Dueling Retirement States: The Mid-South, a Cost-Effective Choice

Category: Best Retirement Towns and States

July 11, 2017 — In this installment of our “Dueling Retirement States” we compare and analyze retirement in the states that we will call the mid-South: Georgia, Tennessee, Kentucky, and Alabama. See Further Reading at bottom for links to the other regional comparisons in our series, such as The Carolinas, Gulf States, and Florida vs. Arizona.

These states can provide many different retirement lifestyles. They have mountains, lakes, cities, and small towns. Beyond that, they offer some of the most inexpensive living situations available in the U.S. Your retirement dollar can definitely go farther here, especially with their generally tax-friendly reputations. Winters in these states are much milder than in the most of the rest of the country, with a climate that is amenable to an active retirement year round. They are also generally uncrowded and less congested than many other retirement locations.

In this article we will compare and contrast these four southern states:
(links go to our mini-retirement guides to each state). Population and income data is from American Fact Finder-U.S. Census Bureau.

A Few Facts
Georgia is the largest state by population and also the youngest and most affluent. In 2015 there were an estimated 4.9 million people in Alabama, 10.3 million in Georgia, 4.4 million in Kentucky, and 6.6 million in Tennessee.

Georgia has the lowest percentage of 65+ population of the 4 states – 11.9%. The other states were almost identical: 14.9% in Alabama, 14.4% in Kentucky, and 14.6% in Tennessee. The total U.S. % over 65 (2015) is 14.1%.

Economics and Home Prices – All 4 Under the U.S. Median.
All four states have median household incomes well below the national figure of $53,889: Alabama ($43,623), Georgia ($49,620), Kentucky ($43,740), and Tennessee ($45,219)

All four states have statewide home values well below the nationwide Zillow Home Index of $199,200 (July 2017). Alabama has the least expensive home prices of the 4 states ($126,300), while Georgia had the highest home prices at $155,800. Homes in Kentucky had a Zillow Index of $134,400 and Tennessee was second highest at $141,600. Tennessee experienced the highest one year price appreciation (8%) of any of these states. All states represent great real estate bargains compared to the rest of the country, where retirees also enjoy some of the lowest property taxes in the U.S. Source: Zillow

Tennessee mountains and lakes, as seen Fairfield Glade

2017 Home Price
2017 % Chge vs. Yr.ago

Home Prices by City
Home prices in this section are from the National Association of RealtorsĀ® (NAR), which generally publishes the most reliable sales data (and are generally higher than those reported by Zillow). As is the case everywhere, home prices vary tremendously from neighborhood to neighborhood and city to city. Places closer to cities and affluent suburbs will generally command higher prices. Looking at Alabama provides a good example, where in Birmingham/Hoover Metro the median selling price in 2017’s first quarter was $183,000 vs. $192,800 in Huntsville and $134,000 in Mobile.

Over in Georgia, Atlanta was closer to the national median with a selling price of $182,800. Kentucky and Tennessee housing prices tend to be much more inexpensive: Bowling Green (KY) at $152,000, Knoxville (TN) at $164,300, Memphis (TN) at $150,100 and Chattanooga (TN) $167,700.

View near Chattanooga, TN

Cost of Living
As mentioned at the outset, these states are some of the most inexpensive places to retire in the country.
The MERIC Index of cost of living (Ranked by lowest):
Alabama – 12th
Georgia – 13th
Kentucky – 7th
Tennessee – 5th

The Numbeo.com Cost of Living + Rent Index shows that all of these states have a lower than average cost of living. Their Index shows 80 for Atlanta, 69 for Mobile, 78 for Memphis, Huntsville at 66, Knoxville at 67, Athens (GA) at 63. For comparison, New York City is 100, so any index below that is comparatively less expensive. Unfortunately, data on cost of living is not readily available for many of the smaller cities in these states, but it is probably safe to assume they are for the most part even lower than in the larger cities.

Generalizing about crime on a state by state basis is generally meaningless. Even looking at a rates by city is difficult (where, no surprise, crime rates will usually be higher than in small towns) because crime in different parts of the metro and in the suburbs will vary so much by quantity and by type. We recommend going to city-data.com for city crime rates, or better yet, if you are interested in an area visit it and talk to people who live there to get a feel if crime is a problem.

Fountain in the former utopian community of Fairhope, AL

The states share fairly similar weather; much warmer than in the Northeast or Midwest, but not as warm in winter as in Florida. Being the furthest south, Georgia (avg. temp 63 F., ranked 5th hottest state in the USA) and Alabama (7th) are the hottest of the four. Kentucky has an avg. temp of 56 and is the 15th warmest state, whereas Tennessee is ranked 14th. Areas in the mountains, particularly in Tennessee and Kentucky, will be cooler than at lower elevations. In general these states are generally hot and humid in the summer with almost daily showers, and relatively mild and dry during the winter. As one example, Mobile (AL) has average January temperatures ranging from 40 to 61, with July temps from 72 to 90.

Tax Environment Comparison
Of these states Tennessee is the most tax-friendly – it has no income tax on earned income, although it does tax dividends and interest. None of the other states have particularly high marginal income tax rates – the highest of the bunch is Georgia which maxes out at 6%. None of the states tax Social Security, and most have generally favorable treatment for other retirement income. All of the states except Kentucky rank in the bottom half for their State tax burden, although it is near the mid-point for the U.S. Tennessee has the highest sales tax at 7%.

These 4 states have some of the lowest property tax rates in the nation. Although Kentucky has the highest property taxes of the group, it is still only the 27th highest in the country. Alabama has the lowest property taxes; it ranks 49th in the nation. Most of these states offer senior property tax exemptions of some type. The data below is from the Tax Foundation and Tax-Rates.org. For more detail about taxation and other information about each state see our mini State Retirement Guides.

Tax Burden (2012)
State Inc Tax
Int & Div only
State Sales Tax*
Prop Tax Rank

*Localities may add additional sales taxes

Taxation of SocSec
Tax on Pensions
Inher/Estate Tax

*KY exempts up to $41,110 in pension income

Where to Live by State – from our Top 100 List
All of these southern states have many interesting places to retire. There are plentiful outdoor recreational possibilities.
There are 11 cities and towns from the mid South on our 2016 List of the Most Popular Places to Retire. Those included 5 from Tennessee, 4 from Georgia, and 2 from Alabama (ranks are shown below in ( ):

Tennessee has several large cities like Memphis and Nashville, along with many small towns. Several cities and towns in Tennessee are popular as retirement communities, particularly lake towns like the golf capital of Tennessee, Crossville (#53). Paris (#10) is a small town of about 10,000 in northwest Tennessee, 15 miles from the vast and popular Land Between the Lakes recreation area. Nashville is the country music capital of the world. Maryville (#39) is a small town near Knoxville (#36) that has two great colleges in it. Johnson City and Franklin are interesting towns in the northeastern and central parts of the state. Chattanooga was the #21 most popular place to retire on our 2016 list.

Georgia has a variety of towns that are great for retirement. Many people would like Atlanta where there is so much going on. The state also has any number of active and 55+ communities of all types and sizes:
– You can live near the Ocean on a barrier island like St.Simons (#35)
– Charming Savannah (#29) is one of the earliest planned cities anywhere.
– A college town like Athens (#30)
– Riverside in Augusta
– A downstate, Florida-like town, Thomasville.
Blue Ridge (#31) is a small town in the mountains.
– Bustling Atlanta is the biggest city in the state and this part of the South. It makes for an interesting place to retire.
– Scenic and peaceful Lake Lanier offers a laid back retirement for those who like living on or near one of the biggest lakes in the country.

Fairhope (#36), a former utopian community near Mobile, is one of the most interesting retirement communities in the U.S. Another top-rated place to retire is historic small town of Eufaula.
Gulf Shores is a beach town on Alabama’s Gulf Coast. (#79).

Berea – One of the fastest growing towns in America, Brea also one of the most unusual small towns in the south. It was was founded by abolitionist missionaries in 1853. They established Berea College,where tuition is free – but students must work. Arts and crafts are very big in Berea.
Bowling Green – A delightful college town of about 52,000 in southwest Kentucky is about an hour’s drive north of Nashville. Bowling Green has been cited by Forbes Magazine (Best Small Places to Do Business) as well as making a list of the 2007 ‘Top Ten Value Towns’ for retirees.
Murray – Situated near one of the biggest man-made lakes in the country, it offers low-cost living, a great climate, and unlimited recreation. Murray State University, a top institution, makes this a delightful college town.

55+ and Active Adult Communities
These states have a variety of 55+ and active communities to choose from. Many are located on huge lakes or near interesting towns. You can find many more interesting places to retire in these states listed in our State Directories.

Bottom Line
The southern states all offer superb recreation and many types of places to live. They are all inexpensive and generally tax-friendly, making them desirable for any boomer anxious to move away from state taxation. People who already live in the south will obviously feel the most at home in this region. Some folks from other parts of the country might find that it takes an adjustment to living in a slightly different culture. For them a bigger city or area with many transplanted retirees might feel more comfortable. See our article, “Can a Yankee Find Retirement Happiness in the South” for many Member comments on this topic.

For further reference:
State Retirement Guides
Dueling Mountain States: NV, CO, UT, ID, WY, MT
Retirement 101 Mid-Atlantic States: MD, DE, VA, NJ
Florida Retirement 101
Dueling Carolinas: NC vs. SC
Dueling States: Arizona vs. Florida
California Retirement 101
Retirement in the Southwest: AZ, NM, and Utah
Comparing the Pacific Northwest: Oregon and Washington for Retirement

Comments? We and all your fellow members love to know what you are thinking. Do you live in one of these states, or are you thinking of retiring there? Please share your thoughts about retirement in these states in the Comments section below.

Posted by Admin on July 11th, 2017


  1. Whatever you do, don’t settle in the Memphis, TN area. We lived there for 12 years and are so glad we no longer live there. Crime, racism, filthy city, corrupt politicians. I could go on and on.

    by Norma — July 12, 2017

  2. Be cautious. No income tax in Tennessee BUT sales tax is close to 10% and food prices are higher than New England. Property taxes are high in the city limits and education is NOT a priority. We are in SE TN and I have a number of friends who retired here and are making it work. I will miss them. We came for work and are going back to New England to retire. Higher taxes, yes, but better quality of life for us.

    by HEF — July 13, 2017

  3. I’m a native Southerner, born and raised, and I would second the first two comments above to any city in the states you mention. We just moved from Atlanta to Colorado after living in the ATL area for fifty years. Atlanta has horrible crime, miserable traffic, heat and humidity. If you are young and looking for economic opportunity it is ok, but ABSOLUTELY NOT a place I would recommend to retire. BTW, before retiring my occupation had me travel all over the US so I have a pretty good point of reference.

    by Scott James — July 19, 2017

  4. Scott…..we are a “little” behind you in that we just vacated suburban ATL after 30 years. I, too, traveled a bit but we discovered Fairhope, AL on a Gulf Shores vacation 6 years ago. We came back each year at various times and also looked comparatively at several other retirement clty possibilities. We pulled the re-lo trigger a month ago and haven’t looked back for most of the reasons you mentioned and several others except the heat and humidity…….that was an acceptable trade-off to the much lower overall cost of living.

    by JeffH — July 20, 2017

  5. I moved Scott’s latest comment and answer to Trish and Loral to a different Blog, as the conversation is now heading West:
    Dueling Mountain States For Retirement: CO, ID, MT, NV, UT, and WY

    by Admin — July 20, 2017

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