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Best Places to Retire on the Cheap

Best Places to Retire on the Cheap

Sure, you’d probably like to retire to Hawaii. But chances are you don’t really want to live in the U.S. state with the highest cost of living and the worst business climate — killer waves and majestic sunsets notwithstanding.

The average age Americans say they retired is 61, up from 57 in the early 1990s, according to a Gallup poll from May. And 37% of those not yet retired say they expect to after age 65, up sharply from 14% in 1995.

These days, even if you aim to make your office exit on the (relatively) early side, and are considering a move, you need to think not only about affordability but also opportunity. Retirement is getting longer as life spans continue to climb higher, raising the risk that people will outlive their savings. And four in 10 Americans underestimate their life expectancy by five or more years.

There are roughly 78 million baby boomers in the U.S. and about 10,000 each day turn 65. Many of them envision a semi-retirement where they have more free time mixed with the opportunity to work or start their own business.

We compiled a list of places that promise affordability, robust local economies, low unemployment, affordable housing, and access to affordable health care.

We asked the folks at FindtheData.org, a research hub, to crunch some numbers to help find the best places. They filtered only those cities with a labor force of more than 80,000 and unemployment less than 7%; the overall number was reduced to 29 finalists. We further narrowed that list down by looking at each city’s cost of living, strength of the underlying economy and median age (as one way to indicate if the community is a young and vibrant one).

FindtheData’s cost of living measures take into account childcare, healthcare, housing, food, transportation and tax expenses. The nationwide average score is 100. So, for example, Amarillo, Texas, sixth on our list, has a cost of living index of 90, which means it’s 10% less expensive than the average U.S. city. (According to FindtheData, the Nassau-Suffolk, N.Y. metro area has the highest overall cost of living with an index of 155.) The cost of living may not be as low in these locales as some more exotic towns in Belize, Argentina and Thailand that frequently appear on other roundups, but they’re all lower than the U.S. average.

A few of our entries also make appearances on other lists, notably the Milken Institute’s list of “Best Cities for Successful Aging,” an index that measures and ranks the performance of 359 metropolitan areas on factors that affect seniors’ quality of life. These include health care, crime rates, economic and job conditions, housing, transportation and social factors.

Omaha, Neb., Sioux Falls, S.D, Lincoln, Neb., and Lubbock, Texas – all in our top 10 – rank among the top 20 best cities (in separate lists for large and small metros) in Milken’s analysis, while Lexington-Fayette, Ky., ninth on our list, made a strong showing on Milken’s index (ranked 33 among small metros).

“The notion of moving to a retirement community with a rec center, nine-hole golf course and shuffle board court and waiting to die has really lost credibility,” says Paul Irving, president of the Milken Institute.

“A lot of the cities that did well are not just doing well for older people but for everyone, because of what they have in common – a healthy economy, good jobs, low crime, good public transit systems, active lifestyles and often major universities or university systems,” Irving says.

1. Sioux Falls, South Dakota
Unemployment rate: 4.2
Cost of Living Index: Economy Star rating: 82
Median home price: $134,300

2. Overland Park, Kansas
Unemployment rate: 4.9
Cost of Living Index: Economy Star rating: 95
Median home price: $201,600

3. Plano, Texas
Unemployment rate: 5.2
Cost of Living Index: Economy Star rating: 98
Median home price: $209,900

4. Lubbock, Texas
Unemployment rate: 6.2
Cost of Living Index: Economy Star rating: 91
Median home price: $107,300

5. Lincoln, Nebraska
Unemployment rate: 5.6
Cost of Living Index: Economy Star rating: 94
Median home price: $129,400

6. Amarillo, Texas
Unemployment rate: 5.5
Cost of Living Index: Economy Star rating: 90
Median home price: $120,400

7. Austin, Texas
Unemployment rate: 6.5
Cost of Living Index: Economy Star rating: 90
Median home price: $186,800

8. Mesa, Arizona
Unemployment rate: 6.9
Cost of Living Index: Economy Star rating: 99
Median home price: $135,200

9. Lexington-Fayette, Kentucky
Unemployment rate: 6.3
Cost of Living Index: Economy Star rating: 97
Median home price: $152,500

10. Omaha, Nebraska
Unemployment rate: 6.9
Cost of Living Index: Economy Star rating: 98
Median home price: $129,700

Data from FindtheData.org, BestPlaces.net
Unemployment Rate: City Economic Facts (based on US Census Bureau data)
National unemployment rate: 7.4% as of July (BLS)