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Where Can I Retire on $2,500 a Month?


A retirement income of $2,500 a month will pay for a comfortable and secure lifestyle in many places in the United States. While there are pros and cons to living in any location, here are six cities where $2,500 can stretch to cover the monthly living expenses for many retirees and some information about what you need to expect with your potential retirement income. It’s important to discuss your retirement goals with a financial advisor as early as possible if you’re not sure whether you’ll have enough for the retirement you want.

Retirement Income Reality

The average 65-year-old who is still working earned $57,252 a year as of the second quarter of 2023, according to the Bureau of Labor Statistics. A monthly income of $2,500 works out to a little more than half that, or $30,000. With that in mind, it may seem like a difficult if not impossible task to retire on $2,500 per month.

However, while in many cities, especially large metropolitan areas, that much income would make it hard to scrape by, in others it’s enough for a secure and satisfying lifestyle. This is due to wide geographic variations in key costs, particularly housing but also including taxes, transportation, utilities, food, healthcare and other expenses. As a result, if you pick your retirement city with careful attention to its cost of living, an income of $2,500 in many cases will adequately fund a comfortable if not extravagant existence.

Of course, much depends on individual circumstances. For instance, if you own a home in a high-cost area you may be able to use the proceeds from selling it to purchase a residence mortgage-free somewhere else. Since housing costs are the single biggest item in most budgets, not having a monthly mortgage or rent payment can make all the difference in your retirement lifestyle’s affordability. But almost any retiree on a limited income can benefit from considering not just how much they have to spend but where they will spend it.

Six Cities Where You Can Retire on $2,500

Group of women retired for less than $2,500 per month

By definition, approximately half the places in America have below-average living costs. Many of these are out of the way and far from essentials such as healthcare facilities. However, here are six cities that combine minimal expense with urban-style living and, inevitably, some drawbacks for each.

1. Memphis, Tennessee

You can enjoy living amid the rich musical culture of Memphis without paying a lot due to its lack of a state income tax and inexpensive real estate. Costs for transportation and groceries are also modest. Summers are hot and humid compared to much of the country, but winters are generally mild. On the downside, healthcare accessibility is on the low side.

2. Wichita, Kansas

Another affordable housing beacon shines in Wichita, where residents also pay some of the lowest utility costs in the nation. You may have to rely on a car more in Wichita than in older cities with better mass transit, and it also offers limited entertainment options compared to major metros. Wichita has four distinct seasons, with cold winters and hot summers.

3. Cleveland, Ohio

Moderate healthcare and housing costs help make Cleveland a prime target for retirees living on limited incomes. Its history as a manufacturing center manifests in a heavy industrial presence, and cultural attractions may be less varied than in some towns. Although winters are cold, summers are temperate.

4. Tucson, Arizona

Healthcare costs in Tucson are significantly below the national average while rent is slightly below the trendline, making for an oasis of affordability in the desert. The dry climate limits opportunities for water recreation and hot summers paired with relatively high electricity rates make utility bills a negative. On the other hand, Tucson’s gentle winters attract retirees from across the northern tier of states.

5. El Paso, Texas

With no state income tax and plenty of affordable housing options, this border city is quite viable for retirees in search of a bargain. They’ll enjoy mellow winters but hot summers. El Paso may fall short in the eyes of retirees who enjoy high-end entertainment options like art museums and symphonies but its proximity to Mexico ensures an international culture unlike most other cities.

6. Jackson, Mississippi

Inexpensive groceries and low housing costs help put Jackson on the map for the budget-minded. Mississippi exempts all retirement income from taxation and winters exempt everyone from shoveling snow. Limited cultural venues and public transit options are among the drawbacks.

An Example of a $2,500 Retirement Budget

Combined with cost-cutting strategies like downsizing their residence, using public transportation and shopping for groceries to prepare at home rather than dining out, a retiree in these cities potentially could put together a monthly budget that looks somewhat like this:

Housing $800
Taxes $400
Groceries $300
Utilities $200
Transportation $150
Healthcare $400
Leisure and miscellaneous $250

Other financial considerations when relocating for retirement include costs for moving household goods, transaction costs when selling and buying real estate and differences in premiums to insure your auto, home and health. These can be managed by, for instance, packing possessions yourself instead of paying a moving team. And they may be one-time or less significant than other costs. Accounting for them is still part of a carefully thought-out retirement relocation plan.

Bottom Line

A woman picking a place to retire for less than $2,500 per month

Relocating to a lower-cost city can stretch $2,500 in retirement income to fit most budgets. Cities with below-average housing costs and limited taxation are especially friendly to retirees with limited income. These bargain-themed smaller urban areas may lack the healthcare and transportation facilities some retirees desire, but many also offer better weather and, in some cases, cultural climates.

Tips for Retirement

  • Before making a move, talk to a financial expert to understand how taxes and other considerations may affect your budget. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • SmartAsset’s Cost of Living Calculator makes it easy to compare living expenses in your current location with those in a city you are considering for retirement.

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