You’ve probably seen dozens of lists like this, but let’s admit it – most of them center on locations that are already flooded with retirees for all the usual reasons.
On this list, I’m zeroing in on cities that offer tangible financial advantages to retirees. Sure, they’re great places to retire. But each also offers financial or economic benefits beyond simply being where the living is cheap.
And that’s the way it should be – if you’re moving to another city, you’re moving there to retire and create a new life, not to fold up the tent of your life.
The Criteria to Evaluate the Cities
The recommended cities were largely culled from at least a half-dozen other “best places to retire” lists, and I zeroed in on the ones that were included across several lists – plus a couple of surprises that don‘t usually make the circuit.
But remember, this list is about cities that offer specific financial advantages to retirees.
Due to warm weather, beaches and the absence of a state income tax, locations in Florida are heavily over-represented on most such lists – I even included one here. But, I took the liberty of assuming that not everyone wants to live out their golden years in the Sunshine State, and broadened the list to cover the country.
The recommendations were distilled further for economic and financial advantages, including:
- Cost of living in the city (US = 100)
- Overall tax burden by state, taking in income, sales, real estate and other taxes (US average is 9.9% of income)
- Median house prices – for comparison, the US median house price = $198,500 as of March, 2014
- Weather, natural amenities and cultural environment
- Strength of the local job market as determined by the regional unemployment rate (as of March, 2014; US national rate = 6.7%)
The last two points warrant some explanation.
While weather and amenities are mostly about personal preferences, they can also translate into lower living expenses.
For example, a mild climate can result in lower utility bills. And, an abundance of local attractions can lower the cost of both entertainment and travel. This is particularly true of natural amenities like beaches and lakes.
On the job front, I considered retirees often return to the job market – due to either financial necessity or out of boredom. An area with strong employment will make those jobs available.
It’s a nice option to have, even if you never need to use it.
In addition, strong local employment also creates investment opportunities close to home, particularly in regard to rental real estate. A strong job market usually means greater potential rent income which can be had in an area with few employment opportunities.
Keeping the “different strokes for different folks” idea in mind, I’ve presented this list as the top ten cities your financial advisor approves you to retire in and not a specific ranking. Depending on personal preferences, any one of these cities could be your own top choice.
With that in mind, on to the list…
1. Omaha, Nebraska
The home of Warren Buffet – arguably the world’s best-known billionaire – Omaha is consistently showing up on lists like best city for new college graduates, best city for job opportunities, best city for entrepreneurs, and many more like it.
This is a city on the rise, and that is reflected in its growing population, currently well over 400,000. But, when you add the city’s low cost of living to its many economic opportunities, it’s also an excellent place to retire.
Granted, winters are severe in this part of the upper Midwest – with an average high of 33, and low of 13 in January – but if you already live in the Midwest this shouldn’t be a problem. In fact, the cold weather can more than be offset by the fact that the cost of living in Omaha is well below the national average, and the median house price is only a little bit more than 75% of the US average. The city offers low-cost living in combination with rising economic opportunities, and an increasing number of cultural amenities.
As wealth in the city is rising, so are those amenities. Omaha is a surprisingly ethnic city, which is reflected in its various neighborhoods, including Little Italy, Little Bohemia, Little Mexico, and Greektown.
Located near downtown Omaha is the Old Market, the city’s primary historic district. Older buildings, such as warehouses, have been converted to shops, restaurants, bars, and art galleries.
The numbers on Omaha:
- Cost of living – 88.3
- State tax burden – 9.7%
- Median house price – $150,000
- Unemployment rate – 4.5%
2. Sarasota, Florida
No list of cities to retire in would be complete without at least one entry from the state Florida.
The state offers too many financial benefits and amenities for retirees to ever ignore. For starters, there is no state income tax, which is a benefit to retirees looking to stretch their retirement dollars farther. Year round warm weather keeps heating bills low, and the state is surrounded by tropical beaches making it hard to beat as a retirement destination.
Though house prices in the Sarasota area are a little bit above the national average, that’s still lower than many other popular retirement havens in coastal Florida. And Sarasota house prices can still be blessed relief to those relocating from areas like California and the Northeast, where prices are radically higher.
The city is located on the gentle shores of the Gulf of Mexico, about an hours drive from Tampa, two hours to Orlando, and less than four hours to Miami.
The numbers on Sarasota:
- Cost of living 101.5
- State tax burden 9.3%
- Median house price $210,000
- Unemployment rate 6.0%
3. Austin, Texas
Much like Omaha, Austin is another one of those cities that turns up frequently in all of those good news lists of the best cities. Employment is growing rapidly in the city, particularly in the technology sector. It is also home to the University of Texas, with more than 50,000 students.
Despite the economic advantages that Austin has, the overall cost of living in the area is actually below the national average. The overall state tax burden for Texas, at 7.9%, is the second lowest of any city on this list. The best news, for retirees, is that Texas is another one of those states that has no state income tax.
House prices are above the national average, at $225,000, but still well below the high cost cities that so many retirees leave behind. This is partially because of the rapid population growth in the area, as well as its booming economy. The unemployment rate of 4.4% is nearly 1/3 below the national average, and that presents all kinds of economic opportunities. If you ever have a need for a post-retirement job, education and technology are strong fields in this area, along nearly every other sector.
The news on the weather in Austin is mixed. The 62° average January high makes for a very pleasant winter; but the 97° average high in August makes it one of the hottest cities in the country.
But despite the weather, Austin offers tremendous cultural opportunities. It’s status as a major college town feeds into that culture. For example, the SoCo shopping district near downtown, prides itself on “Keeping Austin Weird”, and is home to eccentric stores, coffee shops, restaurants, food trucks, trailers and numerous festivals.
If you’re looking to retire to a place where life is happening all around, Austin is the place.
The numbers on Austin:
- Cost of living 95.5
- State tax burden 7.9%
- Median house price $225,000
- Unemployment rate 4.4%
4. Charleston, South Carolina
One of the richest cultural centers in America, Charleston is an historic seaport and beach community. The city has some of the oldest and best preserved architecture in the US, and represents a blend of Southern, English, French, and West African cultural influences. The city offers mild (but not tropical) weather, and is also a reasonable drive to Atlanta and to various locations in Florida.
Like most other cities on this list, Charleston combines a low cost of living and relatively low taxes with a strong economy. House prices are above the national average, with a median of $225,000, but that’s still a bargain when you consider that the city is both historic and coastal, with a mild year-round climate.
The numbers on Charleston:
- Cost of living 98.3
- State tax burden 8.4%
- Median house price $225,000
- Unemployment rate 4.6%
5. Nashville, Tennessee
The “Music City” has a lot going for it, and that makes it a primary destination for retirees. The capital and second largest city in the state of Tennessee, Nashville offers a strong economy, a low cost of living, and the cultural advantages of being the capital of country music.
You just have to love those states that have no income tax, and Tennessee is yet another of them. But even beyond the absence of the state income tax, Nashville has the lowest overall rate of taxation of any city on this list. Beyond low taxes, the city’s overall cost of living is well below the national average, and median house prices in the area are nearly 20% below the US median.
The economy is strong, with the music industry, tourism, state government, healthcare, education, and the growing automobile assembly industry in the Middle Tennessee region.
The numbers on Nashville:
- Cost of living 88.9
- State tax burden 7.7%
- Median house price $160,000
- Unemployment rate 5.4%
6. Des Moines, Iowa
Des Moines is another Midwest city that has been seeing steady growth in both population and its economy. Despite this growth, the cost of living in the city’s nearly 10% below the national average, while house prices are about 20% lower than the median for the entire US.
Though it sits in the middle of the large Midwestern agricultural region, the growth of the city’s economy has been due primarily to nonagricultural industries. The city is regarded as the third-largest insurance center in the world, and is also the state capital of Iowa. It has a significant number of jobs in both finance and healthcare.
Prairie Meadows Racetrack and Casino is located in nearby Altoona, an entertainment venue for gambling and horse racing. The facility is open 24 hours a day, 365 days per year, and features more than 1,750 slot machines and table games. It also hosts concerts and shows.
The numbers on Des Moines:
- Cost of living 90.9
- State tax burden 9.6%
- Median house price $178,000
- Unemployment rate 4.7%
7. Atlanta, Georgia
Surprise! Atlanta is by far the biggest city on the list, and while big cities are not generally good places to retire, this one is an exception. For starters, the city enjoys mild winters – the average daytime high in January is 52 degrees – the overnight low is 34. Not quite Florida, but extremely pleasant.
Location is another Atlanta plus. The city is an easy drive to Florida, as well as Nashville, and the charming coastal cities of Charleston, SC, and Savannah, GA. And for longer distances, Atlanta is home to Hartsfield-Jackson Airport, the busiest airport in the world, providing non-stop flights to nearly every destination in the world.
In addition to a below average state tax burden, Georgia offers a major tax benefit to retirees. The state allows a $35,000 “other retirement income” exclusion for each taxpayer. This includes taxable investment income, as long as you’re age 62 or older. For most retirees, this will prove to be the equivalent of having no state income tax.
The cost of living and median house prices are both below national averages, and while the unemployment rate is slightly higher than the national average, the job base is diverse, offering opportunities in virtually every field.
The numbers on Atlanta:
- Cost of living 95.6
- State tax burden 9.0%
- Median house price $190,000
- Unemployment rate 6.8%
8. Manchester, New Hampshire
Yet another surprise! Though we don’t normally think of New England when it comes to retirement, Manchester is well worth a close look. It can provide many of the advantages of life in the Boston area, but without the high price tag.
The city has the third lowest state tax burden of any city on this list, but there’s even more on the tax front. Though real estate taxes are fairly high, the state has neither an income tax nor a sales tax. And the city’s low unemployment rate virtually assures that there will be a job available if ever you decide you need to come out of retirement for a spell.
Amenities abound in the area. The city has a charming downtown area that’s undergoing redevelopment. There’s skiing in the nearby White Mountains, Atlantic beaches are about 30 minutes away, and Lake Winnipesaukee and Squam Lake (where the movie On Golden Pond was filmed) are some of the most beautiful lakes in America. Boston – with all of its cultural amenities – is just an hour away by car.
Cold weather is certainly a negative, but not everyone despises the cold. And while both the overall cost of living and median house prices are higher than national averages, they’re generally a bargain by Northeastern standards.
The numbers on Manchester:
- Cost of living 116.8
- State tax burden 8.1%
- Median house price $240,000
- Unemployment rate 4.7%
9. Salt Lake City, Utah
Another state capital, Salt Lake City is another location that combines low cost of living with a strong and growing economy. The median house price is well above the US average, at nearly a quarter million dollars. But it is in the West, where house prices in general are higher than in the rest of the nation. And if you are planning to relocate from a high-cost state like California, house prices in Salt Lake City will seem like a true bargain.
At 4.3%, the area’s unemployment rate is more than one third below the national average. In addition, employment is broad-based, including government, education, healthcare, transportation (the city’s airport is one of the busiest of the nation), as well as business and professional services.
Weather can be a bit of an issue in this area, as the region experiences severe winter cold, as well as searing summer heat. However, the city is close to the Great Salt Lake, as well as numerous world-class skiing resorts (there are eight ski resorts within 50 miles of the city).
The numbers on Salt Lake City:
- Cost of living 100.6
- State tax burden 9.3%
- Median house price $248,800 (according to Zillow.com)
- Unemployment rate 4.3%
10. Asheville, North Carolina
If you’re looking to retire to the mountains, Asheville could be the place for you. Located in the Blue Ridge Mountains of North Carolina, Asheville is in one of the most beautiful settings in the US. The city’s climate features mild winters and warm/hot summers, comparable to those experienced in Atlanta. In fact, Asheville is located within a reasonable driving distance of Atlanta, as well as other southeastern cities, including Nashville, Charlotte, and