Missouri, known as the Show-Me State, offers a combination of affordable living, beautiful landscapes, and a central location that makes it an attractive destination for early retirement. The state offers retirees financial advantages, moderate weather, and a high quality of life, all at a fraction of the cost compared to more expensive states.
With its blend of urban centers like St. Louis and Kansas City, and quieter rural areas, Missouri offers a variety of living options for retirees seeking financial independence, retire early (FIRE) while embracing a slower-paced lifestyle. This guide explores the key reasons why Missouri can be an ideal location for early retirement.
Key Terminology
To understand the impact of retiring in Missouri, consider these important FIRE-related terms:
- FIRE (Financial Independence, Retire Early): A movement focused on saving aggressively and investing wisely to retire far earlier than traditional retirement age.
- Geoarbitrage: Moving to a state with a lower cost of living to stretch retirement savings further.
- Lean FIRE vs. Fat FIRE: Lean FIRE requires living on a modest budget, while Fat FIRE allows for a more comfortable, higher-expense lifestyle.
- The 4% Rule: A guideline to help determine how much of your savings can be withdrawn each year without running out of funds, typically 4%.
- State Tax Exemptions: Some states provide tax exemptions or breaks for retirees, allowing for a more tax-friendly retirement environment.
What Is Early Retirement in Missouri?
Missouri offers a low-cost living environment with a variety of retirement options. Retirees can find affordable housing, access to good healthcare, and plenty of activities to enjoy their free time. Missouri is particularly attractive for those seeking financial independence in a state that boasts a comfortable climate, and close proximity to major urban centers while maintaining affordable living.
How Does Early Retirement Work in Missouri?
1. Missouri’s Tax Structure for Retirees
Missouri has a relatively tax-friendly environment for retirees, offering some attractive advantages:
✅ No Tax on Social Security Benefits: Missouri exempts Social Security income from state taxation, which can be a significant benefit for retirees living on Social Security.
✅ Moderate Property Taxes: Property taxes in Missouri are lower than national averages, providing a favorable environment for retirees looking to settle in one of the state’s smaller towns or cities.
✅ Income Taxes on Pensions and Retirement Accounts: While Missouri does tax pensions and retirement income, the tax rate is relatively low compared to many other states.
❌ Sales Taxes: Missouri’s sales tax rate is 4.225%, though it varies by county and city, and it can increase to around 8% in certain areas.
2. Cost of Living in Missouri
Missouri is consistently ranked as one of the most affordable states for retirement. It offers reasonable housing costs, low property taxes, and a lower-than-average overall cost of living.
Housing Costs (Median Home Prices in Key Cities)
- St. Louis: ~$175K
- Kansas City: ~$210K
- Columbia: ~$230K
- Springfield: ~$155K
- Jefferson City: ~$170K
Rent Prices (Average for 1-Bedroom Apartment)
- St. Louis: ~$950
- Kansas City: ~$1,000
- Columbia: ~$1,100
- Springfield: ~$850
- Jefferson City: ~$850
✅ Affordable Housing: Cities like Springfield and Jefferson City offer lower rental prices and affordable homes, making Missouri a great place to stretch your retirement savings.
3. Healthcare in Missouri
Missouri’s healthcare system is generally good, especially in its larger cities. However, some retirees may find that rural areas have limited access to healthcare facilities. Fortunately, the state provides access to both private and public healthcare options.
- Top Medical Centers: Missouri is home to some top-tier medical facilities, including the Washington University Medical Center in St. Louis, and Mercy Hospital in Springfield.
- Affordable Healthcare: The average healthcare costs for Missouri retirees are lower than the national average, averaging around $6,400 per year.
- Medicare and Medicaid: Missouri provides solid Medicare Advantage and Medicaid options for qualifying individuals, making healthcare more affordable for those with limited retirement savings.
4. Outdoor Lifestyle and Recreation
Missouri boasts a variety of outdoor activities perfect for retirees seeking adventure and relaxation. The state is known for its beautiful lakes, forests, and hiking trails, all of which provide ample opportunities for outdoor recreation.
- Lake of the Ozarks: Known for its boating, fishing, and water sports, it’s a favorite spot for retirees.
- National Parks and Trails: Enjoy hiking and camping in places like the Ozark National Scenic Riverways and Mark Twain National Forest.
- Mild Winters: Missouri’s moderate winters are great for year-round outdoor activities without the harsh cold experienced in other states.
How Does Early Retirement in Missouri Compare to Other States?
- Missouri vs. Arkansas: Arkansas offers a lower overall tax rate, but Missouri has better access to healthcare and more urban living options, making it a better choice for retirees seeking a balance of city and country life.
- Missouri vs. Oklahoma: Oklahoma has lower property taxes, but Missouri offers more job opportunities and better healthcare for retirees.
- Missouri vs. Kansas: Missouri has lower housing costs and is more tax-friendly for retirees compared to Kansas, making it a more affordable option for early retirement.
Pros and Cons of Retiring Early in Missouri
✅ Pros of Early Retirement in Missouri
✔ Affordable Housing and Low Cost of Living
✔ No Tax on Social Security Benefits
✔ Low Healthcare Costs
✔ Rich Outdoor Activities and Scenic Beauty
✔ Moderate Climate with Four Distinct Seasons
❌ Cons of Early Retirement in Missouri
❌ Rural Healthcare Accessibility
❌ Moderate Sales Tax
❌ Income Tax on Pensions and Retirement Income
❌ Higher Cost of Living in Major Cities
Best Practices and Tips for FIRE Success in Missouri
✅ Opt for Suburban Areas: Cities like Springfield and Jefferson City offer lower housing costs and a quieter pace of life.
✅ Utilize Missouri’s Tax Benefits: Take advantage of Missouri’s no-tax policy on Social Security income.
✅ Embrace the Outdoors: Missouri is an outdoor paradise, offering hiking, fishing, and boating opportunities in its lakes, parks, and forests.
✅ Plan for Healthcare Costs: While healthcare costs are reasonable, it’s wise to prepare for future medical needs by choosing the right Medicare Advantage or Supplemental plans.
Conclusion
Missouri offers early retirees a balanced lifestyle with affordable living, tax advantages, and access to outdoor recreation. With low housing costs, no state tax on Social Security, and access to major cities, Missouri is an excellent choice for those seeking financial independence without sacrificing comfort.
Could Missouri be your next home for early retirement? Share your thoughts below!