For decades, Florida reigned supreme as America's premier retirement destination, with its sun-drenched beaches from Punta Gorda to Daytona Beach symbolising the golden years. However, a significant shift is underway. Soaring real estate prices and a steeply rising cost of living are now pricing many retirees out of the Sunshine State, particularly those with annual incomes of $75,000 or less, according to a recent Wall Street Journal analysis.
The Search for Affordable Sunshine
This financial pressure has prompted a growing exodus, with long-time Florida residents leading the way to more budget-friendly locales. For those reconsidering a Florida retirement, three states have emerged as standout alternatives, combining a lower cost of living, strong Medicare performance, and tax laws specifically beneficial to older demographics. These states are also confirmed to be among the top five destinations for former Florida residents, as highlighted in a 2024 report from the Florida Chamber of Commerce.
To identify these leading alternatives, The Independent conducted a thorough evaluation using key metrics: cost-of-living data from the Council for Community & Economic Research, Medicare performance scores from The Commonwealth Fund, and tax analysis from the Tax Foundation.
Texas: The Big Alternative
Texas presents a compelling case for retirees seeking warmth, coastline, and a favourable fiscal environment. The state's overall cost of living ranks 11th nationally, outperforming Florida specifically in grocery, housing, and transportation expenses. Crucially, Texas joins Florida as one of only nine states with no individual income tax.
This tax structure offers a substantial advantage for retirees drawing from 401(k)s and traditional IRAs, as these withdrawals are not subject to state income tax. For context, with the average 401(k) balance for someone in their 60s around $580,000, retirees in states with income tax, like Georgia, could face a tax bill of approximately $31,000 before deductions.
While Texas's Medicare system ranks poorly nationally, it compensates with over 3,300 miles of coastline—the eighth longest in the nation—providing ample opportunity for sun and sand.
North Carolina: The All-Round Performer
North Carolina distinguishes itself as the only state in this analysis to rank in the top 30 across all three critical categories. It holds the 26th position for cost of living (still more affordable than Florida), an impressive 14th for Medicare performance, and 22nd for its individual income tax situation.
The state's flat income tax rate of 4.25% is relatively low, complemented by competitive property and sales tax systems. This attractive package has made North Carolina the number one destination for people migrating from Florida between 2019 and 2024.
Furthermore, the state promotes an active lifestyle for seniors, ranking among the top 20 for physical activity, with older residents averaging 98.1 active minutes daily. It also boasts the country's seventh-longest shoreline.
Tennessee: A Fiscal Haven
Tennessee earns top marks from tax analysts for its complete lack of a state income tax, mirroring the significant advantage found in Texas for retirement account withdrawals. Its cost of living is exceptionally competitive, ranking 8th nationally, with excellent scores for grocery prices, utilities, and transportation costs.
Although its Medicare performance ranks 39th, this is still an improvement over Florida's standing. Similar to North Carolina, Tennessee fosters an active senior community, with older residents averaging 97.6 minutes of daily activity. This combination of financial benefits and lifestyle appeal is proving highly attractive to cost-conscious retirees leaving Florida.
