You've Been Warned: Retiring In This New England State Could Cost You

When it comes to retirement destinations, Massachusetts can offer ample upside. It ranks among the top states for quality of healthcare, boasts a vibrant cultural scene, and is home to some of the most iconic historic landmarks in the U.S. However, for retirees living on a fixed income, the Bay State can strain their finances, especially when compared to some of the cheapest states in the U.S. to retire.

According to GOBankingRates, individuals need an estimated $1,645,764 in savings to retire in Massachusetts, where the annual cost of living sits at $88,627. Healthcare expenses, in particular, can add up. According to the Massachusetts Health Policy Commission, higher healthcare costs in the state saw healthcare spending per person go up by 7.8% in 2023 alone, with an increase of about 6.1% per year between 2019 and 2023. In fact, a family in Massachusetts spent more than $29,000 in healthcare in 2023. Despite this, the steepest financial hurdles for retirees in Massachusetts actually stem from high housing costs and generally unfriendly taxes.

The high cost of living in Massachusetts often forces individuals leaving the workforce to look beyond the state for retirement. Housing, in particular, is one of the biggest cost drivers. As of June 2025, Zillow data shows that the median sale price for a home in the state was $634,500, compared with a national median sale price of about $371,300. Meanwhile, renters get little relief with an average rent, as of August 2025, of $3,144, per Zillow – compared to the national average of $2,100.

Another consideration for would-be Massachusetts retirees is taxes. While Social Security income is exempt, unlike in some states that tax those benefits, Massachusetts still levies a 5% income tax on most other forms of retirement income, including withdrawals from 401(k)s and IRAs, annuities, and private pensions. In contrast, other potential retirement destination states don't even have an income tax. For wealthier retirees, the tax burden in Massachusetts can be even heavier — income above $1 million faces an additional 4% tax. On top of this, the state also enforces a strict estate tax policy, which is make it harder for seniors to transfer their wealth. Guidance from the Commonwealth of Massachusetts states that estates valued over $2 million are subject to tax, a threshold far below the federal exemption of $13.99 million in 2025, according to the IRS.