Thinking of heading down South for your retirement? You’re not alone. Thanks to a warm climate, lower cost of living, and tax-friendly treatment of retirees, many choose a Southern state. Not all are retired. A U.S. migration report released in January 2023 by American Moving Services shows that more Americans are migrating to the South than to any other region in the U.S.
If you haven’t settled on a place, a key consideration will be the cost of retirement living. In partnership with Southern Living, we examined Census data and Bureau of Labor Statistics reporting to determine the cost of retirement in 41 Southern towns and cities.
Based on our analysis, of the 41 cities, we found Chattanooga, Tenn., Huntsville, Ala., and Ocean Springs, Miss. to be three excellent picks for cost and affordability. Take a closer look at why they topped our list.
Key Takeaways
- Chattanooga, Tennessee’s attractions include a robust job market for those considering reentering the workforce full or part-time.
- Huntsville, Alabama, offers low living costs combined with one of the nation’s lowest state tax rates.
- Ocean Springs, Mississippi, has very low housing costs and no state taxes on pension income.
Chattanooga, TN: Best All Around
Chattanooga, Tennessee, took the top spot as the best all-around location for retirement. The city has scores generally in line with the national average for almost all metrics in our study.
What stood out was its robust job market—perfect for those who want to keep their options open for reentering the workplace part-time or full-time. Not only does Chattanooga have an unemployment rate of 3.2% (as of November 2023) which is lower than the already-low national average of 3.7% (as of January 2024), but it’s a hub for jobs in the hydroelectric power generation industry, thanks to its proximity to the Chickamauga Dam.
Also appealing: Chattanooga’s Hamilton County has many hospitals and multiple healthcare systems, offering residents healthcare access and choice.
The Chattanooga area also has a great food scene, with excellent restaurants for all tastes.
Housing Costs
As for housing costs, Chattanooga’s median rent is $1,179 as of January 2024, and its median home sale price is $285,000 as of December 2023, making it affordable for both renters and buyers—especially those relocating from higher-cost areas.
Chattanooga residents earned a median household income of $57,703 between 2018 and 2022. The national median for that period was $75,149. That at least partially explains the more reasonable housing costs.
Retirees also have favorable tax treatment in Tennessee, since the state is one of nine that does not have an individual income tax.
Huntsville, AL: Best for Affordability
If finding an affordable town to live in is your number one priority, don’t overlook Huntsville, Alabama. It came in as the most affordable retirement spot in our study based on a combination of low average home prices and rent combined with a decent median income.
According to data from the U.S. Census Bureau, residents of Huntsville, Ala. had a median household income of $67,874 between 2018 and 2022. This is below the national median of $75,149 but it stretches farther given relatively lower median home values and rent prices.
The median home sale price in Huntsville is $297,200 which puts its income-to-home value at about 22.8%. That compares favorably to the 17.4% income-to-home value nationally, based upon a median home price of $431,000 as of the third quarter of 2023.
Even better, Alabama has the second lowest property taxes in the nation.
Rental Costs
The same is true for Huntsville renters. The median rent is $1,051 per month. Residents have a median monthly income of $5,656, which means it takes around 18.6% of income to cover rent. This is below the national figure of 22% of income that is needed to pay the rent (based on the national median rent of $1,379 and $6,262 national median monthly household income).
Besides affordability, Huntsville has job opportunities. The unemployment rate is just 2.1% (as of November 2023), which was over a percentage point and a half lower than the national rate of 3.7% (January 2024). Whether or not you decide to return to work post-retirement, strong employment is a sign that an area is thriving overall.
Ocean Springs, MS: Best for Homebuying
Homes are very affordable in Ocean Springs, Mississippi, with a median home sale price of $254,400 compared to $431,000 nationally.
The median annual income of $72,500 in Ocean Springs makes up about 28.5% of the area’s median home sale price—compared to the national figure of 17.4%, based on a median income of $75,149.
Only Birmingham, Alabama, had a lower homebuying cost.
Another perk of retiring in Mississippi is that the state does not tax retirement income, including pensions.
What Are the Best Foreign Countries for U.S. Retirees?
If you’re ready to make the leap, there are foreign destinations that have lower living costs, great climates, and good infrastructures. Some are so eager to attract U.S. retirees that they offer special benefits. At the top of the list of welcoming destinations are Costa Rica, Mexico, Panama, Colombia, Portugal, and Ecuador.
Which Are the Best States for U.S. Retirees?
Based on affordability, quality of life, and healthcare, our top picks include Florida. No surprise there, but there are other good choices including Colorado, Delaware, Virginia, and North Dakota.
Which Are the Worst States for U.S. Retirees?
Unless you’re very wealthy, the worst states to retire in are the states that have high costs of living combined with high taxes and little or no tax breaks for retirees. The current worst list includes New York, Connecticut, California, New Jersey, Vermont, and Maine.
The Bottom Line
If you’re planning to relocate, it’s important to weigh a number of factors including proximity to family, climate, and personal preferences as well as practical considerations like cost of living.
As Americans live longer and healthier lives, having an affordable retirement vision is more important than ever. Where you decide to settle down can have a big impact on how far your retirement savings will take you and the type of lifestyle you can afford.
If you’re thinking of moving South, Chattanooga, Tennessee, Huntsville, Alabama, and Ocean Springs, Mississippi are all worth exploring.