5 Worst States to Retire On Social Security

3. Montana

Insider Monkey Rank: 8.45

Cost of Living Index: 103.1

Health Index: 97.7

Tax Friendliness: Moderately Tax Friendly

Even though the cost of living in Montana is only 3.1% higher than the national average, the state earns a spot on our list because of the low-income threshold for Social Security tax exemptions. Moreover, income coming from pension or retirement accounts is treated as regular income and taxed at the state’s income tax rates. Any capital gains are also taxed as income, but taxpayers can receive a credit of 2% net capital gains.