The Best American Cities for an Affordable Retirement

By Lindsay Frankel
Inside Subprime: Nov. 5, 2020

Most Americans believe the U.S. is facing a retirement crisis, and that’s reflected in their retirement account balances. More than six in 10 Americans report that they’re not on track for retirement, and one quarter have nothing stashed away for retirement at all, according to the Federal Reserve. Part of the problem is that many Americans underestimate their retirement needs, and more than half have no clue how much they’ll need to retire comfortably. 

So, how much do Americans need to retire? A general rule of thumb is that workers should aim to save 70% of their pre-tax income for each year of retirement. You can also estimate how much you’ll need to save by calculating how much savings you’ll need to support your lifestyle each year in retirement and multiplying that number by 25. Remember that you’ll receive Social Security benefits as well, so factor that amount into your calculation. 

While these numbers can provide an estimate, the exact amount you’ll need to retire comfortably depends on many factors within and outside of your control. You may want to retire early, or you may be forced into early retirement. You might decide that you can live a more frugal lifestyle in retirement, or you might want more spending money in your retirement years. There’s also no telling how long you’ll live or what unexpected costs will arise. And finally, the amount you’ll need depends on where you plan to retire, since the cost-of-living varies greatly from one U.S. city to the next. One study that looked at average expenses for seniors found that while $1 million would get you through 25 years of retirement in Columbus, OH, the same amount would only last 10 years in Manhattan. 

U.S. Cities with the Lowest Cost-of-Living 

The Council for Community and Economic Research releases the Cost-of-Living Index (COLI) each quarter, which attempts to measure the cost of goods and services in each city, excluding taxes. The composite index includes data about the costs of each of the following categories:

  • Housing
  • Utilities
  • Groceries
  • Transportation
  • Healthcare
  • Miscellaneous

With that in mind, here are the cheapest U.S. cities in general. 

  1. McAllen, TX
  2. Harlingen, TX
  3. Kalamazoo, MI
  4. Muskogee, OK
  5. Richmond, IN
  6. Joplin, MO
  7. Pittsburg, KS
  8. Tupelo, MS
  9. Amarillo, TX
  10. Statesboro-Bulloch County, GA

Tax-Friendly States for Retirees

Another factor to consider is the tax rate on your Social Security benefits and pension income. The following states don’t charge taxes on either. However, consider sales and real estate taxes when making the best choice for you. 

StateMedian real estate taxSales tax rate
New Hampshire$5,6410%
South Dakota$2,1594.5%

States with Low Assisted-Living Costs

You might consider a different location for your early retirement than your old age. That’s because assisted living costs vary widely by state, impacting how far you can stretch your retirement fund. Here are the states with the lowest assisted living costs

StateMonthly cost
North Carolina/South Carolina$3,000

Best Cities for Retirement

Saving money on living costs means your retirement fund will stretch further, especially if you sell a house in an expensive city and move somewhere affordable. But you also want to enjoy your retirement, and if you’re used to creature comforts that won’t be available to you in your new city, you could face disappointment. 

A recent U.S. News analysis looked at housing affordability in the largest metropolitan areas and also factored in happiness, taxes, the job market, access to healthcare, and desirability to determine the top places for Americans to retire. Here were the top 10 results. 

CityMedian monthly mortgageMedian monthly 


Sarasota, FL$1,481$1,152
  • White sand beaches
  • A bustling arts scene
  • Abundant shopping and dining
Fort Myers, FL$1,416$1,093
  • Beaches
  • Fishing and boating
Port St. Lucie, FL$1,436$1,126
  • Beaches
  • Lakes and state parks
Naples, FL$1,787$1,228
  • Beaches and fishing
  • High-end shopping and dining
  • Golf courses
Lancaster, PA$1,516$978
  • Amish farmland
  • Diverse cuisine and nightlife
Ocala, FL $1,065$859
  • Horseback riding
  • Nature trails
Ann Arbor, MI$1,737$1,083
  • Excellent healthcare
  • Free events at the University of Michigan
Asheville, NC$1,286$874
  • Hiking and nature trails
  • A vibrant art and music scene
  • Craft breweries
Miami, FL$1,774$1,295
  • Beaches
  • Free events at the University of Miami
  • Plenty of shopping and dining
Melbourne, FL$1,324$1,018
  • Beaches and dolphin watching
  • Art museums, gardens, and a zoo

Additional cities worth looking into:

  • Myrtle Beach, SC
  • Nashville, TN
  • Jacksonville, FL
  • Manchester, NH
  • Daytona Beach, FL
  • Orlando, FL
  • Dallas-Fort Worth, TX
  • Lakeland, FL
  • Chattanooga, TN
  • Tampa, FL
  • Grand Rapids, MI
  • Houston, TX
  • Charlotte, NC
  • San Antonio, TX
  • Pensacola, FL

For more information on the middle income consumer, subprime loans and payday loans, see our city and state financial guides including states and cities like California, Texas, Illinois and more.