Cost of living : 12 percent below the U.S. average
Population : 1.97 million
Best city : O’Neill
PROS: The Cornhusker State can offer retirees a very low cost of living and is in good condition financially. Nebraska is ranked sixth in the nation in fiscal health by the Mercatus Center at George Mason University.
CONS: Although the cost of living is low, Nebraska is not very tax-friendly to seniors with most retirement income taxable. The only way in which Social Security is exempt is if your income is less than $43,000 for single filers or $58,000 for joint filers.
North Dakota
Cost of living: one percent above the U.S. average
Population: 786,729 Best city: Rugby PROS: North Dakota is tax-friendly for retirees with low-income tax rates of 1.1 to 2.9 percent and a low cost of living to boot. Plus, you would be hard-pressed to find a more beautiful natural landscape.
CONS: North Dakota taxes retirement income but that shouldn’t impact retirees greatly since the cost of living is low. Like South Dakota, this is not the place for city lovers with a population on only 786,729.
Delaware
Cost of living: 11 percent above U.S. average
Population: 989,948
Best city: Rehoboth Beach
PROS: Delaware was rated as tax-friendly. The state does not tax Social Security benefits and also exempts some investment and pension income for people over 60.
CONS: The cost of living is still 11 percent above the national average and seniors in the state have a below U.S. average income. When you combine these two things, it may be hard for some retirees to easily afford their essentials in Delaware.
New Mexico
Cost of living : 5 percent below U.S. average
Population : 2.1 million
Best city : Taos
PROS: Don’t believe everything you see on TV, New Mexico is nothing like Breaking Bad or Better Call Saul. It is a beautiful state with stunning views and a relatively peaceful way of life.
CONS: While the beautiful sunsets may fill your heart with joy, the tax situation will not. New Mexico is the “Least Tax-Friendly” state because Social Security, retirement income and pensions are all taxable. The state does offer certain exemptions for low-income seniors.
Virginia
Cost of living: 7 percent above U.S. average
Population: 8.6 million
Best city: Roanoke
PROS: The cost of living is higher than the national average, but senior incomes in Virginia are high, which could balance things out. Healthcare, which is an important issue for retirees, is mostly reasonably priced. Plus, Social Security is not taxed and residents who are 65 and over can deduct $12K of their income.
CONS: Retirees on a tight budget may have a hard time with the higher than average cost of living. And although Virginia has plenty of nice cities like Richmond, Lexington, and Roanoke, they don’t have the big city feel of New York or Los Angeles. If you are looking for a major metropolis, Virginia is probably not right for you.