3 Cheapest States to Retire In for 2026
Key Points
Two of these states are located in the Midwest, and one is in the South.
All three states do have other advantages besides relatively low costs.
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When done right, retirement can truly be a golden age for people in their later years. It can, however, also be quite expensive, particularly given the lack of salaried income after exiting the workforce.
With that in mind, here's a look at the three states with the lowest cost of living, drawn from The Motley Fool's recent report "The Best States to Retire to in 2026, Ranked by What Retirees Value Most."
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1. Arkansas
A state with Southern charm in abundance, Arkansas isn't typically on the list of top retiree targets. It should be, however, since it has plenty of other advantages besides very modest costs.
Fans of the outdoors can easily enjoy some of the South's most beautiful natural attractions. There are the Ozark Mountains, considered by many to be the crown jewel of wild Arkansas. This always-impressive range also includes several sites that are star attractions in their own right, namely the Buffalo National River, Blanchard Springs Caverns, and Whitaker Point.
Those looking for some culture and a more urban environment can find what they need in the state's capital and largest city, Little Rock. The downtown area is packed with entertainment and dining options, with certain sections being eminently walkable for seniors who like exploring on foot.
Other advantages for retirees choosing to live in Arkansas include special tax benefits, such as no taxes on Social Security income.
As ever, though, there's the usual good/bad trade-off with this state. Its healthcare score ranked near the bottom among all 51 locales in The Best States to Retire, and numerous municipalities have relatively high crime rates.
2. Indiana
Shifting to the Midwest, the most cost-advantageous state in the region is Indiana, largely because of the preponderance of rural areas, which helps draw seniors seeking a relatively quiet, unhurried post-career life.
That isn't to say that Indiana lacks bustle. Indianapolis is one of the most thriving cities in the Midwest. Many and varied attractions make the city unique, with its blend of professional sports (including the Indianapolis Motor Speedway, which hosts the renowned Indy 500 annual race) and high culture, including the Newfields campus, home to the world-class Indianapolis Museum of Art.
Like Arkansas, Indiana gives retirees a full break on Social Security benefits. Those on a budget will also appreciate its very low (2.95%) flat state income tax, which, by the way, is being lowered every year. They will also be fond of its complete lack of estate or inheritance taxes.
As for the downsides of senior life in Indiana, again like Arkansas it scores quite low in our rankings for healthcare. Its climate can be unfriendly, too, with summers that are frequently sticky-hot, and winters that can be rather frigid and gloomy.
3. Ohio
The third-least-expensive locale is the Buckeye State, which, among the group, holds by far the best overall score (No. 6) in the report. Ohio did particularly well not only in its cost of living but also in the category many retirees consider primary -- quality of life.
What's impressive about the state is that these advantages aren't confined to one locale or region. In The Motley Fool's companion study, "The 50 Best Places to Retire in the U.S. in 2026, Ranked by What Retirees Value Most," three belong to Ohio. Of these, Cuyahoga County (home to its second largest city, Cleveland) earned a total retirement score of 58, putting it in fourth place among the 50.
That stands to reason, as culturally the city punches above its weight with the sprawling Rock & Roll Hall of Fame and the prestigious Cleveland Museum of Art. Foodies will also appreciate the many offerings at the West Side Market. Importantly for those of an advanced age, Cleveland has healthcare facilities that are reputed as some of the best among U.S. cities.
As for disadvantages, Ohio doesn't offer as many tax benefits as some other states, and public transportation can be lacking even in larger cities. And typically for the Midwest, the state is often blustery and witheringly cold in winter.
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