Thinking of heading down South for your retirement? You’re not alone. Thanks to its warm climate, lower cost of living, and tax-friendly treatment of retirees, many seniors choose a Southern state to live out their post-retirement years. In fact, a U.S. migration report released in January 2023 by American Moving Services shows that Americans are migrating to the South more than to any other region.
If you’re currently on the hunt for the best place to settle, one of the key considerations you’ll need to think about is the cost of retirement. In partnership with Southern Living, we examined Census data and Bureau of Labor Statistics reporting to determine the cost of retirement in 41 Southern towns and cities.?
Based on our analysis, of the 41 chosen cities, we found Chattanooga, Tenn., Huntsville, Ala., and Ocean Springs, Miss. to be three excellent picks for cost and affordability. Take a closer look at why these locales topped our list.
Chattanooga, Tenn.: Best All Around
Chattanooga, Tenn., took the top spot as the best all-around location for retirement. The city has scores generally in line with the national average for almost all metrics in our study.?
What really stood out was its robust job market—perfect for retirees who want to keep their semi-retirement options open. Not only does Chattanooga have an unemployment rate lower than the already-low national average, 3.6% compared to 3.9% as of January 2023, but it’s a hub for jobs in the hydroelectric power generation industry, thanks to its proximity to the Chickamauga Dam.
Also appealing: Chattanooga’s Hamilton County has about 9% more hospitals and 27% more restaurants for its residents than the national average (as of Q3 2022, according to data from the BLS Quarterly Census for Employment and Wages). These are important factors for a demographic that wants to make sure they have access to many health care options, as well as ample places to enjoy dining out and other recreation.
As for housing costs, Chattanooga’s median rent is just below $1,000, and its median home value is $189,500, making it affordable for both renters and buyers—especially those relocating from higher-earning areas. However, when taken in context with what Chattanooga residents earn (a lower-than-average median household income of $50,437), the city is less affordable compared to the national average for income-to-home value and rent-to-monthly-income data.
Retirees also have favorable tax treatment in Tennessee, since the state is one of seven that does not have an individual income tax.
Huntsville, Ala.:? Best for Affordability
If finding an affordable town to live in is your number one priority, then don’t overlook Huntsville, Ala. It came in as the most affordable retirement spot in our study based on a combination of its low average home prices and rent combined with a relatively higher average income.?
According to data from the U.S. Census Bureau’s five-year American Community Survey from 2021, residents of Huntsville, Ala. had a median household income of $60,959. Although this is about 11.7% lower than the national median household annual income of $69,021, Huntsville is highly affordable once you begin reviewing median home values and gross rent prices.
The median home value in Huntsville is about $194,500 which puts its income-to-home value at about 31.3%. That means paychecks go a little bit further as they relate to home prices, compared to the 28.2% income-to-home value nationally.?
In addition, Alabama has the second lowest property taxes in the nation.
The same is true for Huntsville renters. While the median gross rent costs $912 per month, residents bring in $5,080 median household monthly income on average, which means it takes around 18% of income to cover rent. This is below the national 20.7% of monthly income that it costs to pay for rent (based on the national median rent of $1,191 and a $5,751.75 national median monthly household income).
Besides affordability, Huntsville retirees can also feel confident knowing that the unemployment rate is just 2.3%, which was over a percentage point and a half lower than the national rate of 3.9% in the same month. Whether or not you decide to return to work post-retirement, strong employment is a sign that an area is thriving overall.
Ocean Springs, Miss.: Best for Homebuying?
Homes are very affordable in Ocean Springs, Miss., and not just because of the below-average $184,800 median home value (as compared to the $244,900 national average). The median annual income of $63,653 in Ocean Springs makes up about 34.4% of the area’s average home value—and that’s six percentage points higher than the national figure of 28.2%.?
Put another way, when all the numbers are crunched, it means that buying a home in Ocean Springs is 22% more affordable than it is nationally. And, in our study, it was the most affordable small town home market.
Only Birmingham, Ala., which is a city, had a lower homebuying cost.
Another perk of retiring in Mississippi is that the state does not tax retirement income, including pensions.
The Bottom Line
Retirement should be a time to live your best life after decades of working hard and taking care of others. If you’re planning to relocate, it’s important to weigh a number of factors, including proximity to family, climate, and personal preferences, as well as practical considerations like cost of living.
As Americans live longer and healthier lives, having an affordable retirement vision is more important than ever. Where you decide to settle down can have a big impact on how far your retirement savings will take you and the type of lifestyle you can afford, so do your research accordingly. If moving to the South is on your radar, at least when it comes to cost, Chattanooga, Tenn., Huntsville, Ala., and Ocean Springs, Miss. are all worth exploring.