The top 5 states to retire in aren't the ones with the warmest weather alone — they're the places where your money, taxes, and healthcare line up.
According to the Tax Foundation's State and Local Sales Tax Rates report, combined state and local sales tax rates range from under 1% in some states to over 9% in others, a gap that can reshape a fixed income over a 20-year retirement.
The problem is that most lists rank states by sunshine, not by what you'll actually pay in property tax, income tax, and healthcare premiums. This guide covers five standout states, the trade-offs behind each one, and a simple way to score them against your own budget.
Why These Five States Stand Out for Retirement
The top 5 states to retire in all balance three things: tax treatment of retirement income, healthcare access, and overall cost of living. A state can win on one and lose badly on another, so you need to weigh them together rather than chase a single factor.
The Tax Foundation reports that nine states levy no individual income tax at all, while others exempt Social Security benefits entirely. That distinction matters more than most people realize, because a modest pension taxed at 5% can cost you thousands each year.
Here's the part most articles skip: no state wins on every metric. Florida has no income tax but rising home insurance costs. Tennessee has low taxes but fewer large hospital systems in rural counties.
Use a two-step filter before you commit:
- List your income sources — Social Security, pension, IRA withdrawals, part-time work.
- Check how your new state taxes each one, line by line.
That exercise alone will eliminate half your candidate list. When you evaluate the top 5 states to retire in for your situation, run this filter first and rank the survivors by total annual cost, not by reputation.
How to apply this: Download your state's tax forms or use a free calculator to model your exact retirement income in two candidate states this week.
1. Florida: No Income Tax, High Insurance Costs
Florida ranks first on most lists of the top 5 states to retire in for one simple reason: it has no state income tax, so Social Security, pensions, and IRA withdrawals all arrive untouched. According to the U.S. Census Bureau, Florida's 65-and-older population has grown steadily for decades, making it one of the oldest states by median age.
That tax advantage is real, but it comes with a catch. Homeowners insurance premiums in coastal counties have climbed sharply in recent years, and property taxes still apply even without an income tax.
Healthcare is a genuine strength. Florida hosts major systems like Mayo Clinic in Jacksonville and Cleveland Clinic in Weston, giving retirees access to top-tier specialists.
- Best for: retirees with large IRA or pension withdrawals who want to keep more of each dollar.
- Watch out for: insurance premiums and hurricane risk near the coast.
- Action step: get three homeowners insurance quotes before you make an offer on any home.
Inland cities such as Ocala and The Villages typically carry lower insurance costs than Miami or Tampa. If sunshine and tax-free withdrawals top your list, Florida is a strong contender among the top 5 states to retire in — just budget for insurance from day one.
How to apply this: Request insurance quotes for a specific address, not a city average, before you commit to a neighborhood.
2. Tennessee: Low Taxes and Moderate Living Costs
Among the top 5 states to retire in, Tennessee also collects no state income tax on wages or retirement distributions, and its overall cost of living sits below the national average in most metros. The state does tax investment income and dividends in limited cases, so check the current rules before assuming everything is exempt.
Tennessee's climate gives you four seasons without brutal northern winters, and the Smoky Mountains offer outdoor recreation year-round. Nashville and Knoxville both have expanding healthcare networks, though rural counties have fewer specialists.
One practical downside: the state sales tax is among the highest in the country. According to the Tax Foundation's sales tax data, Tennessee's combined rate often exceeds 9%, which hits everyday spending harder than a modest income tax would.
- Best for: retirees who want no income tax and prefer a moderate climate.
- Watch out for: high sales tax on groceries and everyday purchases.
- Action step: estimate your annual spending, then multiply it by the local sales tax rate.
This is where careful budgeting separates a good move from a costly one. A retiree spending $40,000 a year on taxable goods could pay thousands in sales tax alone.
How to apply this: Track one month of actual spending, then apply Tennessee's combined rate to see your real annual sales tax bill.
3. Wyoming: No Income Tax and Wide-Open Space
Wyoming has no state income tax and no tax on retirement income, which makes it a quiet favorite on any list of the top 5 states to retire in for those who want to stretch a fixed budget. The state's population is small, so traffic, crowding, and competition for services stay low.
The trade-off is access. Wyoming has fewer hospitals per capita than most states, so anyone with complex medical needs should map the nearest major facility before relocating. Winter weather is also genuinely harsh in higher elevations.
Cost of living varies enormously by town. Cheyenne and Casper are moderate, while Jackson Hole is among the most expensive markets in the country.
| Factor | Why it matters | Action to take |
|---|---|---|
| Income tax | Directly reduces retirement income | Confirm your income type is exempt |
| Property tax | Fixed annual cost | Check the local mill levy |
| Sales tax | Hits everyday spending | Compare county rates |
| Healthcare access | Critical as you age | Map the nearest hospital |
| Insurance cost | Can rise after a move | Get local quotes first |
| Climate | Affects utility bills | Review 10-year weather data |
Among the top 5 states to retire in, Wyoming offers the cleanest tax picture but the thinnest safety net. If low taxes rank above convenience for you, it deserves serious consideration.
How to apply this: Call the nearest hospital to your target town and ask about specialist availability before you visit.
4. South Dakota: Tax-Friendly With No Inheritance Tax
South Dakota charges no state income tax and no inheritance tax, which sets it apart from many low-tax states and earns it a place among the top 5 states to retire in. That combination is especially valuable if you plan to leave assets to heirs or receive an inheritance yourself.
The state's cost of living is below average outside of Rapid City and Sioux Falls, and both cities have solid regional healthcare systems. According to the U.S. Census Bureau, South Dakota's older population has grown as retirees seek lower taxes and a slower pace.
Winters are cold and windy, and rural areas can be genuinely remote. If you need frequent specialist care, choose a larger metro rather than a small town.
- Best for: retirees focused on estate planning and low taxes.
- Watch out for: long drives to specialists in rural counties.
- Action step: review your estate plan with a local attorney after you establish residency.
Residency rules matter here. Most states require you to spend a set number of days and establish a permanent home before you qualify for in-state tax treatment.
How to apply this: Document your move carefully — keep lease or deed records, a new driver's license, and voter registration.
5. Pennsylvania: Retirement Income Exemptions
Pennsylvania is the sleeper pick among the top 5 states to retire in. The state exempts Social Security and most pension income from state tax after you reach retirement age, which softens its otherwise moderate tax burden.
The state also has a large network of hospitals and universities, giving retirees strong healthcare access in Philadelphia, Pittsburgh, and smaller cities like Lancaster. Cost of living stays reasonable outside major metros.
Property taxes are the weak point, and they vary sharply by school district. A retiree moving from one county to another can face a very different annual bill.
According to the Social Security Administration, the average retired worker benefit was around $1,900 per month in recent data, so every state-level exemption adds meaningfully to that base.
- Best for: retirees who value healthcare access and pension exemptions.
- Watch out for: property taxes that vary by district.
- Action step: look up the millage rate for your target school district.
Of the top 5 states to retire in, Pennsylvania offers the best balance of medical infrastructure and tax relief for pensioners.
How to apply this: Use a county property tax calculator to compare two or three specific districts before you tour homes.
Frequently Asked Questions About top 5 states to retire
Which state is best if I only receive Social Security?
Several states exempt Social Security benefits entirely from state income tax, including Florida, Tennessee, and Pennsylvania. If Social Security is your only income, your state tax bill is often zero regardless of which of the top 5 states to retire in you choose. The bigger cost drivers become property tax and sales tax, so compare those two before deciding.
How do I prove residency for tax purposes?
Most states require a permanent home, a driver's license, voter registration, and a minimum number of days lived in-state, often around 183. Keep utility bills and a lease or deed as evidence. Some states also expect you to file a part-year return for the move year, so retain your records for at least three years after relocating.
Most states look for a permanent home, a driver's license, voter registration, and around 183 days lived in-state to prove residency. Keep utility bills and a lease or deed handy, since these documents matter just as much when weighing the top 5 states to retire.
When narrowing down the top 5 states to retire, many couples find it pays to pick a spot that scores well on taxes and healthcare for both of them. If you still can't agree, a six-month trial in each state can settle the question before you commit.
Does moving affect my Medicare coverage?
Medicare Part A and B travel with you anywhere in the country, but Medicare Advantage and Part D plans are zip-code specific. If you use an Advantage plan, you'll need to enroll in a new one after your move.
Original Medicare plus a Medigap policy offers more portability, which many retirees prefer when evaluating the top 5 states to retire in.
What if my spouse wants a different state than I do?
Split decisions are common. One workable approach is to pick a state that scores well on healthcare and taxes for both of you, rather than optimizing for one person. If you can't agree, test a six-month rental in each candidate before committing to a permanent purchase.
Split decisions are common, so many couples compare our top 5 states to retire before choosing together.
Rather than optimizing for one person, use the top 5 states to retire as a starting point for compromise.
Are these states good for part-time work in retirement?
Yes, especially the states with no income tax on wages. Florida, Tennessee, Wyoming, and South Dakota all let you keep more of part-time earnings. Check whether your earnings affect Social Security taxation at the federal level, since that threshold applies nationwide regardless of which of the top 5 states to retire in you select.
Key Takeaways
- Tax treatment of Social Security, pensions, and withdrawals matters more than climate in most retirement budgets.
- No-income-tax states like Florida, Tennessee, Wyoming, and South Dakota still charge property and sales taxes.
- Pennsylvania stands out for pension exemptions and strong healthcare access.
- Always check insurance costs by specific address, not city averages.
Your next step: pick your top two states, model your exact income and spending in each, and request real insurance quotes for one address in each state before you book a moving truck. The right choice among the top 5 states to retire in is the one that fits your numbers, not the one that tops a generic list.
