When you start living on a fixed income — which is the case for many retirees — it makes sense to consider the cheapest places to retire. By choosing to live somewhere affordable, you can rest easy knowing your nest egg will take you far.
Fortunately, many of the cheapest places to retire are desirable destinations, from beachfront cities to quaint capitals out west. Here are some destinations where you can find plenty of action and amenities alongside a low cost of living.
1. Louisville, Kentucky
U.S. News and World Report ranks Louisville as one of the 25 most affordable cities for 2021–2022; the average monthly cost of living is a modest $1,312. Kentucky is also a tax-friendly state for retirees where Social Security benefits are exempt from state income taxes.
Derby City also offers ample entertainment, from catching a baseball game to sampling bourbon, and a moderate climate — you'll enjoy seasonal variation and toasty summers, but you'll forego the bone-chilling winters.
2. Cheyenne, Wyoming
With no income taxes and low sales and property taxes, Wyoming is one of the most tax-friendly states for retirees, with an exceptionally low cost of living to boot.
Wyoming's capital city of Cheyenne is home to about 60,000 residents and a charming, western-inspired downtown. You're also never too far from the natural beauty and solitude the rest of the state has to offer, and the affordability is a draw for many residents: The average rent for a two-bedroom apartment is just $874, compared to a national average of $1,278.
3. Memphis, Tennessee
The Volunteer State is a tax-friendly haven for retirees, with no income tax and low property taxes. It also provides plenty to do, from visiting Graceland to shopping and barhopping along Beale Street, a National Historic Landmark district and a mecca for musicians over the decades. You'll never go hungry in Memphis with a plethora of noteworthy restaurants serving soul food, barbecue and fine dining.
Plus, the cost of living is 14.6% below the national average, with some of the lowest utility bills in the country.
4. The Beaches of Mississippi
Mississippi was named the cheapest state to live in 2021, which is a major plus for beach bums who don't want to pay a premium to retire near the water. This retirement-friendly state offers miles of coastline along the Gulf of Mexico, whether you want to plant your roots near the beaches of Biloxi or in a smaller town along the Gulf Coast.
Your savings can take you far in Mississippi. The average home price in the state is just over $250,000, and Mississippi's cost-of-living index is 84.10 (compared to a score of 239.3 for the New York/Manhattan urban area, which was the most expensive place to live, according to the latest report from the Council for Community and Economic Research).
If you're open to landing abroad during retirement, the world is your budget-friendly oyster.
Many of the top places to retire around the world boast low costs of living and warm, mild climates. If you extend your retirement search beyond the tourist hot spots, tropical countries like Costa Rica offer cheap groceries, free healthcare and relatively affordable housing. If Europe seems like a retirement pipe dream, think again: Countries like France offer surprisingly affordable housing and food, plus easy connectivity to travel around the continent — just be sure to expand your search beyond Paris and look into smaller towns that are more economical.
Remember, the red tape involved in moving and establishing residency varies from country to country, so do your research before you fall in love with your dream destination overseas.
Weigh Affordability With Other Considerations
Wherever you land in retirement, cost of living is an important factor, but it's not the only one. Identify a retirement destination that makes sense both financially and personally, whether your priority is being close to nature, close to family or close to the amenities of a large city.
By thinking holistically about what you want in retirement, you'll land on the ideal destination that fits your lifestyle and your budget.