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For retirees who have paid off their mortgage, Tennessee offers a razor-thin financial margin, allowing them to cover essential living costs with Social Security benefits alone. According to a recent analysis, the state's median Social Security benefit provides an annual surplus of just $156, or about $13 per month, after accounting for average expenses. This places Tennessee among a small group of states where retirement on a fixed income is technically feasible, though it requires extremely careful budgeting.
Retirees in Tennessee face average monthly living expenses of $1,870. The most significant advantage for homeowners without a mortgage is low housing costs. These ongoing housing-related expenses—which include property taxes, homeowners insurance, utilities, and maintenance—average a modest $474 per month. This figure is critically important for fixed-income budgeting, as it keeps total housing costs well below the 30% affordability threshold recommended by federal guidelines, accounting for about 25% of a retiree's total expenses.
While Tennessee's surplus is minimal, it is far better than the situation in many higher-cost states. Nationally, retirees relying solely on Social Security face an average annual shortfall of $2,762. In states like New Jersey and Massachusetts, housing costs alone can range from $1,000 to $1,300 per month, creating deficits exceeding $7,000 annually. Tennessee's position is more fragile than surplus leaders like Delaware ($1,764 annual surplus) or Indiana ($1,392), but its modest cost of living provides a crucial edge.
Tennessee's popularity among retirees is driven by several key factors. The state has no state income tax, which includes no tax on Social Security benefits. Combined with relatively low property taxes, this creates a favorable tax environment. The state also offers a mild climate with four distinct but manageable seasons, particularly in regions like Middle and East Tennessee. Cities like Nashville and Knoxville provide access to cultural amenities and healthcare facilities, while smaller towns offer a lower cost of living and a slower pace of life.
The $156 annual surplus is extremely fragile. Based on our experience assessment, even small increases in costs for utilities, insurance, or property taxes could easily push a retiree's budget into a deficit. Furthermore, the Social Security system itself faces long-term solvency challenges. Projections suggest that without congressional action, benefits could be reduced to approximately 77% of current levels by 2033, which would eliminate Tennessee's slim surplus entirely.
For retirees considering Tennessee, the key to a sustainable retirement on Social Security alone hinges on two factors: having no mortgage payment and creating a meticulous budget that accounts for rising ancillary housing costs. While the state provides a workable, if tight, financial scenario, its viability is highly dependent on stable future costs and benefits.
