With its proximity to nature, affordable housing prices and below-average income tax, Hot Springs, Arkansas is on Investopedia and Southern Living’s best lists. The most affordable southern places to retire. In fact, this was the number one pick based on our team’s research measuring various affordability factors and overall lifestyle.

Although it may be an under-the-radar town, Hot Springs is definitely worth exploring if you’re looking for a place to settle down in retirement. One of the biggest reasons for this: Hot Springs is an affordable place to live. According to the Chamber of Commerce, Hot Springs’ overall cost of living is 14.82% lower than the national average. What’s more, our research found that it has one of the lowest average housing costs in the South.

Below Average Cost of Living

In terms of affordability, one of the most important data that makes Hot Springs stand out is average housing costs. The average monthly cost for Hot Springs residents is $810, which is 30% less than the $1,163 average across the South.

If you are a new home buyer, the median home sales price in Hot Springs was $340,000 as of October 2024. Renters can also find affordable options, with some listings for as low as $500, making this attractive to both renters and buyers moving from areas with higher costs of living.

Why Is This the Key to an Affordable Retirement?

live on a fixed income Retirement means that you have a limited amount of money to rely on, and that money must last throughout your life. Choosing to live in an area with a lower cost of living can help you stretch your limited resources. It also allows you to allocate more of your budget to enjoyable activities that you look forward to after you stop working.

Housing costs tend to play the largest role in cost of living. The Boston College Center for Retirement Research reports that retirement accounts for about 40% of most household budgets. Therefore, if you choose to live in an area with lower housing costs, such as Hot Springs, it may provide more flexibility in terms of your budget and lifestyle.

No State Property Tax

Not only are housing costs lower, but the State of Arkansas has no property taxes. Residents should still expect to pay county property taxes, which average $859 annually based on the median home sales price.

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

Why Is This the Key to an Affordable Retirement?

When a recurring bill, like property taxes, is below average, it allows your money to go further in retirement. That’s why people who live during their working years in areas with high property taxes, such as the Northeast or the West Coast, often migrate south as retirement approaches.

Below Average Income Tax

When you have a fixed income, for example pensionThe last thing you want is for most of it to go to income taxes. Arkansas is one of 29 states with graduated state individual income taxes, with rates ranging from 2.00% to 4.40%. Even if you earn enough to pay the top rate, that rate is still lower than many states. In contrast, the highest rate in California is 13.3%.

Of course, there are a few states with no income tax or slightly lower rates, but Arkansas is still on the lower end.

Why Is This the Key to an Affordable Retirement?

You may hear people discuss trying to retire in a “tax-friendly” or “retirement-friendly” state, and what they’re really talking about is income tax. As mentioned, Arkansas may not be the best in this regard because it does charge income tax but it is on the lower side compared to some places.

This may not be the only factor you look at when calculating your retirement budget numbers, but as part of your overall analysis, income tax It must be something you think about.

Other Surprising Benefits of Arkansas Hot Springs for Retirees

The hot springs are affectionately referred to as the “Spa City” due to their healing thermal waters, hot springs and spa facilities. Because of its beauty and thermal springs, Hot Springs National Park was the first federally protected area in the country, designated in 1832. For retirees with active lifestyles, it’s great to have “The American Spa” so close to home.

Whether you enjoy cycling, fishing, golfing or hiking, there are plenty of things to do outdoors to keep you active and social. Hot Springs also hosts numerous music and film festivals.

In conclusion

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

However, beyond cost savings, Spa City also lives up to its name with its natural hot springs. Add to that the mild climate, lakes suitable for fishing and boating, excellent hospitals, and beautiful scenery, and you can see why this could be the ideal place to spend your golden years.

Methodology

Selected places for 2024 The South’s Best Places to Retire The list is drawn 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 cost estimates were collected from the 2022 American Community Survey (5-year) for each location in the South. Locations where predictions contained large margins of error were removed from the initial list.

The final list of locations was selected based on the following considerations:

1. housing affordability by South (comparing each location’s monthly housing costs to the weighted average of states in the South);
2. Average income in each location (as a proxy for taxes collected, which may be related to community resources; and
3. Individual reports on proximity to parks or shoreline, recent changes in the community, and previous reports from Southern Living highlighting the best places to retire.