8 Budget-Friendly Places to Retire, Even Without a Nest Egg

Recent retirement data points to a troubling reality: many Americans are not financially prepared for retirement, and about half of people over 50 worry they will not have enough money to live on later in life.

In much of the United States, Social Security alone is unlikely to cover retirement costs, especially for older adults dealing with debt or ongoing medical needs.

Still, there are places in the country where the cost of living remains manageable. People hoping to retire soon, but unsure whether they can afford it, may want to consider relocating to one of these lower-cost areas. Below is a look at common retirement expenses and some of the best places to stretch a limited budget.

Many Americans 50 and older have no retirement savings

AARP research shows that 20% of Americans aged 50 and older have no retirement savings. With living costs climbing, inflation pushing up gas and grocery prices, and health care getting more expensive, many people cannot afford to retire where they currently live.

What to factor in when choosing a retirement location

Cost of living should be one of the biggest considerations when deciding where to retire. Housing is a good place to start, since home prices and property taxes can differ sharply from one location to another. Everyday expenses such as groceries, utilities, and transportation should also be included. It is also smart to look closely at state tax rules, because some states tax Social Security benefits while others do not, and many states offer property tax relief programs for seniors.

Fidelity estimates that people age 65 and older retiring in 2026 will spend more than $185,000 on health care and medical costs during retirement. That means many retirees may need more money than they expect.

Other considerations that can shape your ideal retirement spot

Climate is another major factor when weighing retirement destinations. Some people may want room for a garden or acreage, while others may be ready to give up yard work and prefer a condo or townhome.

If being close to family matters, it helps to identify places within driving distance of loved ones. And if you have a medical condition that requires a specialist or certain rehabilitation services, make sure the areas you are considering can provide that access.

The Social Security benefit many retirees depend on

Although many older adults have no retirement savings, a lot of them rely on Social Security to cover basic needs. The average Social Security benefit in 2026 is $2,095. With the 3.6% COLA in 2027, that amount is expected to rise to $2,170.

That still will not pay for most monthly expenses, which may include housing, food, home maintenance, utilities, health care, and other incidentals. Even so, there are places in the United States where Social Security can come close to covering the bills.

Affordable retirement cities in the Midwest

The Midwest is known for relatively affordable housing. U.S. News ranks Decatur, Illinois, and Bay City, Michigan, as the No. 2 and No. 3 cheapest places to retire.

While much of the region deals with long winters, retirees who enjoy all four seasons and do not mind colder weather can benefit from the lower-cost lifestyle many of these communities offer.

Affordable retirement cities in the South

For those who prefer warmer weather, the South also offers several affordable retirement choices. U.S. News ranks Eagle Pass, Texas, as the No. 1 cheapest place to retire. Fort Smith and Springdale, Arkansas, also appear on the list.

Florida has additional budget-friendly options for retirees, including Gainesville, Jacksonville, and Palm Coast, each with a cost of living below the national average, according to Empower data.

How to compare affordable retirement destinations

If you want to research more possible retirement spots, you can review Zillow home values, Bureau of Labor Statistics consumer expenditure data for retirees, and the Tax Foundation's property tax data. Together, these sources can help you narrow down the best city for your needs.

In general, retirees with limited income are better off avoiding expensive metro areas such as New York City and San Francisco, where housing and utility costs are high. It is also wise to rule out cities with steep property taxes that do not provide meaningful tax breaks for seniors.