For retirees on a fixed income, cost of living does a lot of heavy lifting — a dollar simply goes further in a low-price state. The cleanest way to rank states is the all-items Regional Price Parity (RPP), where the US average is 100.
Estimate — not financial or tax advice. Price level is one factor in a retirement decision. Confirm tax treatment of your retirement income with a professional.
Cheapest states by price level
| Rank | State | RPP (US = 100) | Median rent / mo |
|---|---|---|---|
| 1 | Arkansas | 86.6 | $982 |
| 2 | Mississippi | 87.3 | $990 |
| 3 | Alabama | 87.8 | $1,077 |
| 4 | South Dakota | 88.0 | $999 |
| 5 | Iowa | 88.4 | $981 |
| 6 | North Dakota | 88.7 | $980 |
These states have everyday prices roughly 12-13% below the US average and some of the country’s lowest median rents. See the full cheapest states ranking.
Low rent matters most for retirees
Housing is the biggest line item in most budgets and the biggest reason cheap states are cheap. Several of the lowest-RPP states have median rents under $1,000/month (Census ACS 2023), versus a national figure well above $1,400 — a meaningful gap when you’re drawing down savings.
The tax caveat
Price level is only half the retirement equation. States differ enormously in how they tax Social Security, pensions and retirement-account withdrawals, plus property and sales tax. A low-RPP state that taxes pensions can end up costing a retiree more than a slightly pricier state that exempts them. Treat the RPP ranking as your cost-of-living starting point, then layer taxes on top.
How far your income goes
Use the cost-of-living calculator to see what your current spending would be worth in a cheaper state. Moving from an expensive state can effectively give your retirement income a raise — for example, the same budget that supports you in California stretches roughly 23% further in Arkansas on price level alone.
Sources
Price levels: BEA Regional Price Parities. Rents: U.S. Census Bureau ACS. Estimates as of June 2026 — verify before relying on them. See our methodology.