Retirees Can Forget Florida, This Affordable Midwest State Offers Lower Costs, Outdoor Fun, And Fewer Crowds

Florida attracts plenty of retirees, but the Sunshine State fails to address a fear expressed by the majority of retirees: running out of money. According to the U.S. Bureau of Economic Analysis (BEA), 2024 costs of living there exceeded the national average by 3.4%. By choosing a state with more affordable expenses, retirees can keep more in savings and/or spend more of their dollars on enjoyable activities. Using BEA data, the state of South Dakota comes with affordable costs of living being 11.4% less than the national average, 14.8% more affordable than Florida. Financial factors played a key role in WalletHub ranking South Dakota as the third-best state to retire in 2026. The state has no inheritance or estate taxes, along with comparatively low poverty and hunger rates among residents age 65 and older.

South Dakota offers a wide variety of outdoor activities across the state. One example is Hot Springs in southwestern South Dakota, which offers relaxing thermal spas and access to Angostura Reservoir Recreation Area for biking, hiking, swimming, fishing, birdwatching, boating, and picnicking. A resident annual park pass costs $40

Another reason to retire in South Dakota is its relatively low population density. The World Population Review (using multiple governmental sources) lists South Dakota as the 46th most populated state, putting it near the bottom of crowd concerns. Although tourists do visit places like Mount Rushmore, the Mammoth Site, Custer State Park, and so forth, strategically avoiding in-season tourist spots can give retirees a peaceful life. 

Delving more into the favorable tax environment in South Dakota, this is one of the places that doesn't charge a state income tax. For retirees, this typically means no taxes on retirement income withdrawals (verify your situation with your financial advisor). Plus, sales tax is relatively low: the 39th highest rate at 4.20%. Property taxes, however, may be higher than what a retiree is used to. These taxes can vary by county and city, and TaxRates.org calculated the average amount for each state before ranking them. Property tax rates range from Louisiana's 0.18% to New Jersey's 1.89%, with South Dakota ranking in 16th place at an average of 1.28%. 

Retirees can save money on grocery costs in South Dakota. Living Cost Index, which uses New York City as a baseline of 100, gives South Dakota a grocery cost index of 76. It also estimates average monthly food costs at $380 per person monthly, with a typical range of $220 to $600. 

WalletHub also gave South Dakota a high ranking for health: #4 in 2026. Reasons cited included the quality of geriatric hospitals, the second-fewest reported poor mental health days, and the third-highest number of family doctors per capita. Using data from HCAHPS Patient Survey and CMS Hospital Price Transparency, Momentary Lab ranks Black Hills Surgical Center in Rapid City among the top 7% of hospitals nationwide. It also notes the five-star facility has a 93% patient recommendation rate.