This Midwestern U.S. State Is the Best Place to Retire for Affordable Cost of Living and No Income Tax

South Dakota recently topped a list of the best retirement states in 2024.

Financial planning is essential when deciding where to spend your retirement years. According to the Social Security Administration, the average benefit for January 2024 was $1,907, and the average spending was $4,345, so it's crucial to maximize your savings and get more bang for your buck. That includes moving to a state with reasonably priced housing, a low tax burden for seniors, and a cost of living that's ideally below the nation's average. And that state, according to a recent study by the financial website Insider Monkey, is South Dakota.

"Affordable cost of living, friendly communities, and adequate healthcare make it a true all-rounder destination. There is no state income tax, making it a very tax-friendly state to retire to," the website stated. It also highlighted that South Dakota is filled with natural beauty, including ​​the Black Hills, Badlands National Park, and its many lakes and rivers.

"Retirees can enjoy outdoor activities such as hiking, fishing, boating, and wildlife viewing, the perfect way to lead an active lifestyle," it added.

South Dakota is home to a little over 900,000 residents, of which about 18 percent are aged 65 or over. The state's cost of living index is 92.4, the seventh lowest in the country. If you choose to live in one of the state's larger metro areas, your monthly expenses will be higher than in other parts but still a lot more affordable than the nation's average.

The median home value in the state is $292,551, which is about $50,000 less than the median for the rest of the country. And if you're looking to invest in property that will increase its value over time, consider cities like Florence, Henry, and Lead, where prices have skyrocketed by more than 50 percent in the past five years. Your retirement plans don't include buying a new home? Then plan to spend about $759 for a one-bedroom apartment in South Dakota.

Second on Insider Monkey's list is Iowa — Des Moines has one of the most affordable housing markets in the country — with a cost of living index of 90.3, and the third spot is occupied by Wyoming for its tax-friendliness. Florida and Michigan are fourth and fifth, respectively.

You can see the full ranking at insidermonkey.com.

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