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A financial advisor emphasizes the importance of factoring in state income and property taxes when planning for retirement. Photo Credit: Freepik

For generations, retirement in America was sold as a reward after decades of hard work. A slower pace of life. Warm weather. Financial peace. In 2026, that dream is becoming far more complicated.

A new study by MoneyLion has revealed dramatic differences in retirement costs across the US, with some states demanding enormous savings while others remain relatively affordable for older Americans living on fixed incomes. The findings arrive at a time when inflation, healthcare expenses, and housing costs continue to strain retirees and those nearing retirement age.

At the centre of the divide are two very different states: Hawaii and West Virginia. One represents paradise with an enormous price tag. The other offers one of the cheapest paths to retirement in America.

Hawaii Is the Most Expensive State to Retire

According to the MoneyLion study, Hawaii has the highest retirement living costs in the country. The annual necessities cost for retirees in the island state stands at $90,752. A comfortable retirement lifestyle climbs to more than $181,000 annually before Social Security income is considered.

Even after Social Security payments are factored in, retirees are estimated to need around $156,610 each year to live comfortably. The savings required are equally striking. Someone who begins saving at age 20 would need to put aside roughly $5,800 every month until retirement at age 65. Waiting until age 30 increases the monthly target to more than $7,400.

Despite the financial pressure, Hawaii continues to attract retirees drawn by its climate, scenery, and lifestyle. Yet financial advisers warn that taxation and housing costs can quickly overwhelm retirement budgets.

Ted Jenkin, managing partner at Exit Wealth Advisors, told FOX Business that taxes are often overlooked during retirement planning. He said: 'Two of the biggest expenses a retiree needs to look into are the state income taxes and real estate property taxes that will factor into your budget.'

California Continues to Push Retirees Out

California ranked as the second most expensive retirement destination. The study estimated the state's annual necessities cost at $73,387, while a comfortable retirement lifestyle rises to nearly $122,000 per year after Social Security adjustments.

For many retirees, California's soaring property values and high living costs have become difficult to manage. The trend has accelerated migration towards lower-tax states in recent years, particularly among older Americans seeking to preserve retirement savings.

West Virginia Emerges as the Cheapest Option

At the opposite end of the ranking sits West Virginia. The state recorded the lowest annual retirement necessities cost in the study at just $29,059. A comfortable retirement lifestyle was estimated at $58,117 annually.

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A comfortable retirement lifestyle in West Virginia was estimated at $58,117 annually. (PHOTO: Richard Sagredo/Unsplash)

After Social Security income is included, retirees may need around $33,223 per year. The savings targets are dramatically lower than those required in states like Hawaii or California. A person beginning retirement savings at age 20 would need to save approximately $1,230 each month to retire comfortably in West Virginia. For many Americans facing uncertainty over pensions and savings, that gap could prove life-changing.

Why Florida, Texas, and Tennessee Remain Popular

States with lower tax burdens continue to attract retirees in large numbers. Florida, Texas, and Tennessee all ranked in the middle range for retirement costs, but continue to benefit from favourable tax policies. Florida's annual necessities cost was estimated at $44,170, while Texas and Tennessee were both close to the $38,000 mark.

Thomas Aiello, vice president of federal affairs at the National Taxpayers Union, explained why these states remain attractive to retirees. He told FOX Business: 'Places like Florida, Texas, and Tennessee offer no state income tax, no estate tax, relatively low property taxes, and a policy environment generally more favourable to taxpayers.'

For retirees trying to stretch savings over decades, those tax advantages can make a substantial difference.

Retirement Anxiety Is Growing Across the US

The report also reflects broader concerns about retirement readiness in America. A recent BlackRock survey found that 63 per cent of Americans have less than $150,000 saved for retirement.

For many middle-income workers, the rising cost of housing, healthcare, and everyday essentials is creating growing uncertainty about where, and whether, they can afford to retire comfortably. Increasingly, retirement decisions are no longer driven purely by lifestyle or weather. They are being driven by economics.

Cheapest States to Retire in 2026

The most affordable states in the MoneyLion study included:

  • West Virginia
  • Mississippi
  • Louisiana
  • Arkansas
  • Alabama

Most Expensive States to Retire in 2026

The highest retirement costs were found in:

  • Hawaii
  • California
  • District of Columbia
  • Massachusetts
  • Washington

For millions of Americans approaching retirement, one reality is becoming increasingly clear. Where they choose to live may now matter as much as how much they manage to save.

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