Cost of living : 17 percent below U.S. average
Population : 3 million
Best city : Bella Vista
PROS: The Natural State offers an impressively low cost of living and the third lowest healthcare costs for retired couples around. It is renowned for its natural beauty, wildlife, hot springs, rivers, and mountains and has plenty of outdoor pastimes to excite the active senior.
CONS: The taxes in Arkansas are steep. Most retirement income is taxed and only Social Security and up to $6,000 of other retirement funds are exempt. Income tax rates can go as high as 6.9 percent, if your income is over $75,000. The state has the eighth-highest poverty rate for seniors in the nation. There is also not a big city anywhere to be seen and the state gets more than its fair share of tornados.
Cost of living : 4 percent below U.S. average
Population : 12.78 million
Best city : Leland Grove
PROS: The fiscal standing of the state of Illinois has been on a downward trend for some time. The upside of that is that the cost of living is below the national average, which could make it affordable for retirees. The small town of Leland Grove was rated as the best place to retire in Illinois by Niche. It has a suburban feel, but also offers many restaurants and coffee shops.
CONS: Unfortunately, the state’s financial standing has earned it the second-lowest ranking for fiscal soundness. That means that tax breaks on retirement funds may not remain in place and there is also a high sales tax.
Cost of living : 5 percent below the U.S. average
Population : 1.6 million
Best city : Sandpoint
PROS: Idaho’s rugged landscape is breathtaking. Nature enthusiasts will be able to enjoy snow-capped mountains, canyons, and lakes. Its below-average cost of living will allow seniors to make the most of their income and enjoy their retirement with less financial pressures.
CON: Once again, Idaho is not for you if you are craving the excitement of a big city. There are no major metropolitan areas in the state. Taxwise for seniors, there are pros and cons. The state tax is six percent, and the state income tax is above seven percent, but Social Security is not taxed and there are no inheritance or estate taxes.
Cost of living : 4 percent above U.S. average
Population : 5.7 million
Best city : Osseo
PROS: If you have health problems or are worried about having them, Minnesota could be the state for you. It was ranked as the “healthiest in the country for seniors” by the United Health Foundation. It is also the home of the world-famous Mayo Clinic in Rochester. This state is a good choice for the health-conscious.
CONS: Unfortunately, Minnesota has an unideal combination of a slightly higher than average cost of living with below-average annual income. It also taxes Social Security as much as the Federal government and doesn’t exempt other retirement incomes. Plus, the winters are extremely cold and snowy.
Cost of living : 5 percent below U.S. average
Population : 10.5 million
Best city : Asheville
PROS: With mild temperatures and mostly comfortable weather all year round, North Carolina could be a nice change for retirees who are sick of cold winters or hot summers. The cost of living is below average and real estate is pretty affordable if you are not looking in the Kill Devil Hills area. Also, Social Security benefits are not taxed.
CONS: The cost of living may be low, but so are the incomes with an average of $43,616 for residents that are 65 and over. And although Social Security is not taxed, other retirement income is, at a set rate of 5.9 percent.