The 20 Best States for Your Retirement

20. Missouri

• Population: 6.1 million
• Share of population 65+: 15.4% (U.S.: 14.5%)
• Cost of living: 10% below U.S. average
• Average income for 65+ households: $43,540 (U.S.: $53,799)
• Average health care costs for a retired couple: Below average at $408,746 (U.S.: $423,523)
• Tax rating for retirees: Mixed

The Show Me State has little to tell in the way of retirement advantages. The low living costs go hand in hand with relatively low household incomes. And the tax situation is moderate: If your adjusted gross income is less than $85,000 for single filers ($100,000 for couples filing jointly), your Social Security benefits are not taxed and you can deduct a portion of your public retirement benefits. But distributions from individual retirement accounts, 401(k)s and other employer retirement plans are taxable at ordinary income tax levels, which hits the top rate of 6% on more than just $9,000 of taxable income.

And one notable downside: Missouri ranks low at 42nd in the nation for senior health with a high percentage of low-care nursing home residents and a high prevalence of smoking, according to the United Health Foundation.

19. Ohio

• Population: 11.6 million
• Share of population 65+: 15.5%
• Cost of living: 12% below U.S. average
• Average income for 65+ households: $42,667
• Average health care costs for a retired couple: Below average at $417,912
• Tax rating for retirees: Mixed

Ohio's status as a destination for retirees matches its geographic location: in the middle. Its living costs are well below average, but so is its average household income. Even the tax situation is just fine: Social Security benefits are not taxed, and retirees living in the Buckeye State can claim a tax credit of up to $200 on other retirement income.

18. Colorado

• Population: 5.4 million
• Share of population 65+: 12.7%
• Cost of living: 17% above U.S. average
• Average income for 65+ households: $54,108
• Average health care costs for a retired couple: Below average at $415,210
• Tax rating for retirees: Mixed

Retirees in the Centennial State may just reach 100 years themselves. Colorado ranks fourth in the United Health Foundation's senior health rankings, with particularly high marks in clinical care and positive behaviors. Among its health-related strengths, the state has low rates of obesity and physical inactivity in seniors. It also has a low poverty rate among the 65+ population at 7.4%, compared with 9.3% for the nation as a whole.

17. Wyoming

• Population: 583,029
• Share of population 65+: 13.8%
• Cost of living: Same as U.S. average
• Average income for 65+ households: $45,305
• Average health care costs for a retired couple: Above average at $430,916
• Tax rating for retirees: Most Tax Friendly

The Equality State knows how to keep an even budget. It ranks fifth in the nation for its fiscal health, holding more than enough cash to cover its obligations (thanks to plenty of revenues from oil and mineral rights), according to the Mercatus Center. That bodes well for its ability to maintain its generous tax benefits for retirees and all its residents. There's no state income tax at all, and the state sales tax is a modest 4.5%.

16. Washington

• Population: 7.1 million
• Share of population 65+: 14.0%
• Cost of living: 21% above the U.S. average
• Average income for 65+ households: $55,577
• Average health care costs for a retired couple: About average at $420,480
• Tax rating for retirees: Tax Friendly

The Evergreen State can be a great place to stay refreshed throughout retirement. Washington boasts more than 3,000 miles of coastline and two major mountain ranges: the Cascades and the Olympic Mountains. So active retirees have plenty of opportunities to boat, swim, climb, hike and more. No wonder the state ranks second in the nation (after California) for physically active seniors, according to the United Health Foundation's senior health rankings report.

15. Delaware

• Population: 934,695
• Share of population 65+: 16.5%
• Cost of living: 11% above U.S. average
• Average income for 65+ households: $52,387
• Average health care costs for a retired couple: Below average at $414,416
• Tax rating for retirees: Tax Friendly

The First State offers retirees first-rate tax advantages. It does not tax Social Security benefits and exempts $12,500 of investment and qualified pension income for taxpayers age 60 and older. Above that, income tax rates are modest, ranging from 2.2% to 6.6%. Plus, there's no sales tax at all. Health care costs are also friendly to retiree budgets with a 65-year-old couple's expected to pay 2.2% less than the U.S. average. Living costs, otherwise, are relatively high—particularly considering the below-average household incomes for seniors.

14. Pennsylvania

• Population: 12.8 million
• Share of population 65+: 16.7%
• Cost of living: 3% below U.S. average
• Average income for 65+ households: $48,706
• Average health care costs for a retired couple: Below average at $411,414
• Tax rating for retirees: Most Tax Friendly

The Keystone State locks in an affordable standard of living for retirees. Health care costs for a 65-year-old retired couple come in 2.9% below the national average. And the tax situation, among the 10 friendliest in the U.S. for retirees, can boost your bottom line even more: Most retirement income, including Social Security benefits, is not taxed. Unfortunately, Pennsylvania's own budget is not so sturdy. With not enough cash to cover short- or long-term obligations, its fiscal health ranks a low 45th among all 50 states, according to rankings from the Mercatus Center at the George Mason University.

13. Iowa

• Population: 3.1 million
• Share of population 65+: 15.8%
• Cost of living: 12% below U.S. average
• Average income for 65+ households: $41,194
• Average health care costs for a retired couple: Below average at $399,991
• Tax rating for retirees: Not Tax Friendly

Low living costs are the big advantage for retirees in the Hawkeye State. Health care costs are especially affordable, at 5.6% below the U.S. average, based on what a 65-year-old retired couple can expect to pay for the rest of their lives. That should help the below-average household income for seniors stretch further. But the tax situation may be burdensome: While Social Security benefits are untaxed, some retirement income may get hit by the high top rate of 8.98%. On the plus side, people age 55 or older can exclude up to $6,000 if single ($12,000 for joint filers) of taxable retirement income.

12. South Carolina

• Population: 4.8 million
• Share of population 65+: 15.8%
• Cost of living: 7% below the U.S. average
• Average income for 65+ households: $43,340
• Average health care costs for a retired couple: Below average at $408,343
• Tax rating for retirees: Tax Friendly

If the mild weather and southern charm of the Palmetto State aren't enough of a retirement draw, surely the affordability can tempt you. On top of below-average living costs, the tax situation goes easy on a fixed income, too. South Carolina doesn't tax Social Security benefits and offers generous exemptions on other types of retirement income. It also does not levy an inheritance or estate tax. Property taxes tend to be very low.

11. Idaho

• Population: 1.6 million
• Share of population 65+: 14.3%
• Cost of living: 5% below the U.S. average
• Average income for 65+ households: $40,248
• Average health care costs for a retired couple: Below average at $407,942
• Tax rating for retirees: Mixed

Put your potato jokes away, people. Idaho has some serious advantages to offer your retirement. The state's affordability, for one thing, makes it easy to stretch your retirement savings. And while the tax picture for retirees is mixed—there's a statewide sales tax of 6% and a state income tax that can go as high as 7.4%—Social Security benefits are not subject to state taxes. Idaho also is one of the states that doesn't have an inheritance or estate tax.

10. Utah

• Population: 2.9 million
• Share of population 65+: 10.0%
• Cost of living: 4% above the U.S. average
• Average income for 65+ households: $53,211
• Average health care costs for a retired couple: Below average at $412,641
• Tax rating for retirees: Least Tax Friendly

The Beehive State is a sweet spot for active retirees. Utah ranks second in the U.S. for the overall health of its 65-plus population, according to the United Health Foundation, and offers plenty of outdoor recreation options that are sure to keep you buzzing through retirement. There are five national parks, seven national monuments, five national forests and 43 state parks to host all your hiking, climbing, boating and skiing desires.

Maybe the activity can distract you from the state's unfriendly tax laws—Utah is one of the few states that taxes Social Security benefits, for example. Still, the tax man isn't keeping Utah's seniors down: Even with income levels for older adults just about average for the U.S., the state has the third-lowest poverty rate in the country for people 65 and older.

9. New Hampshire

• Population: 1.3 million
• Share of population 65+: 15.9%
• Cost of living: 18% above U.S. average
• Average income for 65+ households: $53,204
• Average health care costs for a retired couple: $424,052
• Tax rating for retirees: Most Tax Friendly

The Granite State's current tax situation gives retirees a solid advantage. Ranking among the 10 Most Tax-Friendly States for Retirees, it doesn't tax Social Security benefits or other retirement income or levy any sales tax. That savings helps balance out the above-average living costs and below-average household incomes. Another plus: New Hampshire ranks fifth in the U.S. for senior health, according to the United Health Foundation.

8. Florida

• Population: 19.9 million
• Share of population 65+: 19.1%
• Cost of living: 1% above U.S. average
• Average income for 65+ households: $51,187
• Average health care costs for a retired couple: About average at $425,025
• Tax rating for retirees: Most Tax Friendly

If you're looking to party with your peers through retirement, head to the Sunshine State. Nearly 3.8 million seniors call Florida home, giving its population the highest share of residents age 65 and older in the country. Indeed, it's famous for its retiree-haven status, what with its warm weather, beautiful beaches and seven-season-long "Golden Girls" endorsement. But the main attraction for retirees to the Sunshine State must surely be the tax situation. Florida has no state income tax, estate tax or inheritance tax, and it doesn't tax Social Security or other retirement income, either. Plus, those benefits are pretty secure: Florida scores top marks for fiscal soundness, according to a recent report from the Mercatus Center at George Mason University, in large part due to its abundance of cash versus short-term liabilities.

7. Virginia

• Population: 8.3 million
• Share of population 65+: 13.8%
• Cost of living: 7% above U.S. average
• Average income for 65+ households: $59,869
• Average health care costs for a retired couple: Below average at $408,950
• Tax rating for retirees: Tax Friendly

Virginia is for retirees. Overall living costs are above average, but high household incomes among seniors—11.3% higher than the national average of $53,799, to be exact—should be able to cover the spread. Plus, health care costs, a particularly worrying budget item for retirees, actually tend to be relatively affordable, with a retired couple in the state expected to pay 3.4% less than the average couple in the U.S. Plus, the Old Dominion doesn't tax Social Security benefits and allows residents 65 and older to deduct income up to $12,000 per person, depending on their income levels.

6. Alabama

• Population: 4.8 million
• Share of population 65+: 15.3% (U.S.: 14.5%)
• Cost of living: 13% below the U.S. average
• Average income for 65+ households: $44,934 (U.S.: $53,799)
• Average health care costs for a retired couple: Below average at $404,922 (U.S.: $423,523)
• Tax rating for retirees: Tax Friendly

Retirees are sure to love the Heart of Dixie. You can get many of Florida's retirement attractions—warm weather, nice beaches and plenty of golf—all at a lower price. The low living costs extend to health care, for which retirees can expect to spend 4.4% less than the average retired American couple. Taxes are easy on the budget, too, with income tax rates ranging from just 2% to 5%, and Social Security benefits being exempt.

5. Tennessee

• Population: 6.5 million
• Share of population 65+: 15.0%
• Cost of living: 12% below the U.S. average
• Average income for 65+ households: $47,891
• Average health care costs for a retired couple: Below average at $411,617
• Tax rating for retirees: Tax Friendly

The Volunteer State is a good choice for budget-conscious retirees. According to data from the Council for Community and Economic Research, every major metro area offers below-average living costs in almost every category of expenses, including health care—among the biggest financial concerns for aging Americans. Plus, Tennessee does not levy state income taxes, so your retirement income can stretch even further. And being economically healthy, Tennessee should have no issues maintaining its tax-friendliness; it ranks eighth of all states for fiscal soundness, according to a recent report from the Mercatus Center.

4. North Dakota

• Population: 736,162
• Share of population 65+: 14.2%
• Cost of living: 1% above U.S. average
• Average income for 65+ households: $46,763
• Average health care costs for a retired couple: Below average at $414,455
• Tax rating for retirees: Tax Friendly

Cross the border from South Dakota, our top state for retirement, and you'll find many of the same benefits: North Dakota offers retirees affordable living costs and overall low taxes. Unfortunately, retirement income, including Social Security benefits, gets no tax break in the Peace Garden State. But income taxes are so low—ranging from 1.1% to 2.9%—that it's still considered tax friendly. Plus, the state ranks second-highest for fiscal soundness, indicating that the economic health is stable enough to sustain a friendly tax environment.

3. Georgia

• Population: 10.1 million
• Share of population 65+: 12.3%
• Cost of living: 7% below the U.S. average
• Average income for 65+ households: $50,607
• Average health care costs for a retired couple: Below average at $404,460
• Tax rating for retirees: Most Tax Friendly

Warm weather and low living costs make Georgia just peachy for a happy retirement destination. Health care expenses are particularly affordable for retirees, with the sixth lowest average costs for a retired couple in the country. Plus, Georgia's favorable tax situation makes it one of the 10 Best States for Taxes on Retirees.

2. Hawaii

• Population: 1.4 million
• Share of population 65+: 16.1%
• Cost of living: 87% above the U.S. average
• Average income for 65+ households: $71,997
• Average health care costs for a retired couple: Below average at $375,273
• Tax rating for retirees: Tax Friendly

As you'd expect on an island paradise, living ain't cheap. In fact, Hawaii sports the highest living costs in the country. And yet, the landscape turns out to be idyllic for retirees' finances. For one thing, the seniors who have settled there can afford it. The average household income for people age 65 and older are the highest in the U.S. at 33.8% above the national level. Plus, health care costs are surprisingly affordable at 11.4% below the national average. Credit that to the Aloha State's highly efficient health care system—ranked tops by Bloomberg—and its healthy population, snagging the third highest spot in the United Health Foundation's Senior Health Report rankings, which are based on people's behaviors, such as physical activity, as well as community support and clinical care available.

1. South Dakota

• Population: 851,058
• Share of population 65+: 15.2%
• Cost of living: 4% below the U.S. average
• Average income for 65+ households: $43,712
• Average health care costs for a retired couple: Below average at $415,297
• Tax rating for retirees: Most Tax Friendly

The Mount Rushmore State might not be the first place that comes to mind when you dream of where to retire, but it's first place on our list. Affordability is the main factor pushing it to the top spot. In addition to low living expenses, including for health care, South Dakota is one the 10 Best States for Taxes on Retirees. And you can be confident it'll stay that way. The state ranks third in the country for fiscal soundness, according to a recent report from George Mason University's Mercatus Center, which indicates high confidence that it can keep up with short-term expenses and long-term financial obligations.

How We Ranked Every State for Retirement

To rank all 50 states for retirement, we weighed a number of factors:

• Taxes on retirees, based on Kiplinger's Retiree Tax Map, which divides states into five categories: Most Tax Friendly, Tax Friendly, Mixed, Not Tax Friendly and Least Tax Friendly.
• Cost-of-living for each state, with data provided by Sperling's Best Places, includes overall costs—across all age groups—for housing, food and groceries, transportation, utilities, health care and miscellaneous expenses.
• Average health care costs in retirement are from HealthView Services and include Medicare, supplemental insurance, dental insurance and out-of-pocket costs for a 65-year-old couple who are both retired and are expected to live to 87 (husband) and 89 (wife).
• Rankings of each state's economic health are provided by the Mercatus Center at George Mason University and are based on various factors including state governments' revenue sources, debts, budgets and abilities to fund pensions, health-care benefits and other services.
• Rankings of the health of each state's population of residents 65 and over are from the United Health Foundation and are based on 34 factors ranging from residents' bad habits (smoking and excessive drinking) to the quality of hospital and nursing home care available in the state.
• Household incomes and poverty rates are from the U.S. Census Bureau.
• Population data, including the percentage of the population that is age 65 and older, is also provided by the Census Bureau. They are highlighted in these rankings for the benefit of readers, but were not factors in our methodology for ranking the states.