How Much You’ll Need to Retire Comfortably in Each U.S. State in 2025

Where you retire could affect how far your savings go. The cost of living varies widely across the U.S., and these differences can have a major impact on your retirement planning. A comfortable lifestyle in one state might require much more—or less—in another.

This article breaks down how retirement costs differ by state, what factors drive those differences, and how you can adjust your strategy based on where you plan to live. Whether you’re looking to fine-tune your savings goal or simply exploring more affordable options, this guide can help you make more informed decisions.

Why Retirement Costs Vary by State

Not all states cost the same to retire in. Day-to-day expenses such as housing, food, healthcare, and utilities tend to vary depending on where you live. These differences can affect how much you may need each year to maintain a comfortable lifestyle.

A large portion of this variation comes from local housing prices, insurance costs, and state tax policies. In some states, you might pay far less for rent or property taxes. In others, even basic needs could be more expensive. Inflation, wage levels, and regional demand also shape each state’s overall cost of living.

Knowing how these factors change by state can help you build a more realistic retirement plan. It may even guide where you choose to live, either now or later in retirement.

How Much You May Need in Each State

Retirement costs vary more than most people expect. Some states may require much higher savings due to housing, taxes, and healthcare, while others could offer more affordable lifestyles. Below are two tables that highlight the range, starting with the most expensive states to retire in, followed by the most affordable.

10 Most Expensive States to Retire

State	Cost-of-Living Index	Annual Spending Estimate	Required Nest Egg @ 65 (×25)	State Tax on Retirement Income	Healthcare Cost Index
Hawaii	182.3	$110,921	$2.77 M *	Social Security exempt; most private & public pensions exempt; IRA/401k withdrawals taxable; top rate 11%	125.9
Massachusetts	145.1	$88,627	$2.22 M*	Social Security exempt; many public pensions exempt; IRA/401k withdrawals taxable (5% flat + 4% “millionaire” surtax)	139.0
California	141.6	$86,945	$2.17 M*	Social Security exempt; all pension/IRA/401k withdrawals taxable at up to 14.4%	105.4
Alaska	127.3	$74,147	$1.85 M*	No state income tax—all retirement income untaxed	142.1
New York	124.7	$74,147	$1.85 M*	Social Security exempt; up to $20 k per taxpayer of pension/IRA/401k income excluded; excess taxed 4–10.9%	110.5
New Jersey	114.8	$68,980	$1.72 M*	Social Security exempt; retirement-income exclusion (up to $100 k joint, $75 k single) then progressive tax 1.4–10.75%	109.2
Vermont	113.7	$68,559	$1.71 M*	Social Security partially taxed (exempt ≤ $65 k AGI joint); most pension/IRA/401k income taxable (3.35–8.75%)	113.0
Washington	112.0	$68,259	$1.71 M*	No state income tax—retirement income untaxed (note separate capital-gains tax)	113.0
Maine	113.4	$68,199	$1.70 M*	Social Security exempt; pension exclusion ≈ $45.9 k, remainder taxable 5.8–7.15%	117.4
Arizona	112.5	$67,778	$1.69 M*	Social Security exempt; 401k/IRA/pensions taxable at flat 2.5% (first $2,500 pension exclusion)	90.8

Sources:

10 Most Affordable States to Retire

State	Cost‑of‑Living Index	Annual Spending Estimate	Required Nest Egg @ 65*	State Tax on Retirement Income	Healthcare Cost Index
West Virginia	84.8	$50,954	$1.27 M	65 % of Social Security exempt in 2025; most other retirement income taxed 2.55‑5.525 %	94.4
Kansas	86.7	$52,095	$1.30 M	Social Security now fully exempt; other retirement income taxed at flat 4 % (2025 law)	102.1
Mississippi	87.5	$52,576	$1.31 M	Social Security, pensions, IRA/401k withdrawals all exempt; flat 4.4 % rate on other income	95.7
Oklahoma	87.9	$52,816	$1.32 M	Social Security, military pensions exempt; other retirement income taxed 0.25‑4.75 %	94.6
Alabama	88.8	$53,357	$1.33 M	Social Security & public pensions exempt; first $6 k of IRA/401k exempt; 2‑5 % on remainder	90.7
Missouri	89.0	$53,477	$1.34 M	Social Security fully exempt; pensions partly; IRA/401k taxed 2‑4.8 %	91.0
Arkansas	89.0	$53,477	$1.34 M	Social Security exempt; first $6 k of IRA/401k/pension exempt; balance taxed 2‑4.9 %	85.4
Tennessee	90.0	$54,078	$1.35 M	No state income tax — all retirement income untaxed	85.9
Iowa	90.4	$54,319	$1.36 M	All retirement income exempt for 55+; flat 3.8 % on other income	96.0
Indiana	91.3	$54,859	$1.37 M	Social Security exempt; IRA/401k/pension distributions taxed at flat 3.05 % (+local)	95.2

Sources:

📝 Note: Here’s how to read the tables above:

What Affects Retirement Costs in Each State

Even with the same lifestyle, where you live can dramatically affect your expenses in retirement. Several key factors drive the cost differences across states. Some are obvious, like housing. Others, such as how your Social Security is taxed, might be easy to overlook but still impact your long-term budget.

Housing and Property Taxes

Housing is often the biggest factor. Buying or renting a home costs much more in some states than others. Property taxes also vary widely, and they don’t stop when the mortgage does. For instance, a typical home in Hawaii costs around $834,000, while in Oklahoma the average is closer to $217,000. 

Property taxes also vary widely. In New Jersey, the effective property tax rate is 2.23 percent (the highest in the country). In contrast, Hawaii’s rate is just 0.27 percent, based on data from the Tax Foundation. Even if you’ve paid off your mortgage, property taxes can add thousands each year. 

Some retirees may qualify for senior exemptions, but in high-tax states, housing-related expenses could still add thousands to the annual budget. That’s why many retirees explore lower-cost areas or tax-friendly states as part of their planning.

Healthcare and Long-Term Care

Medical expenses usually increase with age, and certain states have much higher prices for coverage, services, and long-term care. The national median for a semiprivate nursing‑home room is now $9,555 a month, but it ranges from $5,639 in Texas to $31,282 in Alaska.

Even with Medicare, premiums and out-of-pocket expenses for things like Medigap or Advantage plans can differ based on location. If you plan to stay in one place as you age, it’s important to factor in the healthcare cost trends in that state.

State Taxes on Retirement Income

Some states do not tax retirement income at all, including withdrawals from 401k or IRA accounts. Others may apply standard income tax rates or have specific rules that depend on your age or income level. A tax-friendly state could help your money last longer, especially if you plan to withdraw meaningful amounts each year.

How States Tax Social Security

Most states do not tax Social Security benefits. Only nine states still tax Social Security in 2025: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont, and West Virginia (phasing out by 2026).

Even in those states, there may be income-based exemptions or deductions that reduce or eliminate the tax for retirees with moderate income. Understanding your state’s rules can help you better estimate how much of your benefits you’ll actually keep.

How to Reach Your Retirement Target

Reaching your retirement goal takes more than just saving. It also involves consistent habits, smart timing, and a clear plan. Here are three areas to focus on.

Increase Your Savings Over Time

Small increases in savings can make a big difference. As of Q1 2025, Fidelity reports that the average 401k saver is contributing a total of 14.3 percent (employee and employer combined). That’s just shy of the 15 percent savings rate Fidelity recommends for long-term financial security.

Quick ways to stay on track:

✅ Set an automatic 1 percent annual increase until you reach 15 percent or more
✅ Maximize your employer match
✅ Use catch-up contributions. In 2025, you can add $7,500 extra to your 401k, or $11,250 if you’re ages 60 to 63, beyond the $23,500 base limit

Build a Portfolio That Pays You Back

Once you’re saving enough, the next step is building a portfolio that can generate income in retirement.

Start with a strong allocation. A mix of dividend-paying stocks and bonds can create a steady income stream while keeping volatility in check. A 4 percent withdrawal rate is often used as a guide. 

✏️ Hypothetical Example: A $300,000 portfolio yielding 4 percent could generate around $1,000 a month in income. 

To build that income:

✅ Include dividend stocks, bond ladders, or low-cost ETFs
✅ Explore higher-yield options like energy midstream companies or business development corporations but do deeper research, as these involve higher risk
✅ Diversify your sources of income to avoid relying too heavily on any single one

Consider Retiring in a Lower-Cost State

Where you retire can be just as important as how much you save.

Nine states—including Florida, Texas, and Washington—don’t tax income. Kiplinger estimates that moving to one of these states could save $2,000 to $5,000 per year on a $50,000 retirement income.

Living costs vary too. Kiplinger’s 2025 roundup of the most affordable retirement areas highlights places where housing prices run 30 to 60 percent below the national average.

One example is Tennessee. Nashville offers no state income tax, plus a median home price of about $386,000 (well below prices in major coastal cities) while still providing access to city-level amenities.

Before you relocate, run the numbers using a relocation calculator. But in general, combining steady contributions, income-producing investments, and a cost-friendly retirement location can bring you closer to your goal.

Final Thoughts and Next Steps

Your retirement lifestyle depends not only on how much you save, but where you choose to live and how you plan. Evaluate your options carefully, consider tax and healthcare impacts, and consult a financial advisor if you’re considering relocating or making significant investment changes.

📌 To learn more, explore our other articles on saving, planning, and retirement options:

---

Disclaimer:

The Carry Learning Center is operated by The Vibes Company Inc. (“Vibes”) and contains generalized educational content about personal finance topics. While Vibes provides educational content and technology services, all investment advisory services discussed on this website are provided exclusively through its wholly-owned subsidiary, Carry Advisors LLC (“Carry Advisors”), an SEC registered investment adviser. The information contained on the Carry Learning Center should not be construed as personalized investment advice and should not be considered as a solicitation to buy or sell any security or engage in a particular investment, accounting, tax or legal strategy. Vibes is not providing tax, legal, accounting, or investment advice. You should consult with qualified tax, legal, accounting, and investment professionals regarding your specific situation.

The accounts, strategies and/or investments discussed in this material may not be suitable for all investors. All investments involve the risk of loss, and past performance does not guarantee future results. Investment growth or profit is never a guarantee. All statements and opinions included on the Carry Learning Center are intended to be current as of the date of publication but are subject to change without notice.

To access investment advisory services through Carry Advisors, you must be a client of Vibes on an eligible membership plan. For more information about Carry Advisors’ investment advisory services, please see our Form ADV Part 2A brochure and Form CRS or through the SEC’s website at www.adviserinfo.sec.gov.