Ransacking your retirement nest egg? You're not the only one. According to a Bank of America Corporation (NYSE:BAC) survey, many clients have been taking hardship withdrawals from their retirement plans, up 13% in Q3, 2023 compared to Q2, 2023. Tracking approximately 4 million clients' employee benefits programs, Bank of America Corporation (NYSE:BAC) notes that more than 18,000 plan participants have been leveraging this quick cash scheme, a financial move that isn’t without its significant share of repercussions.
“While there could be several factors at play, the economic environment, following a year of high inflation and the rising cost of living, could be influencing this ongoing trend."
Financial service companies such as Morgan Stanley (NYSE:MS) strongly advise against tapping into 401(k) accounts because they come at a price. For instance, those who tap into these funds before the plan's normal retirement age incur an additional income tax of 10%, according to the Internal Revenue Service. Moreover, such withdrawals inhibit the potential compounding of investment returns, a consequence that hampers retirement savings in the long run.
Unfortunately, many individuals don’t have an option but to tap into these savings. Besides Bank of America Corporation (NYSE:BAC), reports from sources such as Fidelity and Empower are also demonstrating similar trends. For example, Fidelity has found that hardship withdrawals jumped by a whopping 25% from 2022 to 2023. Meanwhile, Empower, another financial services company, noted a 46% jump in hardship withdrawals in the year 2023.
“Once you take that money out you lose the savings but you also lose any ability to make more money off that in the future.”
In such a case, it is better for potential retirees as well as those who have already entered their retirement phase to make necessary lifestyle adjustments that can help them avoid tapping into retirement savings before time, or more than required. Retirees can also make smart moves that can help them stretch their retirement savings. For instance, moving to states with the lowest cost of living can help retirees save further. Examples of such states include West Virginia, Mississippi, Alabama, and Kansas, to name a few.
Within such states, retirees can find some of the cheapest places to retire where the cost of living is $2,500 or even less. Examples include Springfield, Illinois; Mobile, Alabama; and Akron, Ohio; to name a few. Retirees are relocating across states to many of these areas, and Florida remains a top contender for many retirees, notes AARP. According to a new study compiled by the US Census Bureau, 11% of retiree relocations in 2023 were to Florida, while South Carolina was a close second, drawing 10% of all retiree moves. Moreover, a spokesperson from Hire a Helper notes that more and more of these individuals are looking for a place that is "warm" yet "not as expensive".
While California and New York are losing out on retirees due to the obvious cost-of-living highs, other states have been marking gains such as New Jersey and Texas. Even though New Jersey isn’t exactly a cheap state to retire to, it still makes sense for retirees coming in from states such as New York. No matter what state, city, or town one chooses to retire to, one must make sure that they have access to factors such as healthcare and other necessary amenities that can help them live a comfortable retirement.
To help retirees move to cheap yet desirable locations, we have compiled a list of places across America that they can choose.
30 Cheapest Places Across America Where You Will Want to Retire
Methodology
To compile the list of cheapest places across America where you will want to retire, we used a consensus approach to draft a list of all potential cheap destinations that individuals can retire to. Sources include US News Real Estate, CNBC, The Travel, and forums such as Reddit and Quora, amongst others.
Next, we ranked them on their cost of living indices sourced from Best Places, as well as livability scores from Area Vibes. An average ranking was calculated that was deemed as our Insider Monkey Score. Places were ranked in ascending order from the lowest to the highest scores.
The cost of living for all the selected places is 99 or below, implying a cost of living that is 1% or more below the national average. Livability scores are 60 and above, implying an above-average score. It must be noted here that there are both good and bad areas within a particular city or town. The key to choosing the best area for living is to do the necessary homework, talk to neighbors, decide which amenities are important when living in an area, and then make a final decision.
By the way, Insider Monkey is an investing website that tracks the movements of corporate insiders and hedge funds. By using a similar consensus approach, we identify the best stock picks of more than 900 hedge funds investing in US stocks. The top 10 consensus stock picks of hedge funds outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). Whether you are a beginner investor or professional one looking for the best stocks to buy, you can benefit from the wisdom of hedge funds and corporate insiders.
Here are the cheapest places across America where you will want to retire:
30. Fargo, North Dakota
Insider Monkey Score: 4
Cost of Living: 90.6
Livability Score: 85
Fargo has been an ideal retirement destination for numerous sources such as Forbes for quite some time now. Revered especially for its affordability, the city offers seniors a cost of living that is 9.4% lower than the national average, whereas there are plenty of amenities for the elderly as well.
29. Huntsville, Alabama
Insider Monkey Score: 4.5
Cost of Living: 94.2
Livability Score: 81
One of the cheapest places across America where you will want to retire is Huntsville, Alabama. According to Redfin Corporation (NASDAQ:RDFN), the median home value in the city hovers around an affordable $314,000 while the average rent for a one-bedroom apartment is under $1,000.
28. Des Moines, Iowa
Insider Monkey Score: 9.5
Cost of Living: 86.6
Livability Score: 81
From abundant healthcare facilities to museums, art venues, and other big-city amenities, Des Moines is one of the cheapest places to retire with good healthcare in the USA. Homes in the area are selling for a median price of $205,000, and rents are affordable as well.
27. Milwaukee, Wisconsin
Insider Monkey Score: 10.5
Cost of Living: 88
Livability Score: 78
This budget-friendly Midwest city is one of the cheapest places to retire in the USA. Seniors love this bustling city for its amazing array of restaurants and shops, museums, and good access to healthcare. The cost of living is 12% lower than the national average, and the place also boasts a good livability score.
26. Rochester, New York
Insider Monkey Score: 12
Cost of Living: 88.6
Livability Score: 75
The flower city of Rochester is revered for its affordability despite being located in the expensive state of New York. Its bustling arts scene, vibrant downtown, and affordable housing make it one of the cheapest places across America to retire.
25. Greensboro, North Carolina
Insider Monkey Score: 12.5
Cost of Living: 84.2
Livability Score: 82
One of the best places to retire in North Carolina is Greensboro. Besides the abundant healthcare facilities, the city offers seniors many parks, recreational areas, as well as a diverse culinary scene.
24. Oklahoma City, Oklahoma
Insider Monkey Score: 13.5
Cost of Living: 85.5
Livability Score: 79
Several sources such as Forbes have claimed that Oklahoma City is one of the best places to retire in the US, citing reasons such as affordable housing, low cost of living, and abundant restaurants and nightlife options. The cost of living in the city is 14.5% lower than the national average, and the livability score is well above average too.
23. Columbia, South Carolina
Insider Monkey Score: 13.5
Cost of Living: 87.4
Livability Score: 76
According to Zillow, the median price of a home in Columbia is $219,579. Rent prices are affordable too, with the median rent price for all property types being a reasonable $1,400 only. The capital city is home to a myriad of shopping and dining options, art, and culture.
22. Knoxville, Tennessee
Insider Monkey Score: 14.5
Cost of Living: 91.8
Livability Score: 72
One of the most affordable places to retire in Tennessee is Knoxville. Besides its low cost of living, the city is known for its beautiful nature, mild climate, and plentiful recreational activities.
21. Fort Wayne, Indiana
Insider Monkey Score: 15
Cost of Living: 82
Livability Score: 84
From affordable housing to excellent healthcare, Fort Wayne is another one of the cheapest places across America where you will want to retire. Not only is the cost of living 18% lower than the national average, but the livability score is quite good as well.
20. Indianapolis, Indiana
Insider Monkey Score: 15.5
Cost of Living: 85.7
Livability Score: 77
Another Midwest city making it to our list of cheapest places to retire in the USA is Indianapolis. Known for its peaceful vibe, the city offers seniors the best of culture, nature, and sports.
19. Corpus Christi, Texas
Insider Monkey Score: 16.5
Cost of Living: 83.5
Livability Score: 78
For seniors looking to retire near the beach, Corpus Christi can be one of their best bets. Being one of the cheapest beach towns to retire in the US, seniors can enjoy the warm weather, beautiful beaches, as well a thriving culture scene.
18. El Paso, Texas
Insider Monkey Score: 18.5
Cost of Living: 81.9
Livability Score: 81
El Paso is one of the best places to retire in Texas owing to its warm climate, abundant parks, and open spaces, as well as good quality of life. The cost of living in this city is 17.9% lower than the national average, and the livability score is well above average.
17. Tulsa, Oklahoma
Insider Monkey Score: 19
Cost of Living: 85.3
Livability Score: 74
Age-friendly, affordable, and beautiful, Tulsa is another nice option to consider for those looking for cheap retirement destinations. Redfin Corporation (NASDAQ:RDFN) notes that the median price of a home in Tulsa is $219,000; while the average rent for a one-bedroom apartment is $828 per month.
16. Akron, Ohio
Insider Monkey Score: 19.5
Cost of Living: 80.8
Livability Score: 81
Another location for retirees who want to live on a budget is Akron, Ohio. The cost of living in the city is 19.2% lower than the national average, while the median home price is $120,000.
15. Saint Louis, Missouri
Insider Monkey Score: 20.5
Cost of Living: 84.1
Livability Score: 74
St. Louis in Missouri is praised for its walkability, excellent healthcare, and low cost of living. The median price of a home is $199,000, which is considered quite affordable.
14. Memphis, Tennessee
Insider Monkey Score: 21
Cost of Living: 85.8
Livability Score: 69
Seniors who love the big-city life yet want to retire on a budget can choose Memphis, one of the largest cities in Tennessee. An average-sized home can easily be bought for under $300k, and seniors can enjoy a cost of living that is 14.2% lower than the national average.
13. Lincoln, Nebraska
Insider Monkey Score: 22.5
Cost of Living: 92.6
Livability Score: 78
Scoring high on livability, Lincoln is another one of the cheapest places across America to retire to. Seniors love this city because of its abundant museums, restaurants, and cultural events. The University of Nebraska offers opportunities to engage in lifelong learning.
12. Birmingham, Alabama
Insider Monkey Score: 23
Cost of Living: 87
Livability Score: 65
The Magic City of Birmingham in Alabama is brimming with amenities, natural attractions, and plentiful entertainment. According to Redfin Corporation (NASDAQ:RDFN), the median price of a home in the city is $185,000, and the overall cost of living is 13% lower than the national average.
11. Winston-Salem, North Carolina
Insider Monkey Score: 24.5
Cost of Living: 84.3
Livability Score: 66
One of the safer cities in North Carolina and an affordable place to retire on the East Coast is Winston-Salem. The city offers a sub-urban community vibe, and there are plenty of restaurants, parks, and coffee shops to enjoy in the city.
