Where Should I Retire?: We need lower taxes and a lower cost of living so we can retire on $38,000 a year—where can we go?

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Hello,

I am hoping for suggestions on where my husband and I could afford to live on our $38,000 annual budget. He is 71, disabled and receives Social Security. I am 64. We are looking for a more friendly retirement state with lower taxes and a lower cost of living.

I have recently retired from a job with the state of California and get a pension. However, after six months of retirement, I am ready to re-enter the workforce. Even though our budget will be more in the future, I would like a place that we can afford on our current budget.

Thank you,

Derinda

Dear Derinda,

I’ve got some good news for you: most states don’t tax Social Security checks. Depending on how the state treats your pension income, that may be tax-free too. Or you may just pay a small amount — even in California. (I used this retirement tax calculator from Smart Asset, but you should verify your numbers with a tax pro.)

There are always other taxes, though, starting with sales taxes. And city services, from road repairs to senior centers and parks, need to be funded somehow.

You didn’t indicate any preference for where in the country you’d like to live. Given your husband’s disability, easy access to medical care may be even more important than it is for other retirees. I also looked for a place on solid economic footing so that you’ll have an easier time finding a job.

I budgeted for rent of $1,000 or less a month, which ruled out areas where home prices (and rents) have skyrocketed in the wake of COVID-19. That put my focus on the center of the country, though you can also find affordable options in the South. If you want to stay west, would you consider Spokane, suggested here?

Of course you may be comfortable spending more on housing.

One additional tip: using a site like Realtor.com (which like MarketWatch is owned by News Corp.), start with one community, set your rent and bedroom parameters, and then zoom out and scroll. You’ll see where you can find rentals that meet your criteria. The same approach works for prospective buyers. Then you can do your research about the city or town.

Read: There is more to picking a place to retire than low taxes—avoid these 5 expensive mistakes

Finally, before you make a move, please think about how you’ll build a new network of friends. Those social connections are so important to our happiness, as this person found. Do test out your shortlist with short-term rentals, living as a local, not as a tourist, to see if what sounds good on paper is in fact a good fit in real life.

Here are three suggestions to get you started. I hate to repeat myself, so you’ll find more suggestions in all the other “Where Should I Retire?” columns.

Owensboro, Kentucky

One of Owensboro’s many ‘Friday After 5’ concerts along the Ohio River.

Courtesy Visit Owensboro

This city of 60,000 along the Ohio River in western Kentucky comes with a low cost of living—and a big music scene.

Start with Friday After 5—that’s free concerts at five venues along the Ohio River every Friday from Memorial Day to Labor Day. Then there is the Nashville Songwriters Series every other Thursday featuring Nashville artists; admission is only $10. (Nashville is less than two hours away.) And many local restaurants have music offerings, too.

Owensboro also is the birthplace of bluegrass and home to the National Bluegrass Hall of Fame and Museum. I’m told contemporary strains of bluegrass are far from the stereotype of an old guy with a banjo.

You’re not into bluegrass and country? Check out RiverPark Center, the performing arts center that brings in traveling Broadway shows and other events. Or wander through the Western Kentucky Botanical Garden.

The cost of living in Daviess County is about 12% below the national average. The transit system has multiple bus routes, and fares for those 60 and older or disabled are just 50 cents. Your local hospital is the 477-bed Owensboro Health Regional Hospital.

Average winter highs are in the 40s; in the summer, the average high is around 90. You’ll also average about 10 inches of snow a year.

Take a look at the rental market here. The median list price for a home in June 2022 was $208,750, according to Realtor.com. Here’s what’s for sale right now.

Eau Claire, Wisconsin

Eau Claire loves its murals.

Courtesy Vis Eau Claire

Here’s another town with some personality; Eau Claire, a city of nearly 70,000 residents market itself as “the Indie capital of the world”.

The eclecticness starts with the annual sculpture tour, when dozens of original pieces in a range of styles are installed mostly downtown. Some become permanent installations, while others are replaced every year. Eau Claire aims to surpass Sioux Falls, S.D., to have the largest sculpture tour in the nation.

Sculpture not your thing? Then check out more than 20 permanent murals across the city. See what’s on at the new performing arts center, the Pablo Center at the Confluence.

Go on the cheese curd crawl. (Hey, it’s Wisconsin.) Pair that with the breweries; the county has an above-average number, despite only having 105,000 people. And this is a place that thinks ginormous pumpkins (think 2,000-pounders) deserve their own festival.

The indie music scene starts with local celeb Justin Vernon and his Bon Iver band.

And then there’s the university; the University of Wisconsin-Eau Claire has more than 9,000 students.

I mentioned healthcare as a consideration for where you put down roots. Not only does Eau Claire County have an above-average number of primary care doctors per capita but it has an outpost of the Mayo Clinic. The main Mayo Clinic is about 75 miles away (the wider Minneapolis-St. Paul metro area is about a 90-minute drive.).

The cost of living here is about 11% below the national average. Bus tickets cost seniors and the disabled 85 cents.

Summers here will be on the cooler side, with average highs in the low 80s. But winter will be cold, with average highs in the 20s. And you’ll get close to 4 feet of snow a year.

Here’s a sense of the rental market. The median list price of homes for sale in June 2022 was $295,900, according to Realtor.com, which calls it a buyer’s market. Here’s what’s on the market now.

Kansas City

Perhaps you’re more interested in a bigger city. Nearly 650,000 people live in Kansas City, Mo., and smaller Kansas City, Kansas, across the Kansas and Missouri rivers; 1.7 million are in the broader metro area. Yet for all that city, the cost of living is about 7% below the national average, and you may not owe any state income tax on the Missouri side.

You’ll find the sort of art museums and performing arts options that you’d expect in a metro this size, including First Friday art crawls in the arts district. But you’ll also find some unique museums: for jazz, baseball’s Negro Leagues, World War I and bank robber Jesse James.

Don’t forget pro sports: baseball, football and soccer.

You can’t talk about Kansas City without getting into barbecue (its style involves a sweeter, thicker sauce), but its restaurant scene also has some James Beard nominees.

Oh, and Kansas City loves fountains. It even has a special day — Greater Kansas City Fountain Day — when the 48 publicly operated ones are turned on after the winter. More than 150 other fountains are registered with the city, and Kansas City likes to claim it has more fountains than any city aside from Rome.

Another surprise: Kansas City isn’t flat as a pancake. This video gives you a sense of what you’ll find. Explore some of the dozens of miles of paved trails in the area accessible to someone with a disability. Look here for other outdoor adventure possibilities.

Transit? RideKC buses are free through 2023. The downtown streetcar is also free. The local airport’s expansion also should be completed in 2023.

Healthcare here begins with the University of Kansas Hospital (the No. 1 hospital in Kansas, according to U.S. News & World Report) and St. Luke’s Hospital of Kansas City (U.S. News ranks it second in Missouri).

The weather here will be a touch cooler than Owensboro, with average summer highs in the upper 80s and average winter highs around 40. You’ll likely get just over a foot of snow each winter.

You can see what’s for rent in Kansas City, Mo., here and on the Kansas side here. Or the suburbs might appeal. The median list price for homes on the market in Kansas City, Mo., was $249,900 in June 2022. Here’s what’s on the market now. The Kansas side is slightly cheaper.

Not quite right? What about Tulsa, suggested here?

Readers, where should Derinda and her husband retire? Leave your suggestions in the comments section.