This Affordable Southern Jewel Could Be Your Dream Retirement Place

Thanks to its proximity to nature, affordable housing costs, and below-average income taxes, Hot Springs, Arkansas, has earned its place on Investopedia and Southern Living’s list. The Most Affordable Southern Places to Retire. In fact, it was the number one choice based on our team’s research, which assessed several affordability factors and overall lifestyle choices.

Although Hot Springs is an under-the-radar city, it’s definitely worth exploring if you’re looking for a place to retire. One of the main reasons: Hot Springs is an affordable place to live. According to the Chamber of Commerce, the cost of living in Hot Springs overall is 14.82% lower than the national average. What’s more, our research found that it has some of the lowest median housing costs in the South.

Cost of living below average

In terms of affordability, one of the key metrics that sets Hot Springs apart is its average home price. Hot Springs residents have an average cost of $810 per month, which is 30% less than the South’s average of $1,163.

If you’re a first-time home buyer, the average home sale price in Hot Springs as of October 2024 was $340,000. Renters can also find affordable options, with some listings as low as $500, making it attractive to both renters and buyers who may be moving from areas with a higher cost of living.

Why this is the key to an affordable retirement

Life on fixed income Retiring means there is a limited amount of money you can rely on, and it should last you throughout your life. Choosing to live in an area with a lower cost of living can help you make the most of your limited resources. This will also allow you to allocate more of your budget to enjoyable activities that you’ve been looking forward to after you stop working.

Housing costs typically play the largest role in the cost of living. The Boston College Center for Retirement Research reports that they typically make up about 40% of most households’ budgets. So if you choose to live in an area with lower home costs, like Hot Springs, it can provide more flexibility to your budget and lifestyle.

No tax on state property

Not only are home values ​​lower per se, but Arkansas has no property taxes. Residents should still expect to pay county property taxes, which average about $859 per year based on the average home sales price.

Statewide, Arkansas’ average property tax of $776 per capita is the third highest per capita tax in the country, just behind Alabama ($598) and Oklahoma ($771). Compared to the national average state and local property taxes of $1,675 per capita nationwide, Hot Springs property owners are getting a good deal.

Why this is the key to an affordable retirement

Any time regular bills like property taxes are below average, it allows your money to go further into retirement. That’s why people who live in high property tax areas like the Northeast or West Coast during their working years often migrate south as they approach retirement age.

Income tax below average

If you have a fixed income, e.g. pensionthe last thing you want is for most of that money to go to income taxes. Arkansas is one of 29 states that have a graduated personal income tax, with rates ranging from 2.00% to 4.40%. Even if you earn enough to pay the maximum rate, it is still lower than in many states. By comparison, in California the maximum rate is 13.3%.

Of course, there are a few states that have no income tax at all or slightly lower rates, but Arkansas is still on the low end.

Why this is the key to an affordable retirement

You may hear people discussing trying to retire in a “tax-friendly” or “retirement” state, and what they’re really talking about is income taxes. As mentioned, Arkansas isn’t necessarily the best in this regard since it does have an income tax, but it is lower than some places.

This may not be the only factor you look at when crunching the numbers for your retirement budget, but as part of your overall analysis: income tax there must be something that you consider.

Other Surprising Benefits of Hot Springs, Arkansas for Retirees

Hot Springs is affectionately known as the “Resort City” due to its healing thermal waters, springs and spa offerings. Thanks to its beauty and thermal hot springs, Hot Springs National Park also became the first federally protected area in the country, designated back in 1832. For retirees with active lifestyles, it’s great to have an American Spa so close to home.

Whether you like to bike, fish, golf or hike, there are plenty of outdoor activities to keep you active and social. Hot Springs also hosts numerous music and film festivals.

Bottom line

Hot Springs, Arkansas may not immediately come to mind when you think of retirement destinations, but it has many key features that retirees are looking for. First of all, it is very affordable thanks to below-average home costs, no state property taxes, and below-average state income taxes.

But beyond the cost savings, the Spa Town lives up to its name with its natural hot springs. Add to this the mild climate, lakes for fishing and boating, excellent hospitals and beautiful scenery, and you can see why this could be the perfect place to live out your golden years.

Methodology

Locations chosen for The South’s Best Places to Retire in 2024 The list was selected from all census-designated places in the Southern states (Alabama, Arkansas, Florida, Georgia, Kentucky, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, and West Virginia). Median household income and monthly housing value estimates were obtained from the 2022 American Community Survey (5-year period) for each location in the South. Places whose estimates had a large error were excluded from the initial list.

The final list of locations was selected by evaluating:

1. Housing affordability compared to the South (how monthly housing costs in each location compare to the weighted average for states in the South);
2. Average income in each location (as a measure of taxes collected, which can be tied to community resources; and
3. Personalized reporting on proximity to parks or coastlines, recent community changes, and previous Southern Living reporting highlighting the best places to retire.