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After decades on the company clock, most people are more than ready to enjoy their well-earned retirement. The average age to retire is 65, and whether you're almost there or just beginning to think about pensions and retirement funds, you're probably putting some thought into the best states or cities to plant your new free-time flag. You might be surprised how much costs vary from state to state for those planning to live without a paycheck for the next few decades.

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Connecticut

Retiring in Connecticut requires at least $79,762 per year. The Nutmeg State has four distinct seasons, with lush greenery in summer and dazzling colors in autumn. The sales tax is below the national average, but all forms of retirement income, including Social Security, are taxed. Property taxes average 2.07 percent, and the average house costs between $240,000 and $250,000.

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Mississippi

Mississippi is one of the friendliest spots to consider when it comes to retirees. The Magnolia State has extremely low property taxes, which average about 0.80 percent. Sales tax is moderate, and all forms of retirement income are exempt from taxation. Home values are typically lower than $80,000, and homeowners spend less than $500 in property taxes. This means you can comfortably live on a minimum annual income of $53,072.

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Hawaii

What sets Hawaii apart from other states is also what makes it the most expensive, requiring retirees to save up at least $117,724 annually. Individuals with private pensions are fully taxed at 8.25 percent for the $48,000 to $150,000 bracket. The good news is that public pensions are exempt from taxation, and homeowners aged 65 and older are eligible for up to a $120,000 exemption, depending on where on the islands they live.

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Arkansas

To retire comfortably in Arkansas, you’ll need approximately $54,744 annually. The Natural State is subtropical and prone to tornadoes and storms from the Gulf of Mexico. Winters are milder, reaching between 30 and 50 degrees Fahrenheit in January. Those with military pensions are exempt from taxes, while anyone with a private pension needs to pay about 6 percent. The good news is, retirees 60 and older who have their own homes are eligible for a homestead credit.

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California

When it comes to California, retiring comfortably on $85,893 per year depends on which location provides you with your essentials. California is in the top five of high-cost living and poses a significant tax burden, but for anyone looking for the lowest cost of living, El Centro may be the spot. Palm Desert and Palm Springs have a higher population of 65 and older, but if you want to live where there's a low property crime rate, Saratoga and Rancho Santa Margarita are better locations.

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Alabama

To retire, people living in Alabama need to have squirreled away at least $55,425 annually. The Cotton State is considered welcoming to those in their golden years, with its mild winters and warm, friendly atmosphere. It has a relatively high sales tax, but retirees who own their houses have low property tax rates, sometimes paying as little as $400 per year. A number of retirement income exemptions can make that money stretch even further.

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New York

Despite expensive housing that's sometimes more than double the national average, New York has made retiring there more attractive than some might expect. While sales tax is relatively high, it doesn’t apply to clothing under $110, groceries, or medications. State, local, and federal pensions are tax-exempt, and the Enhanced Star program provides an attractive real estate tax break. If you choose someplace outside of the priciest boroughs and have about $84,035 per year, a New York retirement could be a win for you.

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Kentucky

To live comfortably in Kentucky, retirees need to plan for $56,850 per year. Apart from temperate winters, people 65 and older are eligible for a homestead exemption. While residents will have to pay income tax on other sources of retirement income besides Social Security, they can opt in on plenty of deductions to offset that expense. One attractive draw is that the inheritance tax doesn't apply to money bequeathed to close family.

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New Jersey

New Jersey is considered a higher-end retirement option. Retirees need to plan for living on $75,861 or more per year. Social Security does draw federal taxes, but not state taxes, and those with an adjusted gross income of less than $100,000 from private pension schemes can deduct $60,000 or $80,000 depending on how they file. Homeowners over 65 are eligible for rebates, and the state eliminated estate taxes in January 2018.

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West Virginia

Retiring comfortably in West Virginia takes about $58,645 annually. The Mountain State has a small, rural atmosphere that makes people feel right at home. Places like Bridgeport and Star City are popular thanks to their lower crime rates. Retirement income, including Social Security, is partially taxed, but seniors can claim deductions that will help them recoup their money. The average cost of a house is $112,000, while the state property tax rate is about 0.59 percent, making it one of the lowest in the country.

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Iowa

Iowa is one of the least tax-friendly places to retire thanks to expensive property taxes, high taxes on incomes over $74,970, and even an inheritance tax in some cases. While the state doesn't touch Social Security benefits, additional sources of retirement income over $6,000 — or $12,000 for joint filers — are up for grabs. Property tax breaks for homeowners over 65 are minimal, considering some areas charge additional income taxes.

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Texas

In the Lone Star State, where the average home sells for about $283,000, you'll find the seventh-highest property tax rates in the country. These levies can take a big bite out of retirement savings despite Texas' lack of an income tax. It's a good thing school district taxes freeze for homeowners over 65, and some seniors are eligible for additional tax breaks, homestead exemptions, valuation freezes, and deferments. Sales taxes are also on the high side once state and local rates combine.

The modern skyline of downtown Houston, Texas, America's fourth largest city, shot aerially from an altitude of about 1000 feet. Art Wager / Getty Images
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New Mexico

New Mexico's desert landscapes are a sight for sore eyes, but their tax laws might give you a headache. Social Security benefits, retirement income, and pensions are all subject to taxation with an exemption of up to $8,000 for some. The good news? Property taxes are on the lower end, and low-income seniors might be eligible for tax credits and deferral programs. With median home prices at around $201,000, you'll need about $47,184 annually in the Land of Enchantment.

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Georgia

Retirement in Georgia looks mighty peachy. Not only does the state refrain from taxing Social Security benefits, but they also exempt up to $65,000 in retirement earnings for taxpayers over 65, with a head start of $35,000 a year when you turn 62. Property tax breaks for low-income seniors make reasonable rates even better. With an average cost of living at $46,771 a year, no one can blame you for keeping Georgia in mind.

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Indiana

Indiana doesn't tax Social Security benefits, but retirement income from 401(k) plans, private pensions, IRAs, and military retirement plans are all taxable. Some counties charge an additional income tax on top of the state's 3.23%. These factors contribute to the Hoosier State's reputation as not being very tax-friendly for retirees. Average property tax rates ease a bit with reductions for qualifying seniors over 65. With a median home price of $214,000, a modest income of $46,720 a year is all it takes to live comfortably.

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