For many Americans, deciding where to retire is just as important as deciding when to claim Social Security. With inflation still pressuring household budgets, retirees are increasingly looking for states where their fixed income can stretch further.
While there is no single perfect retirement destination, some states consistently stand out for lower housing costs, tax advantages and overall affordability. One state frequently cited by financial analysts as more manageable for retirees is Tennessee.
Here’s why.
No State Income Tax on Wages or Retirement Income
Tennessee does not impose a state income tax on wages, pensions or Social Security benefits. For retirees living primarily on fixed income, that can make a meaningful difference in monthly cash flow.
Because Social Security benefits are not taxed at the state level, retirees may keep more of their monthly check compared with states that tax retirement income.
Lower Housing Costs Compared to National Averages
Housing remains the largest expense for most retirees. In Tennessee, median home prices and average rents tend to fall below national averages, particularly outside major metro areas.
Smaller cities and suburban communities often offer:
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Lower property taxes
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More affordable single-family homes
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Reduced maintenance costs
For retirees who have already paid off a mortgage, relocating to a lower-cost housing market can significantly reduce monthly expenses.
Cost of Living Advantages
Beyond housing, Tennessee’s overall cost of living is often below the national average. Groceries, utilities and healthcare services in many areas are competitively priced.
While costs vary by region — with larger cities such as Nashville and Memphis trending higher — many smaller communities offer more budget-friendly living conditions.
Property Tax Considerations
Tennessee property taxes are generally lower than the U.S. average. That can be especially attractive to retirees on fixed incomes who want predictable housing costs.
However, sales taxes in Tennessee are relatively high, so retirees should consider how spending habits might offset some savings.
Climate and Lifestyle
Retirement decisions are not just financial. Tennessee’s moderate winters and relatively mild climate appeal to many retirees seeking to avoid harsh northern winters without moving to high-cost coastal states.
The state also offers access to outdoor recreation, cultural attractions and growing healthcare infrastructure — all factors retirees consider when evaluating long-term living costs.
Other Affordable Retirement States
Tennessee is not alone in offering manageable expenses. States often ranked highly for retirement affordability include:
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Florida (no state income tax, but higher housing in some regions)
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Texas (no income tax, varying property taxes)
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South Carolina (retirement income exclusions)
Each state has trade-offs, including differences in healthcare access, property taxes and insurance costs.
Why Affordability Matters in 2026
The average Social Security retirement benefit in 2026 is around $2,000 per month. For retirees relying heavily on Social Security, choosing a lower-cost state can mean the difference between comfortably covering expenses and stretching every dollar.
Financial advisors often recommend evaluating:
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State tax policies
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Housing affordability
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Healthcare access
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Insurance costs
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Climate risks
before relocating in retirement.
The Bottom Line
For retirees seeking more manageable monthly expenses, states like Tennessee can offer meaningful financial advantages — particularly due to the lack of state income tax and relatively affordable housing in many areas.
However, retirement decisions remain highly personal. Costs can vary significantly within any state, and individual lifestyle preferences play a major role.
Careful planning and research are essential before making a move.