A retiree collecting the average Social Security benefit of about $1,976 per month faces a simple math problem: that check covers roughly 14 months of median housing costs in Mississippi but barely seven in California. The gap is not anecdotal. The U.S. Bureau of Economic Analysis quantifies it through Regional Price Parities (RPPs), which score every state’s overall price level against a national baseline of 100. A state at 86 is 14% cheaper than average across housing, groceries, healthcare, and services. A state at 110 is 10% more expensive. For someone on a fixed income, that spread can mean the difference between comfort and constant budgeting stress.
To build this ranking, we combined the BEA’s most recent RPP release (covering 2023 price data, published December 2024) with the Missouri Economic Research and Information Center’s (MERIC) cost-of-living index for 2025. Both datasets consistently place interior and Southern states at the top of the affordability list, a pattern that has held for over a decade. Because relative state price levels shift only marginally year to year, these rankings are highly likely to hold through 2026.
Here are the 10 cheapest states to retire, ranked from the least expensive to the 10th-least expensive.
1. Mississippi
Mississippi posts the nation’s lowest RPP at 86.0, meaning prices across the board run about 14% below the national average. That discount hits hardest in housing: the median home value sits well under $200,000 according to U.S. Census Bureau estimates, and monthly rents in cities like Hattiesburg and Tupelo often land below $900 for a two-bedroom apartment.
The state does not tax Social Security benefits, which keeps more of that monthly check intact. But the savings come with a well-documented trade-off. Mississippi ranks near the bottom nationally for healthcare access and quality on the Commonwealth Fund’s state health system scorecard, and rural counties may sit an hour or more from the nearest hospital with specialist services. Retirees managing chronic conditions should map out medical facilities before choosing a community.
2. West Virginia
West Virginia’s RPP of 86.7 makes it the second-cheapest state by federal price data, and housing is the main reason. Modest three-bedroom homes in smaller cities like Beckley or Parkersburg regularly list under $150,000, a price point that has largely vanished from coastal markets.
Under HB 2526, West Virginia has been phasing out its state tax on Social Security benefits since 2024, with full exemption taking effect for the 2026 tax year. Property taxes are also among the lowest in the country. The state’s Appalachian terrain delivers genuine scenic beauty, four distinct seasons, and low-cost outdoor recreation, but it also means winding roads and longer drives to specialty medical care, particularly in the rural southern counties.
3. Oklahoma
Oklahoma’s RPP of 87.4 reflects broad affordability that touches nearly every budget category: housing, groceries, and utilities all come in well below national norms. Tulsa and Oklahoma City regularly appear on national lists of affordable mid-size metros, offering urban amenities (hospitals, airports, cultural districts) at prices that would be unrecognizable in Denver or Phoenix.
Oklahoma does not tax Social Security benefits, and its overall state and local tax burden on retirees is moderate. The practical consideration here is weather. Tornado season runs roughly from April through June, and winter ice storms can knock out power for days. Both factors affect homeowner’s insurance premiums and should be part of any relocation budget.
4. Arkansas
Arkansas carries an RPP of 87.5 and consistently ranks among the five cheapest states on MERIC’s housing subindex. A retiree buying a median-priced home here will spend a fraction of what the same square footage costs in the Sun Belt’s more popular retirement corridors.
The northwest corner of the state, anchored by Fayetteville and Bentonville, has seen significant economic growth driven by the retail and logistics sectors. That growth has improved infrastructure and healthcare access without yet pushing costs to national-average levels. Arkansas exempts Social Security benefits from state income tax for most retirees, though other retirement income may be partially taxed depending on total income. For retirees who want affordability paired with a growing local economy, the northwest Arkansas corridor is worth a close look.
5. Alabama
Alabama’s RPP of 87.9 places it firmly in the cheapest tier nationally. Coastal areas near Gulf Shores carry higher housing costs than the state average, but interior cities tell a different story. Huntsville, which has boomed thanks to aerospace and defense employers, still offers median home prices well below the national figure. Birmingham and Montgomery are even cheaper.
Alabama does not tax Social Security benefits, and property taxes rank among the lowest in the country. Healthcare quality varies sharply by region. The Birmingham metro area, home to the University of Alabama at Birmingham medical center, provides nationally ranked care. Smaller rural communities may lack nearby specialists. Retirees prioritizing healthcare access should focus their search on the state’s metro corridors.
6. Kansas
Kansas posts an RPP of 88.5, with especially low costs for housing and groceries. Wichita and Topeka offer affordable urban living with access to regional hospital systems, and smaller college towns like Lawrence and Manhattan provide walkable downtowns at even lower price points.
Kansas exempts Social Security from state income tax for residents with federal adjusted gross income of $75,000 or less. Utility costs deserve attention: summer air conditioning and winter heating on the Great Plains can produce seasonal spikes that MERIC’s utilities subindex captures. Even so, the combination of rock-bottom housing and moderate healthcare expenses makes Kansas competitive for retirees watching every dollar.
7. Missouri
Missouri’s RPP of 88.6 masks wide internal variation. Kansas City and St. Louis metros cost more than the state average, while smaller cities like Springfield, Joplin, and Cape Girardeau sit well below it. A retiree willing to live 30 minutes outside a major metro can capture significant savings without giving up access to urban healthcare and shopping.
Missouri does not tax Social Security benefits, and property tax rates fall below the national median. The state’s central location appeals to retirees with family scattered across the country, and its winters, while real, are milder than those in Minnesota or the Dakotas. Springfield, in particular, has built a reputation as a retiree-friendly city with a low cost of living and two major hospital systems.
8. Iowa
Iowa’s RPP of 89.2 is driven largely by housing. Median home values in Des Moines, Cedar Rapids, and Davenport remain well below the national median, and property taxes, while not the lowest on this list, are partially offset by the state’s homestead tax credit for primary residences.
The bigger story is Iowa’s recent tax overhaul. Under the 2022 reform law (SF 2417), the state phased out taxes on retirement income over several years. As of the 2025 tax year, Iowa no longer taxes Social Security benefits, pensions, or 401(k) distributions for residents 55 and older. That shift makes Iowa meaningfully more attractive for retirees than it was just a few years ago. The trade-off is winter: cold stretches from November through March drive up heating bills and limit outdoor activity for months at a time.
9. Georgia
Georgia’s RPP of 89.8 places it just inside the top 10. Atlanta skews the state average upward; the city’s housing and transportation costs exceed national norms in many neighborhoods. But smaller cities like Augusta, Macon, and the suburbs surrounding Savannah offer prices well below the state figure.
Georgia’s retirement income exclusion is one of the more generous in the Southeast. Under O.C.G.A. § 48-7-27, residents aged 62 to 64 can exclude up to $35,000 per person in retirement income from state taxes. At 65 and older, that exclusion jumps to $65,000 per person ($130,000 for a married couple filing jointly). For many retirees, this effectively eliminates state tax on Social Security and pension income. Add mild winters and proximity to both the Blue Ridge Mountains and the Atlantic coast, and Georgia offers a lifestyle balance that pure budget rankings do not fully reflect.
10. Tennessee
Tennessee rounds out the list with an RPP of 90.1. The state has no income tax on wages or salaries and eliminated its tax on investment income (the Hall Tax) in 2021, making it one of the most tax-friendly states for retirees regardless of income source.
Nashville and its suburbs have grown expensive enough to rival mid-tier coastal cities, but Chattanooga, Knoxville, and the greater Memphis area still offer housing costs below the national average. Tennessee’s MERIC composite score benefits from low grocery and miscellaneous costs, though healthcare expenses run closer to the national norm. Retirees drawn to Tennessee’s tax advantages should look beyond Nashville to find the affordability the statewide data promises.
Matching the data to your actual spending
The BEA’s Regional Price Parities are the most methodologically consistent tool for comparing state-level costs. The agency applies the same framework across all 50 states and the District of Columbia, blending local price data, housing costs, and national expenditure weights into a single comparable score. Full documentation is available on the BEA’s website. MERIC’s index adds useful granularity by breaking costs into six categories: groceries, housing, utilities, transportation, health, and miscellaneous. That breakdown lets retirees weight the data toward the categories that matter most to them.
Neither dataset is retiree-specific. Both reflect prices paid by the general population. The Bureau of Labor Statistics’ Consumer Expenditure Survey shows that housing and healthcare dominate the budgets of households headed by someone 65 or older, which means retirees feel state-level differences in those two categories more acutely than younger workers do. It is also worth noting that while Medicare Part B and Part D premiums are set nationally, Medicare Advantage and Medigap premiums vary by state and even by county. A state with low grocery and housing costs but limited insurer competition could still produce higher-than-expected healthcare spending.
Because the BEA’s most recent RPP data covers 2023 and MERIC’s latest annual average covers 2025, neither source projects prices into 2026. But relative state price levels have shifted only marginally from year to year over the past decade. Barring a localized housing boom or a utility-cost shock tied to a natural disaster, the states on this list are very likely to remain among the cheapest through the end of 2026.
Beyond the price tag
A low cost of living is only one piece of the retirement puzzle. State tax treatment of Social Security and pension income varies widely and can add or erase thousands of dollars in annual savings. Property tax exemptions or freezes for seniors exist in some of these states but not all. Healthcare access, particularly proximity to hospitals and specialists, matters more with each passing year of retirement. And quality-of-life factors like climate preference, proximity to family, cultural amenities, and walkability never show up in a price index.
Treat this ranking as a starting map. Identify two or three states that fit your budget, then dig into specific communities within those states. Compare local rents or home prices on the ground, check Medicare Advantage plan availability and premiums in the county you are considering, review property tax rules for seniors, and visit before you commit. Federal price data can tell you where your dollar stretches furthest on paper. Only spending a week in a place can tell you whether it actually feels like home.
