Can You Retire on Social Security Alone? 10 States Where It's Possible After Paying Off Your Mortgage

For many retirees, the goal of a mortgage-free home is central to their retirement plan. However, rising homeownership costs like property taxes and insurance mean that paying off your mortgage does not guarantee you can live comfortably on Social Security benefits alone. Recent analysis confirms that Social Security income is sufficient to cover the average retiree's living expenses in only 10 out of 50 states, highlighting a significant financial challenge for those relying primarily on this income source.

This reality underscores the critical importance of location in retirement planning. While a paid-off mortgage eliminates a major debt, ongoing costs vary dramatically by state and can create substantial budget shortfalls. Understanding these geographic disparities is the first step toward building a secure financial future.

What Are the Ongoing Costs of a Paid-Off Home?

Even after your mortgage is paid, you are still responsible for several essential housing expenses. The most significant are property taxes, which are levied by local governments to fund services like schools and infrastructure. These taxes can vary by thousands of dollars annually between states. Another key cost is homeowners insurance, which protects your investment from damage due to fire, storms, or other covered events. Premiums are influenced by your home's value and the region's risk factors (e.g., hurricane or wildfire zones).

Additionally, retirees must budget for routine maintenance and repairs. Unlike renting, homeowners bear the full cost of upkeep, from roof replacement to HVAC system repairs. Setting aside 1% to 4% of your home's value annually for maintenance is a common recommendation. Finally, homeowners association (HOA) fees apply if you live in a condominium or planned community, covering shared amenities and exterior maintenance.

Which States Allow Retirement on Social Security Alone?

Based on an analysis comparing average annual Social Security benefits to the estimated cost of living for retirees, only a select number of states are financially feasible. These states typically feature a combination of lower-than-average property taxes, affordable homeowners insurance, and reasonable costs for essentials like healthcare, utilities, and groceries.

The 10 states where Social Security is most likely to be sufficient share common traits, including:

• Low Tax Burdens: Many have below-average property tax rates and some offer favorable tax treatment for Social Security income.
• Affordable Housing Markets: Overall housing costs, even for maintenance and utilities, are manageable on a fixed income.
• Moderate Cost of Living: General expenses for food, transportation, and healthcare do not excessively strain a retiree's budget.

It is crucial to conduct hyper-local research, as costs can vary widely within a state. A rural area may be far more affordable than a major metropolitan city in the same state.

Why Can't Social Security Cover Costs in Most States?

The primary issue is that Social Security cost-of-living adjustments (COLAs) have historically struggled to keep pace with the actual inflation experienced by retirees, particularly in housing and healthcare costs. Furthermore, the long-term solvency of the Social Security Trust Fund is a concern, with projections indicating potential benefit reductions if congressional action is not taken. This uncertainty means that relying solely on Social Security is a high-risk strategy for most Americans.

Retirees should view Social Security as a foundational income source—a safety net—rather than a complete retirement plan. A comfortable retirement typically requires additional income streams, such as withdrawals from 401(k) plans, IRAs, or other personal savings and investments.

What Practical Steps Can Retirees Take?

To mitigate the risk of outliving your money, consider these actionable strategies:

• Relocate Strategically: If your current state has a high cost of living, research more affordable states. Consider factors beyond taxes, such as proximity to family, climate, and access to quality healthcare.
• Downsize Your Home: Even with a paid-off mortgage, a smaller, more efficient home can significantly reduce property taxes, insurance premiums, and utility bills.
• Create a Detailed Retirement Budget: Account for all post-mortgage housing costs. Be realistic about maintenance expenses, which often increase as a home ages.
• Diversify Your Income: Supplement Social Security with other income. This could include part-time work, annuity payments, or rental income from a portion of your property.

The key to a secure retirement is comprehensive planning that accounts for all housing costs, not just the mortgage. While paying off your home is a monumental achievement, it is only one piece of the puzzle. By understanding the full financial picture and making informed decisions, you can work towards a truly comfortable and sustainable retirement.