An American City Known As 'The Horse Capital Of The World' Is One Of The Best College Towns For Retirement
According to GoBankingRates, Lexington, Kentucky may also be one of the best college towns for retirement, based on associated living expenses and the cost of housing. Plus, 13.5% of the population of Lexington is age 65 and older, which means you'll be in good company. It also helps that Kentucky is one of 41 states that exempts Social Security income. Another thing to consider is if you receive a pension from the federal government, the Commonwealth of Kentucky, or local Kentucky government totaling over $31,110 per year, you may be eligible to deduct a portion of that from income taxes too. Throw in excellent healthcare providers like the University of Kentucky's Albert B. Chandler Hospital, and Baptist Health, along with high scoring retirement communities like Hartland Hills or Highgrove at Tates Creek, and its unsurprising that Lexington has a livability score of 86 out of 100.
Lexington is also a home to the University of Kentucky, which contributes $90 million in local and state taxes through its employees — including a research department that adds another $580 million annually to the local economy. As per City-Data.com, horse racing and breeding are also part of Lexington's economy, fueled by tourists and associated gambling. Agriculture, including tobacco, wheat, and corn, in addition to cars, make up Lexington's $2.5 billion in exports every year, all amounting to an affordable and economically stable place to retire.
Why retirement in Lexington won't cost you as much as other cities
According to the U.S. Bureau of Labor Statistics' consumers expenditures report, the average yearly expenditure for consumer units in the U.S. was $77,280 in 2023. That's the equivalent of $6,440 per month. However, according to GOBankingRates, in Lexington, those monthly expenditures drop to $1,775 per month, or $21,300 per year. That's a total savings of $55,980 per year, or the equivalent of freeing up $4,665 in cash every month.
For most Americans, the largest portion of their expenses stems from housing — which makes up 32.9% of their total expenses. This is followed by transportation at 17% and food at 12.9%. Aside from horses, Lexington has a decent public transit system with 25 bus routes as well as bike paths and trails for cycling. There are also around multiple grocery stores throughout the Lexington area, meaning you can shop around for the best grocery prices.
Renting and home ownership are both affordable options in Lexington
Per 2025 data compiled by Realtor.com, the median listing price of a home in Kentucky is $304,296. By comparison, the median cost of a home in the U.S., as of April 2025, was $416,900, according to the Federal Reserve Bank of St. Louis. This means living in Kentucky already offers a discount when it comes to home ownership. Lexington doesn't fall too far from the state average, with a median sold price just over $322,000, according to Realtor.com. This is $94,900 lower than the national median. GOBankingRates found that the average mortgage in Kentucky was $1,783 per month, which is lower than the national average mortgage of $2,173, per an April 2025 Mortgage Bankers Association release.
If you choose to rent instead of own, you'll can do even better financially with a median cost of around $1,500 per month in Lexington. With rents and mortgages lower than national averages, it could be worth exploring how both renting or owning a home can help you build wealth based on what makes the most sense for your retirement lifestyle.
Here's how independent and assisted living in Lexington compares to the U.S.
According to a 2024 report on the cost of long-term care and senior living from a Place for Mom, the national median cost of independent living in a retirement community is $3,100 per month or $37,200 per year. Assisted living facilities for seniors jumps to $4,995 per month, or $59,940 per year, while more specialized memory care clocks in at $6,200 per month, the equivalent of $74,400 per year. By comparison, the median cost for independent living facilities in Kentucky is $3,039 per month, while the median for assisted living is $4,168 per month, and the median for memory care is $5,260 per month.
Cost-wise, Lexington stays pretty close to the national median cost in terms of independent living care. However, where assisted living is concerned, the city comes in cheaper than the national median, and outperforms the national median for acute memory care. When you consider the Medicare price hike for seniors in 2025 and all the medical costs Medicare won't cover, anywhere you can receive care below the national median is a bonus in retirement.