Where you choose to retire has an undeniably massive impact on how long your
savings last. Depending on whether Congress decides to act or not, that impact
could increase exponentially: Without congressional action, the Social Security
Trust Fund is likely to run out in 2032, which would spell an automatic 22%
benefits cut for retirees, according to the Social Security Administration (SSA).
If that happens, the best way to stay on track for retirement
could be planning a move to a state where Social Security benefits aren’t taxed,
and the cost of living is below average. Below, we list 10 states where your
benefits could stretch further, whether Social Security checks decrease six
years from today or not.
Editor’s note: Unless otherwise noted, all cost-of-living data
comes from Salary.com.
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1. Texas
Like most states, Texas doesn’t tax Social Security income, but it doesn’t tax
other types of income either, including income from 401(k) and IRA withdrawals.
If your benefits get cut by 22%, Texas’ below-average cost of living ensures
your limited money goes farther. All major expenses cost less in Texas except
for energy, which Salary.com reports as costing about
2% more on average than in the rest of the states.
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2. Indiana
In Indiana, where the cost of living is 9% below the national average, Social Security
benefits are untaxed. While the state does have an income tax, it’s levied at a
flat rate of 2.95%, so your tax burden won’t go up that much if you need to withdraw more
cash from your 401(k) in some years.Â
Indiana is a particularly good choice if
you’re hoping to sell your current home and purchase a smaller, more comfortable
retirement home. In 2025, Consumer Affairs reported that Indiana’s median home
prices were almost 40% lower than the national average.
3. Florida
Worried that shrinking Social Security benefits could end your dreams of a
beachside retirement? Think again. Like Texas, Florida lacks an income tax, so
you could withdraw retirement funds without paying the state. You’ll also find
plenty of affordable beachside towns, from Pensacola to Daytona Beach, where
housing market website Redfin reports housing costs are below average.
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4. Iowa
Iowa might not seem like a typical retirement destination, but this midwestern
state’s cost of living is 10% lower than average. One reason for that, at least
where retirees are concerned, is that Iowa doesn’t tax any retirement income for
individuals who are 55 and older. You get to enjoy your full Social Security
check, pension, and 401(k) withdrawals without paying a percentage to the state
government.
5. Tennessee
If you love Florida’s lush greenery but don’t have your heart set on an ocean
town, landlocked Tennessee is a beautiful alternative, and it’s even more
affordable for retirees than the Sunshine State. Tennessee has no income tax,
and Salary.com states that its housing costs are 23%
less than the national average. Plus, with its mild climate and majestic
mountains, this outdoor-friendly state gives you endless options for year-round
entertainment that shouldn’t cost you any cash.
6. Nevada
If you’re interested in a sunny, dry, desert retirement, Nevada could be a more
cost-effective choice than popular Arizona. Nevada’s cost of living is at
exactly the national average, according to Salary.com, but Arizona’s is 6% above
average. Plus, Nevada doesn’t have an income tax, so your pension and Social
Security benefits are all yours (at the state level, at least).Â
Even better,
there’s no estate tax, property taxes are some of the lowest in the
nation, and Salary.com says its health care costs are 6%
lower than the average.
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7. Wyoming
Do you love the freedom of wide open spaces, affordable housing, and limited
neighbors? The cost of living in sparsely populated Wyoming is 5% below average,
and while it isn’t necessarily a good fit for seniors who want plenty of sun,
warmth, and community, it could be the perfect locale for seniors searching for
Florida’s spiritual opposite. Like Nevada, Wyoming lacks an income tax,
inheritance tax, and estate tax.
8. Mississippi
With a cost of living 13% lower than the national average, Mississippi is easily
one of the most affordable states on our list. And since its median home sales
price is just $281,002 (as of May 2026), according to Redfin, it’s a top
relocation spot for seniors who want to sell their current homes and start
building equity in their retirement home before a potential Social Security cut
kicks in.
9. Illinois
Life by the Great Lakes might mean much cooler winters than a retirement by the
sea, but if you can stand the humidity, you’ll reap some key financial benefits.
The cost of living in this midwestern state is 5% lower than the average, and the
state fully exempts all forms of retirement income from taxation, including
income from pensions, 401(k)s, IRA distributions, and Social Security.
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10. New Hampshire
The East Coast is generally more expensive than Midwestern or Southern states,
but pockets of New Hampshire still have below-average prices (for instance,
Redfin reports that the small town of Keene has the below-average median home
sales price of $348,750. Plus, New Hampshire doesn’t tax pensions, 401(k) or IRA
withdrawals, or Social Security.
New Hampshire is also one of the best states in the nation in terms of
affordable health care access. According to a WalletHub study in 2025, New
Hampshire had both the highest-quality health care and the fourth-lowest
out-of-pocket costs of any state.
Bottom line
Even if Congress steps in now to ensure Social Security is fully funded for
decades to come, it’s not a bad idea to consider moving to a cheaper state.
After all, if your retirement
savings are stretched thin already, a preemptive move could help you keep
more of that retirement cash in your wallet while you wait to see if your
benefits could change.Â
Ideally, moving could decrease your expenses enough that
you could start saving some of your check every month, building a back-up nest
egg if worse comes to worst.
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