15 Best Places to Retire for Lower Healthcare Costs

One of the biggest financial obstacles for retirees is paying for healthcare, according to a GOBankingRates survey. Healthcare in retirement can be expensive, with the average couple needing an estimated $280,000 after taxes to cover healthcare expenses over the course of their retirement, according to the Fidelity Health Care Cost Estimate.

While there is no way to avoid medical expenses — at least not one that doesn’t involve ignoring your doctors — the variation in healthcare market costs from region to region do mean that where you’re spending your golden years can play a major role in what you can expect to spend. The study looked at those cities where the average annual healthcare costs per capita were under $5,000, then scored that data along with the average out-of-pocket costs and income for those age 65 and older to come up with a final ranking of cities where retirees could potentially pay less for medical care.

15. Colorado Springs, Colo.

Annual Healthcare Spending Per Capita: $4,984
Annual Out-of-Pocket Spending Per Capita: $888
Income of Age 65+ Households: $49,422

Senior residents of Colorado Springs can pencil in almost exactly 10 percent of their annual income for the cost of their health insurance, with incomes just shy of $50,000 a year and healthcare spending just under $5,000 a year. The city very narrowly made this list as its average annual healthcare spending per capita was just $16 shy of the $5,000 cap for inclusion.

14. Memphis, Tenn.

Annual Healthcare Spending Per Capita: $4,644
Annual Out-of-Pocket Spending Per Capita: $864
Income of Age 65+ Households: $35,145

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Seniors in Memphis are earning significantly less than seniors in many of the other cities included here, and with healthcare costs still on the higher end, they can expect to spend over 13 percent of their annual income on medical costs — among the higher rates of the cities included here. The good news for Memphis residents is that — with average costs on the low side — it’s one of the cities where $1 million lasts the longest in retirement.

13. Austin, Texas

Annual Healthcare Spending Per Capita: $4,946
Annual Out-of-Pocket Spending Per Capita: $854
Income of Age 65+ Households: $54,293

The average healthcare spending in Austin is the second highest of the study, behind only Colorado Springs. However, with average incomes for retirement-age households at a healthy $54,000-plus, the percentage of total income devoted to healthcare is about 9.1 percent, among the lowest levels in the study.

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12. Lexington, Ky.

Annual Healthcare Spending Per Capita: $4,465
Annual Out-of-Pocket Spending Per Capita: $902
Income of Age 65+ Households: $49,214

Lexington is notable for having relatively high out-of-pocket healthcare costs compared to other cities on this list. The $902 spent on average represents 20.2 percent of the total annual healthcare bill for the typical resident, the highest percentage of any city in this study. However, Lexington is still one of the cheapest places to retire across middle America despite those higher out-of-pocket costs.

11. Reno, Nev.

Annual Healthcare Spending Per Capita: $4,663
Annual Out-of-Pocket Spending Per Capita: $822
Income of Age 65+ Households: $45,707

The Biggest Little City in the World isn’t just a place to consider for retirement if you’re interested in gambling and taking weekend trips to Lake Tahoe. It’s also home to an annual healthcare bill of $4,663, which constitutes a relatively affordable 10.2 percent of the average income for an age-65-and-older household.

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10. Phoenix

Annual Healthcare Spending Per Capita: $4,528
Annual Out-of-Pocket Spending Per Capita: $827
Income of Age 65+ Households: $44,300

Phoenix is another area where the out-of-pocket costs for medical care are relatively high, with a little over 18 percent of the annual total for healthcare expenditures coming directly from patients. That’s the third-highest level of any city in this study.

9. Seattle

Annual Healthcare Spending Per Capita: $4,896
Annual Out-of-Pocket Spending Per Capita: $749
Income of Age 65+ Households: $54,325

With the second-highest average income for senior households in the study, Seattle’s elderly population appears to be doing fine in terms of bringing money in. And although they have the third-highest annual healthcare expenditures of the cities on this list, it still represents just over 9 percent of their total income — the second-lowest proportion of these 15 locations. Still, with high overall costs, Seattle is one city where your retirement nest egg won’t go far.

8. Las Vegas

Annual Healthcare Spending Per Capita: $4,526
Annual Out-of-Pocket Spending Per Capita: $764
Income of Age 65+ Households: $41,969

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Nevada residents likely can’t help but compare costs for Las Vegas vs. Reno, and such a comparison reveals that everything is lower across the board for Vegas. That does mean, though, that although Vegas residents are saving $137 a year on healthcare costs — including spending $58 less out of pocket — they’re also earning $3,738 less over the course of an average year.

7. Portland, Ore.

Annual Healthcare Spending Per Capita: $4,596
Annual Out-of-Pocket Spending Per Capita: $755
Income of Age 65+ Households: $47,775

Portland’s relatively high income for senior households is paired with relatively modest healthcare costs and a relatively low portion of those being out of pocket. All of this is just part of why Portland makes the list of 15 cities you should consider for retirement.

6. Baltimore

Annual Healthcare Spending Per Capita: $4,484
Annual Out-of-Pocket Spending Per Capita: $701
Income of Age 65+ Households: $32,280

Although annual healthcare costs under $4,500 are notable, it’s unfortunately not making a big enough dent for many elderly Baltimore residents. That’s because — with an average income of just $32,280 a year — healthcare is still taking up an oversized piece of their total budget. The average senior citizen can expect to pay out some 13.9 percent of their income in medical costs by year-end, the second-highest level of any city in this study. So, if the city life is getting you down, you might consider nearby Ocean City, Md. — one of the most affordable places to retire near the beach.

5. Buffalo, N.Y.

Annual Healthcare Spending Per Capita: $4,095
Annual Out-of-Pocket Spending Per Capita: $741
Income of Age 65+ Households: $31,909

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Another city where healthcare costs and incomes are both low, Buffalo residents are spending about 12.8 percent of their income on healthcare on average — lower than some but still higher than many.

4. Spokane, Wash.

Annual Healthcare Spending Per Capita: $4,591
Annual Out-of-Pocket Spending Per Capita: $697
Income of Age 65+ Households: $43,831

Spokane is one city where the out-of-pocket medical costs faced by the average resident are relatively affordable. Just 15.2 percent of total medical costs and 1.6 percent of the average income are going to out-of-pocket medical expenses in a typical year for the average senior citizen in Spokane, both of which are among the lowest levels in the study.

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3. Rochester, N.Y.

Annual Healthcare Spending Per Capita: $4,192
Annual Out-of-Pocket Spending Per Capita: $707
Income of Age 65+ Households: $27,998

Annual healthcare costs in Rochester are nearly $1,000 lower than the national average of $5,141, making it one place where you can find relatively affordable healthcare costs. Except that the average retiree household is earning just under $28,000 a year, meaning the proportion of annual income going to healthcare costs — about 15 percent — is the highest in this study.

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2. Washington, D.C.

Annual Healthcare Spending Per Capita: $4,663
Annual Out-of-Pocket Spending Per Capita: $662
Income of Age 65+ Households: $59,086

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Although the total healthcare spending isn’t especially low, the high income levels for the average 65-or-older household in our nation’s capital mean that this is the city where the smallest portion of income goes to healthcare costs — just 7.9 percent of that $59,086 a year.

1. Tucson, Ariz.

Annual Healthcare Spending Per Capita: $3,674
Annual Out-of-Pocket Spending Per Capita: $648
Income of Age 65+ Households: $39,448

Although incomes in Tucson are relatively modest for age-65-and-older households, the average annual spending on healthcare per capita is a bit more modest. At $3,674, this is the only city in this study with costs under $4,000 a year — a bar Tucson cleared by over $300 a year.

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Methodology: GOBankingRates determined the 15 best places to retire where healthcare costs less than $5,000 a year by observing 50 cities using a combination of three factors: 1) total spending on healthcare per capita, sourced from the Health Cost Institute; 2) out-of-pocket spending per capita, sourced from the Health Cost Institute; 3) median household income of age-65-and-older households, sourced from U.S. Census Bureau’s 2017 American Community Survey. To qualify among the top 15 cities, total spending on healthcare must be less than $5,000, based on the U.S. average of $5,141. After meeting this criteria, cities were scored based on senior household incomes, total spending and out-of-pocket spending, which were then combined into an overall score.