lower tax rate in this state. Moreover, prescription drugs and durable medical equipment are exempt from taxes, a plus for seniors. Rents are also quite affordable, making this state ideal for couples to retire on just Social Security.
3. Wyoming
Insider Monkey Score: 67
Cost of Living Index: 92.4
Tax Friendliness: Very Tax-Friendly
Health Index: 100.1
Average Rent (2-bedroom): $1,116
Wyoming is another state that doesn’t tax Social Security income. Therefore, retirees can enjoy their Social Security benefits tax-free in this state. In fact, there is no state income tax in the state. This is good news for retirees, especially those who wish to take up work even after retirement. The cost of living in this state is 7.6% lower than the national average, while healthcare is above the national marks.
2. South Dakota
Insider Monkey Score: 71
Cost of Living Index: 92.4
Tax Friendliness: Very Tax-Friendly
Health Index: 97.9
Average Rent (2-bedroom): $1,028
Coming in second place, South Dakota boasts a tax-friendly environment, affordable cost of living, and a healthcare ranking that is close to national marks. Since there is no income tax in the state, all sorts of retirement income goes to retirees tax-free. Healthcare in the state is also decent, making the state a good choice for couples living on social security alone.
1. Mississippi
Insider Monkey Score: 72
Cost of Living Index: 86.3
Tax Friendliness: Very Tax-Friendly
Health Index: 98.4
Average Rent (2-bedroom): $999
Coming in at the top of our list, Mississippi stands out as an ideal choice due to its favorable combination of mild weather, reasonable living expenses, tax-friendliness, and overall affordability. The state is very tax-friendly and all sorts of retirement income are exempt from taxation in the state. However, the one thing that the state needs to improve is healthcare. For couples who require good quality healthcare, some of the best places to retire within the state include Jackson and Southaven.
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This article is originally published at Insider Monkey.