Retirees thought these states were ‘cheap,’ but hidden costs are making them flee. Here’s where they're moving — and the expenses that drove them out

But now many retirees are finding that the break on state income taxes isn’t enough to offset higher real-estate prices, property taxes, home insurance costs and the cost of groceries.

That means older Americans are casting their gaze to other states. In fact, GoBankingRates reports that states formerly considered “expensive” are emerging as top retirement destinations (1).

Here’s what’s going on, and what to consider as you choose where to nest with your nest egg.

Why low (or no) income tax doesn't always equal affordability

While neither Florida nor Texas taxes retirement income or Social Security benefits, both states have seen a sharp increase in other costs that hit retirees particularly hard.

According to WalletHub, Florida now has one of the highest housing costs in the nation, with only three other states ranking higher, including California and Hawaii (2). Home insurance rates now top $14,000 annually.

Florida has a higher-than-average state sales tax of 6.98%. Local governments often add their own levies, including high property taxes, which further reduce retirees’ buying power. (3)

Texas faces similar issues. With no state income tax, local governments rely heavily on property taxes.

The Tax Foundation ranks Texas seventh-highest in the country for property tax rates, creating a recurring expense that can increase even as retirement income remains flat. (4)

Even for retirees who rent, higher property taxes can drive up rental prices.

Meanwhile, states long labeled as “expensive” are performing better in areas retirees increasingly care about.

WalletHub’s 2025 rankings placed Massachusetts first overall for livability, citing access to health care, quality of life, and public safety as core metrics.

Florida ranked sixth on the same study. Texas fell to 38th place.

These rankings suggest that affordability alone doesn’t guarantee financial stability.

Rising insurance premiums, climate risk and property-tax hikes can quietly erode the savings retirees worked decades to build.

How to choose the right place to retire

For retirees, the conversation is no longer just about weather — or whether there’s a state income tax.

Now retirees have to factor in quality of life, access to health care, community amenities and overall financial predictability as well.

Here's how to make an informed decision.

Consider true affordability

Ask whether you could comfortably absorb sudden insurance hikes, higher property taxes or out-of-pocket health expenses without dipping into emergency savings.

Fixed incomes leave little room for surprises, and housing costs are no longer as stable as they once were in many states.

Prioritize healthcare access

States that rank well for hospital quality, insurance coverage and preventative care may help retirees avoid higher medical costs down the road, even if upfront living expenses appear higher.

Health care is one of the biggest expenses in retirement, so this should not be overlooked. (5)

Think about community and family resources

Living closer to family or having access to community resources, like recreation departments or senior living communities, can also reduce long-term care needs.

Consider other public resources, such as access to public transit, which could reduce costs and help you stay independent longer.