- Edited By
Savannah Hanson is a professional writer and content editor with over 15 years of professional experience across multiple industries. She has ghostwritten for entrepreneurs and industry leaders and been published in mediums such as The Huffington Post, Southern Living and Interior Appeal Magazine.Read More
- Published: September 8, 2022
- Updated: September 23, 2022
- 9 min read time
- This page features 20 Cited Research Articles
The Department of Defense reports that there are almost 2.2 million military retirees in the United States, each receiving an average monthly payment of $2,361. It’s important to note that, unlike most civilian retirement plans, military pensions begin the day you retire, no matter your age.
Identifying the best place to live upon retirement is a challenge for most people. For veterans, there are additional factors that should be considered when leaving the service. States vary in their tax policies on military benefits and access to U.S. Department of Veterans Affairs (VA) mental and physical health care facilities.
To better assist service personnel in finding the optimal retirement location, we’ve ranked the best states for veterans in their retirement.
- South Dakota
- North Carolina
- West Virginia
We compared all 50 states against 13 key metrics in three categories to rank the best states for military retirees. Our research analyzed these data points as important factors for veterans to consider in making their choice:
- State taxation on military retirement pay
- State funding per veteran
- Total quantity of VA facilities
- Veteran suicide rate
- Veteran population
- Rate of cost-burdened renters and homeowners paying over 30% of income for housing
- One-year home appreciation rates
- Average assisted living costs
- Cost of living index
- Overall health care rating
- Mental health care rankings
- Community well-being index scores
- Population of adults over 65
The map below highlights the top 10 states for military retirees.
Let’s take a closer look at the top ten states to better understand what makes them stand out.
Sunny Florida takes the top spot on our list, thanks in part to a lack of taxes, easy access to a variety of VA services and improving home values.
As one of nine states with no income tax, military retirement income is also not subject to any taxation. The general lack of taxes appeals to many, including the 21.3% of the state’s population that are over the age of 65. Not surprisingly, Florida is home to the highest percentage of older adults among the states on this top 10 list.
Florida also ranks first among all 50 states in two other categories important to veterans. The state features the largest number of VA facilities per capita, 11.2, offering vital support services for military retirees and their families. And the state has seen the highest appreciation rate in home values over the past year at 29.8%. Improving home equity is a valuable asset when planning for retirement.
Alabama comes in as the second best state for retired veterans with a lower cost of living than any other state in the top 10. With relatively low housing, health care and transportation costs, the Missouri Economic Research and Information Center ranked the state as having the fourth best cost of living score in the nation. Senior housing options are an important consideration for many retirees. Alabama averages $3,503 per month for assisted living costs, ranking seventh among all 50 states.
In addition to the reasonable cost of living and housing access, Alabama is one of the 26 states that does not tax military retirement income. Veterans can benefit from this tax break and enjoy access to 3.8 VA facilities per capita, the fifth best rate in the country.
Virginia is one of only a handful of states that currently taxes military retirement income with no exemptions. But the Military Officers Association of America reports that beneficial income tax exemptions are on the horizon for veterans, possibly in time for the 2022 tax year, so the state could be seen as a rising star among the best options for military retirees.
This will be good news for the large population of veterans living in Virginia — 8.25% of the state’s total population, the second highest proportion in the United States (and the highest among the top 10). The number of veterans living in the state provides ample opportunity for building a community with fellow servicepeople.
4. South Dakota
Another state without income tax, South Dakota does not apply any taxes to military retirement income. Combine that with the state’s spending $12.68 per veteran for services and state-run programs (the seventh best expenditure rate in the nation), and you can see why many military retirees find South Dakota appealing.
The state’s reasonable housing costs are another big draw. It ranks third in the U.S. for lowest cost-burden rates for renters and homeowners, at 21.8%. That translates to over 78% of residents paying less than 30% of their income toward housing costs. This statistic aligns with the state’s also being home to the second best assisted living costs in America, averaging $3,350 per month.
5. North Carolina
Veterans residing in North Carolina enjoy a variety of benefits, including property tax exemptions, education assistance, hunting and fishing license privileges and state employment preferences. The state also does not tax military retirement income. Its growing residential property appreciation rates (up 23.4% over the past year) are some of the best in the nation.
Hawaii is a popular state for vets, with 7.8% of the islands’ population made up of veterans enjoying tax-free military retirement income. The overall allure of Hawaii may seem self-explanatory, with its beautiful beaches and pleasant climate. Our research validates the excellent quality of life there, with the state ranking second in overall community well-being in the country. And both health care and mental health care ranked at the top as well, in first and seventh, respectively. Both are important, considering that the state has the country’s second lowest rate of veteran suicide.
But life in Hawaii also comes with some challenges, evidenced by its ranking in last place of all 50 states for cost of living. Housing costs — both in cost-burden rates and assisted living costs — are some of the highest in the United States. And state expenditures per veteran are at the lowest amount of all the states on our list, at only $10.59.
The rolling plains of Nebraska offer an affordable option for vets and their families. Only 23.8% of the population are paying over 30% of their income toward housing costs, the 10th best ratio in the country. While one-year home appreciation rates (14.6%) are the lowest among our top 10 states, the state’s assisted housing options for veterans are promising. There are four Veterans Homes in the state, offering multi-level care for those who qualify and their loved ones. And military retirement pay is not taxed in Nebraska.
Ohio veterans benefit from both a lack of taxation on their military retirement income and the state government’s high-value spending on veterans programs and services. Ranking second in the country (only behind West Virginia, also on our list below) in these state expenditures, the $15.28 per veteran provides employment assistance, scholarships, burial benefits and more.
9. West Virginia
West Virginia boasts both the highest amount of state funding for veterans services (at $19.15 per veteran) and the lowest percentage of residents paying over 30% of their income toward housing costs (at 21%). Retired military personnel also benefit from facing no taxation on their retirement pay.
The state also has the second best cost of living score among the top 10 states on this list, thanks to low housing and utilities costs. That may be a factor in the high proportion of residents over the age of 65 (21% of the state’s population) residing in West Virginia.
Arizona rounds out our top 10 list. It offers the nation’s third highest number of VA facilities per capita (7.95) and the second highest residential property appreciation after one year (27.5%). Military retirees are not required to pay taxes on their retirement income, which leaves more cash in the bank to assist in their ongoing retirement planning.
How All 50 States Rank for Military Retirees
Across the country, many states have programs and services available to specifically support veterans as they transition to retired civilian life that go beyond straightforward senior discounts. Multiple states provide education and job support, free or discounted hunting and fishing licenses and property tax discounts.
- South Dakota
- North Carolina
- West Virginia
- South Carolina
- North Dakota
- New Hampshire
- Rhode Island
- New Mexico
- New York
- New Jersey
The needs of American military retirees can vary greatly — from understanding Medicare to treating PTSD to buying a dream home. Every state in the country offers tailored programs and services to support veterans, but identifying the best states for military retirees requires measured consideration and strategic retirement planning. This list can help find the perfect fit for vets and their families.
To identify the best states for military retirees in America, we compared 13 different data points on all 50 states (excluding Washington, D.C., due to insufficient data availability for certain metrics). We ranked each state on a weighted scale based on the following standards:
- State taxation on military retirement pay - 10 points
- State funding per veteran - 10 points
- Total quantity of VA facilities - 10 points
- Veteran suicide rate - 5 points
- Veteran population - 5 points
- Rate of cost-burdened renters and homeowners paying over 30% of income for housing - 5 points
- One-year home appreciation rate - 5 points
- Assisted living costs - 5 points
- Cost of living index - 10 points
- Overall health care rating - 10 points
- Mental health care rankings - 10 points
- Community well-being index scores - 10 points
- Population of adults over 65 - 5 points
We collected the veterans concerns statistics from the Department of Veteran Affairs. Our housing data sets were gathered from the Federal Housing Finance Agency, Harvard’s Joint Center for Housing Studies and the Genworth Cost of Care Survey. The quality of life metrics were pulled from the Missouri Economic Research and Information Center, ShareCare’s Community Well-Being Index, Mental Health America, the Population Reference Bureau and U.S. News & World Report.
20 Cited Research Articles
- Absher, J. (2022, January 11). 5 More States Make Military Retirement Tax Free. Retrieved from https://www.military.com/daily-news/2022/01/10/five-more-states-make-military-retirement-tax-free.html
- Absher, J. (2021, February 22). The Military Retirement System. Retrieved from https://www.military.com/benefits/military-pay/the-military-retirement-system.html
- Congressional Budget Office. (2022, May). Military Retirement. Retrieved from https://www.cbo.gov/system/files/2022-05/51303-2022-05-militaryretirement.pdf
- Department of Veterans Affairs. (2022, May). Geographic Distribution of VA Expenditures for Fiscal Year 2021. Retrieved from https://www.va.gov/vetdata/docs/GDX/GDX_FY21.xlsx
- Department of Veterans Affairs. (2021, November 3). Locations: Facilities by State. Retrieved from https://www.va.gov/directory/guide/allstate.asp
- Department of Veterans Affairs. (2022, February 10). Mental Health: Veteran Suicide Data and Reporting. Retrieved from https://www.mentalhealth.va.gov/suicide_prevention/data.asp
- Department of Veterans Affairs. (2022, March 3). National Center for Veterans Analysis and Statistics. Retrieved from https://www.va.gov/vetdata/maps.asp
- Federal Housing Finance Agency. (2022). Change in FHFA State House Price Indexes (Seasonally Adjusted, Purchase-Only Index, 2022Q1). Retrieved from https://www.fhfa.gov/DataTools/Tools/Pages/House-Price-Index-(HPI).aspx
- Genworth. (2022, January 31). Genworth Cost of Care Survey. Retrieved from https://pro.genworth.com/riiproweb/productinfo/pdf/282102.pdf
- Joint Center for Housing Studies. (2022). The State of the Nation’s Housing 2022. Retrieved from https://www.jchs.harvard.edu/state-nations-housing-2022
- Kilduff, L. (2021, December 22). Which U.S. States Have the Oldest Populations? Retrieved from https://www.prb.org/resources/which-us-states-are-the-oldest/
- Lombardo, T. (2022, June 1). State Tax Update: Latest on Grassroots Work to Exempt Military Retirement. Retrieved from https://www.moaa.org/content/publications-and-media/news-articles/2022-news-articles/state-tax-update-latest-on-grassroots-work-to-exempt-military-retirement/
- Mental Health America. (2022). Adult Ranking 2022. Retrieved from https://www.mhanational.org/issues/2022/ranking-states
- Missouri Economic Research and Information Center. (2022). Cost of Living Data Series. Retrieved from https://meric.mo.gov/data/cost-living-data-series
- ShareCare. (2022). Community Well-Being Index. Retrieved from https://wellbeingindex.sharecare.com/interactive-map/
- Unites States Army. (2021, September 20). Nebraska Military and Veterans Benefits. Retrieved from https://myarmybenefits.us.army.mil/Benefit-Library/State/Territory-Benefits/Nebraska
- Unites States Army. (2021, December 29). North Carolina Military and Veterans Benefits. Retrieved from https://myarmybenefits.us.army.mil/Benefit-Library/State/Territory-Benefits/North-Carolina
- Unites States Army. (2022, July 7). Ohio Military and Veterans Benefits. Retrieved from https://myarmybenefits.us.army.mil/Benefit-Library/State/Territory-Benefits/Ohio
- U.S. News & World Report. (2022). Health Care Rankings. Retrieved from https://www.usnews.com/news/best-states/rankings/health-care
- Waggoner, J. (2022, March 9). 9 States That Don't Have an Income Tax. Retrieved from https://www.aarp.org/money/taxes/info-2020/states-without-an-income-tax.html
We will be offering assistance with annuities, life insurance, Medicare and financial planning. Sign up for updates and be the first to know when these services are available.
Sign up for our newsletter for our latest retirement planning guides, tips and more!