10 Great Retirement Cities in the U.S.
Deciding where to retire presents an exciting challenge.
Deciding where to retire presents an exciting challenge. The best cities for retirement need to offer appealing amenities -- good quality of life, ample health care options and plenty of things to do -- on a fixed-income budget.
To narrow our list to ten of the best cities for retirement, we focused first and foremost on affordability. The cost-of-living index for retirees in each city has to score near or below 100, the U.S. average. Top cities also have to offer tax perks to retirees, such as exemptions on retirement income, and have lower state taxes per capita than $2,424, the national average.
We made sure that these cities offer access to quality medical care and have a high percentage of residents over 65. We also calculated a Lipitor score that reflects how much a 30-day supply of the cholesterol-lowering drug costs above or below the average prescription price of $174.71. Lipitor is the country's most-prescribed name-brand medication, and its price is tracked by the Council for Community and Economic Research -- the same organization that provides our cost-of-living estimates.
Birmingham, Ala.
- Metro population: 1,128,047
- Retiree cost-of-living index: 90.9 (national average is 100)
- Average taxes per capita: $1,712 (national average is $2,424)
- Income-tax exemptions: Social Security benefits; military, civil-service, state- and local-government pensions; qualified private pensions
- Residents over 65: 12.8% (national average is 13%)
- Lipitor score: -8.8% (compared to national average, $174.71)
They call Alabama "sweet home" for a reason: Living costs are low, sunny days are abundant, and taxes per capita fall $700 below the national average. Alabama exempts most retirement income from state income taxes, and older homeowners don’t pay property taxes. Medical costs are nearly 15% less than the national average. And in Birmingham, the state’s largest city, these amenities come with huge Dixie charm. It is home to an opera, orchestra and ballet, as well as a segment of the renowned Robert Trent Jones Golf Trail.
- Top selling point: Big-city living at a Deep South discount
- Biggest drawback: The summer heat can be stifling.
Tucson, Ariz.
- Metro population: 980,263
- Retiree cost-of-living index: 95.8
- Average taxes per capita: $1,596
- Income-tax exemptions: Social Security benefits; up to $2,500 of some government pensions
- Residents over 65: 14.7%
- Lipitor score: -4.9%
Tucson’s dry, sunny weather and low income-tax rates have made it attractive to generations of retirees. Arizona fully exempts Social Security benefits from income taxes, as well as up to $2,500 of some government pensions. Living costs are also low here, falling below both the national average and the costs of popular Southwest cities such as Phoenix and Palm Springs. The area is well known for its 22 golf courses, all of which you can play year-round. Tucson also boasts a symphony, opera and ballet, as well as several noted art museums and photo galleries.
- Top selling point: The sun shines 350 days a year.
- Biggest drawback: When it does rain, it pours, causing flash floods.
Winston-Salem, N.C.
- Metro population: 477,717
- Retiree cost-of-living index: 92.2
- Average taxes per capita: $2,256
- Income-tax exemptions: Social Security benefits; $4,000 of government pensions; $2,000 of qualified private pensions
- Residents over 65: 13.3%
- Lipitor score: +6.5%
Winston-Salem might not enjoy the same name recognition as, say, Charlotte, but this growing city packs tons of Southern hospitality at a price retirees will like. Living costs fall nearly 8% below the national average, and Social Security benefits are exempt from state income taxes. Winston-Salem doesn’t lack things to do, either: Six colleges, 75 recreational parks and 33 wineries call the region home, and Winston-Salem’s theater and visual arts heritage earned it the nickname “The City of the Arts.” It also boasts a huge health care sector, so doctors and specialists are not hard to find.
- Top selling point: Something (affordable) for everyone
- Biggest drawback: The basketball is better in Chapel Hill.
Manchester, N.H.
- Metro population: 400,721
- Retiree cost-of-living index: 118.3
- Average taxes per capita: $1,614
- Income-tax exemptions: No state income tax
- Residents over 65: 11.3%
- Lipitor score: -14.2%
Thanks to the absence of income, sales, estate and inheritance taxes, Manchester is one of the most tax-friendly cities in the U.S. for retirees. While the overall cost of living skews a bit above average because of things such as housing and utilities, health care is cheap. In fact, the New Hampshire capital boasts the lowest Lipitor score on our top-ten list. The city is also known for its extensive parks system and the Currier Museum of Art. If you get bored with the boutiques, restaurants and jazz festivals in Manchester’s charming downtown, Boston is only an hour away, and New York and Montreal fall within day-trip range.
- Top selling point: Like Boston, less the Massachusetts taxes
- Biggest drawback: Proximity to the Northeast Corridor comes with higher living costs.
New Orleans, La.
- Metro population: 1,167,764
- Retiree cost-of-living index: 96.8
- Average taxes per capita: $1,932
- Income-tax exemptions: Social Security benefits; federal and some other retirement system benefits; $6,000 of annual retirement income
- Residents over 65: 12.1%
- Lipitor score: +1.0%
New Orleans’ living costs fall below the national average, and the Louisiana tax code is retiree-friendly. Most pensions are exempt from state income taxes, personal income-tax rates are low, and property taxes are among the lowest in the nation. While Hurricane Katrina hit the city hard in 2005, both the population and the economy are rebounding. Today, retirees can enjoy world-renowned destinations such as the French Quarter and the 158-year-old City Park just as they would have ten years ago.
- Top selling point: Front-row seats to Mardi Gras
- Biggest drawback: A nonstop parade of tourists toting go cups
Spokane, Wash.
- Metro population: 471,221
- Retiree cost-of-living index: 93.7
- Average taxes per capita: $2,395
- Income-tax exemptions: No state income tax
- Residents over 65: 12.7%
- Lipitor score: +1.0%
With no state income tax, below-average living costs and 260 sunny days a year, picturesque Spokane makes a budget-friendly choice for retirees looking to get away from it all. Located between the Cascade and Rocky Mountains, the midsize city is a mecca for outdoor enthusiasts: 76 lakes, five ski mountains and 4,100 acres of city parks lie in the region, as do thousands of acres of cedar forests and state parks. Spokane is a hub in the Northwest health care network, with six major hospitals and 900 physicians within the city limits. While Washington does charge a high sales tax -- 6.5% statewide and nearly 9% in Spokane -- groceries, prescription drugs and many other essential items are exempt.
- Top selling point: The great outdoors at your doorstep
- Biggest drawback: Civilization, in the form of Seattle, is five hours away.
Charleston, S.C.
- Metro population: 664,607
- Retiree cost-of-living index: 102.8
- Average taxes per capita: $1,471
- Income-tax exemptions: Social Security benefits; $3,000 of pension income before age 65, and $15,000 after
- Residents over 65: 11.1%
- Lipitor score: +8.4%
South Carolina’s state taxes are the lowest in the country -- one of the many budget-friendly factors that make Charleston a good home for retirees. There are no taxes on Social Security benefits in the Palmetto State, which also provides a $15,000 retirement-income deduction for people over 65. Retirees can spend their savings in one of historic Charleston’s many theaters or soul-food restaurants. The city is known for its mild climate, and tourist draws such as Savannah, Hilton Head and Myrtle Beach are just two hours away by car.
- Top selling point: Like being on (tax) holiday year-round
- Biggest drawback: Hurricane worries can spoil the fun.
Knoxville, Tenn.
- Metro population: 698,030
- Retiree cost-of-living index: 90.1
- Average taxes per capita: $1,657
- Income-tax exemptions: No state income tax
- Residents over 65: 14%
- Lipitor score: -1.0%
Few cities can stretch fixed-income budgets as far as Knoxville, where living costs for retirees are the lowest among our top ten. If that isn’t enough, note that the state has no income tax, and taxes per capita fall more than $700 below the national average. While hardly a booming metropolis, Knoxville is home to a thriving American music scene, a symphony orchestra, an annual opera festival and 13 golf courses. The city’s proximity to the Blue Ridge Mountains and Great Smoky Mountains National Park also makes it ideal for fishing, hiking and other outdoorsy activities.
- Top selling point: Superb scenery and music for a song
- Biggest drawback: More Appalachian than urban
Palm Bay, Fla.
- Metro population: 543,376
- Retiree cost-of-living index: 99.7*
- Average taxes per capita: $1,675
- Income-tax exemptions: No state income tax
- Residents over 65: 20.2%
- Lipitor score: +2.0%
Palm Bay’s senior population has ballooned to 20.2%, and for good reason. The Sunshine State has no income tax, and taxes per capita fall well below the national average. There are 29 parks within the city limits, and the surrounding county boasts ten golf courses and nine Atlantic beaches. Port Canaveral, a 50-minute drive from Palm Bay, is the second-busiest cruise port in the world. As if that weren’t enough, the average temperature is a pleasant 72 degrees.
- Top selling point: Sun, sand and fellow seniors
- Biggest drawback: It gets sleepy once the sun goes down.
*Retiree cost-of-living index is calculated for nearby Sebastian-Vero Beach metro area.
St. Louis, Mo.
- Metro population: 2,812,896
- Retiree cost-of-living index: 93.3
- Average taxes per capita: $1,620
- Income-tax exemptions: 80% of Social Security benefits (increasing to 100% in 2012); 80% of public-pension benefits, subject to income limits
- Residents over 65: 12.9%
- Lipitor score: -3.5%
St. Louis may not rank as an obvious retirement choice, but the spirited midsize city offers some pretty senior-friendly amenities: low living costs, a laid-back Midwestern atmosphere and full income-tax exemptions for Social Security benefits starting in 2012. St. Louis’s riverfront, which already includes several museums, a casino and more than 200 restaurants, is in the midst of several large-scale development projects. And the city’s central location makes it easy to visit grandkids on either coast.
- Top selling point: Low taxes, lower living costs and no pretensions
- Biggest drawback: Somewhat less exciting than in Judy Garland’s day
