The Most Expensive States to Retire in


More than half of all Americans—56%—are concerned that they won’t be able to achieve a financially secure retirement, according to a study from the National Institute on Retirement Security. The 2022 Anytime Estimate Retirement Finances Survey found that financial stress from the COVID-19 pandemic caused many Americans to stop saving for retirement entirely. In fact, only 63% of adults are saving for retirement—down from a pre-pandemic level of 93%, and the median amount Americans have saved for retirement is just $71,500. These and a host of studies and surveys support what many Americans already know: The majority of us are financially unprepared for retirement.

Many people who don’t have the money to retire at home may look for alternatives. Some people might consider moving abroad where there is a lower cost of living and access to affordable healthcare.

But where to go? We looked at data from Bankrate’s “Best and Worst States to Retire” 2023 list and combined this with the state tax burden ranking for tax year 2022 by The Tax Foundation, a private tax policy research organization, to determine which states are the most expensive. We took into consideration each state’s cost-of-living rank as well as its tax-rate rank. We looked at the 10 worst (i.e., most expensive) states in each category, and found six that made top 10 appearances in both categories—making them the priciest places to retire, overall. Here’s the roster, starting with the most expensive state.

New York

  • Affordability rank: 42
  • Tax rate rank: 50
  • State individual income tax: 4.0% to 10.9%
  • State sales tax: 4.0% (up to 4.875% total sales tax depending on the municipality)
  • Estate/inheritance tax: Yes/No

Although as of 2022 New York doesn’t have the highest cost of living in the U.S., the state’s 15.9% total tax burden for 2022 is well above the national average. In fact, it’s the highest in the country.

The state collected $3,407 per capita in state and local taxes in 2022 (the highest amount in the country), and state and local governments collected about $3,180 per capita in property taxes.


  • Affordability rank: 48
  • Tax rate rank: 49
  • State individual income tax: 3.0% to 6.99%
  • State sales tax: 6.35% (7.75% for certain luxury items)
  • Estate/inheritance tax: Yes/No

Connecticut is the third most expensive state in terms of cost of living. Its 2022 tax burden of 15.4% ranks the second highest in the nation, and the state collected $2,725 per capita in state and local taxes. Property tax collections amount to about $3,215 per capita (the third highest in the country).

Connecticut offers no exemptions or tax credits for most pensions or other retirement income—including Social Security benefits (unless the taxpayers have a federal adjusted gross income of less than $75,000, or less than $100,000 for married taxpayers filing jointly). The exceptions are Railroad Retirement benefits and military pensions, which are both excluded from taxes.


  • Affordability rank: 49
  • Tax rate rank: 46
  • State individual income tax: 1.0% to 13.3%
  • State sales tax: 7.25%
  • Estate/inheritance tax: No/no

California has the second-highest cost of living and ranks fifth in terms of tax rates. The individual income top tax rate of 13.3% is the highest among states that impose an individual income tax. Its 2022 tax burden is 13.5% and the state collected $2,411 per capita in state and local taxes (the fourth on the list).

State and local governments collect about $1,840 per person for property taxes. The state sales tax is 7.25% (the highest among the states mentioned here), and the combined rate in special city/county taxing districts can be as high as 8.82%. Although Social Security and Railroad Retirement benefits are exempt from taxes in California, all other sources of retirement income are fully taxed.

New Jersey

  • Affordability rank: 46
  • Tax rate rank: 45
  • State individual income tax: 1.4% to 10.75%
  • State sales tax: 6.625%
  • Estate/inheritance tax: No/yes

New Jersey has the fifth highest cost of living and a tax burden of 13.2% as of 2022. The state collected $1,692 per capita in state and local taxes, while property tax collections are about $3,513 per person.

Until 2018, New Jersey imposed both an inheritance tax and an estate tax. While close relatives are generally excluded from the inheritance tax, other beneficiaries face tax rates ranging from 11% to 16% on inheritances over $500. Since Jan. 1, 2018, the estate tax is no longer imposed for individuals who died on or after that date.


  • Affordability rank: 45
  • Tax rate rank: 47
  • State individual income tax: 3.35% to 8.75%
  • State sales tax: 6.0%
  • Estate/inheritance tax: Yes/no

Vermont has the sixth-highest cost of living and the fourth-highest tax rate. Its 2022 tax burden is 13.6%, and it collected $1,312 per capita in state and local taxes (16th in the rank). Property tax collections amount to about $2,928 per capita (fifth in the rank).

Vermont taxes most retirement income at ordinary income tax rates, including Social Security benefits, which are taxed up to 85% (in sync with the federal rate) of benefits. Railroad Retirement benefits are exempt.


  • Affordability rank: 41
  • Tax rate rank: 41
  • State individual income tax: 5.8% to 7.15%
  • State sales tax: 5.5%
  • Estate/inheritance tax: Yes/no

Maine is both the 10th most expensive state to live in and also in terms of its tax rate, with a tax burden of 12.4% as of 2022. The state collected $1,199 per capita in state and local taxes (16th in the rank), while property tax collections amount to $2,772 per capita (sixth in the rank).

While there is no inheritance tax, the estate tax rates in Maine range from 8% to 12%. The tax applies on estates worth more than $6.01 million for tax year 2022 and those worth more than $6.41 for tax year 2023. While Maine does not tax Social Security income, other forms of retirement income are taxed at rates as high as 7.15%.

The Bottom Line

Several states have tried to make their tax systems more appealing to retirees. Maine, for example, boosted the amount of pension income you can exclude from state taxes, and Nebraska is phasing out taxation of Social Security income. The federal exclusion for estate tax is $12.06 million in 2022 and $12.92 million in 2023, and both New York and Maryland are incrementally increasing their own exemptions to match the federal amount.

Whether you are concerned with making your money last longer during retirement or leaving more assets to your children, the local cost of living and tax rate may be an important consideration during retirement. Not that non-financial factors—your interests, hobbies, comfort, health, and proximity to friends and family—aren’t important when choosing a retirement destination. Just bear in mind that wherever you retire (be it in place, in another state, or abroad) can have a considerable impact on your finances, as well.


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