Millions of Americans have spent decades planning the same retirement move: sell the house, head south, and enjoy Florida, Texas, or Arizona on a lower budget. But a sweeping new cost-of-living analysis from Fidelity Investments suggests the plan deserves serious scrutiny before you commit.

Roughly 300,000 retirement-age Americans relocate to Sun Belt states each year, with more than a third choosing Florida alone, according to a 2022 U.S. Census Bureau report. Arizona ranks as a distant second. The migration pattern is so embedded in American culture that questioning it feels contrarian.

Fidelity examined four major expense categories that vary widely by state: income tax, property tax, homeownership and auto insurance, and home prices. The results could reshape the way you plan your retirement, because the gap between expectation and reality is wider than most people realize.

Fidelity’s analysis exposes the Sun Belt’s hidden cost problem

The core finding is direct: Sun Belt states are not uniformly cheaper than the northern and midwestern states retirees leave behind. Fidelity compared the combined costs of taxes, insurance premiums, and property tax bills across every major Sun Belt destination. Several popular retirement states ranked among the most expensive overall.

Florida carries the highest combined insurance costs in the entire Sun Belt for homeowners and auto coverage. Texas imposes one of the highest property tax rates in the country, doubling the annual bill on a $300,000 home compared to California. These costs can erase whatever you saved by moving to a no-income-tax state.

The “no income tax” advantage is smaller than you think

Florida, Nevada, and Texas charge zero state income tax, and that headline benefit drives enormous retirement migration. But all except nine states already exempt Social Security income from state taxes as of 2025, Fidelity reports. 

If Social Security provides a large portion of your income, the tax savings from moving may be minimal. Fidelity calculated effective tax rates on retirement income, factoring in federal and state taxes on IRA withdrawals. 

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For married filers, rates ranged from 7.66% in no-tax states to 10.71% in North Carolina. For single filers, the range in California stretched from 13.41% to 17.72%. The gap is real but far narrower than marginal tax rates suggest.

The nine states still taxing Social Security are Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont, and West Virginia. If you live in one of those states, the Sun Belt’s tax benefit is more meaningful.

If your state already exempts Social Security, calculate whether income tax savings justify higher insurance and property costs.

Insurance premiums are eating Sun Belt retirement budgets

The Sun Belt delivers warm winters, but it also delivers hurricanes, flooding, and wildfires with growing frequency. These climate events have driven insurance costs sharply higher across the region over recent years. Florida now has the highest combined homeowners and auto insurance costs among all Sun Belt states, at roughly $9,550 annually, according to Fidelity.

Homeowners insurance premiums nationwide rose 10.4% in 2024 after a 12.7% increase in 2023, according to S&P Global Market Intelligence. Arizona and Texas each saw rate increases exceeding 35% over two years. Louisiana ranks second at roughly $8,133 in combined annual insurance costs.

“A lot of that comes back to Florida’s high wind risk from big storms like hurricanes, and Florida also ranks in the top states hit by tornadoes as well, so it’s not just hurricanes, many things contribute to Florida’s high insurance costs, litigation in the past, but severe weather is what’s driving it,” said Matt Brannon, senior economic analyst for Insurify, as local affiliate Fox29 reported.

Nevada and Georgia sit at the low end, with combined costs of approximately $4,739 and $4,970, respectively. The spread between the cheapest and most expensive Sun Belt states exceeds $4,800 per year. That difference alone could fund a meaningful share of your annual retirement spending over a multi-decade retirement.

“Insurance is no longer a set-it-and-forget-it expense,” said Thomas Ravert, a certified financial planner with Pathway Capital Corp. For retirees on a fixed budget, unchecked insurance inflation can quietly undermine years of careful savings planning.

Rising insurance costs are making Sun Belt retirement more expensive, cutting into savings and changing what retirees can comfortably afford each year.

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Property taxes in Texas rival what you’d pay in the Northeast

States without income tax often compensate through property taxes, and Texas is the clearest example. A $300,000 home in Texas costs roughly $4,410 in annual property taxes, according to the Tax Foundation. That is double Florida’s $2,130 and four times Alabama’s $1,080, the cheapest property tax state in the Sun Belt.

Population growth in Sun Belt metros also carries a hidden risk that Fidelity flagged. Booming populations require expensive infrastructure, and those costs translate into future property tax increases not yet reflected in current rates. You could move to a low-tax suburb today and face significantly higher assessments within five years.

Sun Belt home prices range from bargain to California-tier

Average single-family home prices range from roughly $250,000 in Louisiana to $824,000 in California, according to Redfin. Florida sits closest to the national average at $432,800, compared with $443,000 nationwide. Nevada reached $498,500, placing it in the upper tier among Sun Belt destinations.

A $175,000 retirement home exists in Florida, but Fidelity raises a critical follow-up question: Would it be in a walkable neighborhood near health care? Condos offer a more affordable entry, with Sun Belt averages ranging from $213,000 in Louisiana to $414,700 in Alabama, though condo associations carry their own monthly fees that affect your total budget.

Where you move from determines whether you save or lose money

Fidelity’s hypotheticals show that outcomes depend heavily on your current state. A married couple moving from Colorado to Nevada could save about $4,000 annually on combined taxes and insurance. That same couple moving to Arizona or California would save only about $2,000 per year. The math works best when you leave a high-cost, high-tax state.

The picture reverses for retirees in affordable states. A single retiree leaving Wisconsin for Louisiana could spend an extra $1,000 per year. A single person moving from New Jersey to Florida could pay nearly $1,000 more annually than they paid in New Jersey. The Sun Belt is not a universal bargain, and your savings depend entirely on your origin and destination.

How to build a realistic Sun Belt retirement budget

Fidelity’s findings suggest you need a more detailed comparison than most online calculators provide. Here are the steps financial professionals recommend before you commit to a cross-state retirement relocation.

Key steps before relocating for retirement

• Run a side-by-side comparison of your current total tax burden against your target state, using identical income assumptions and including income, property, and sales taxes.
• Request homeowners and auto insurance quotes in your target ZIP code before committing, since premiums vary by thousands of dollars between neighboring counties.
• Factor in future property tax hikes driven by population growth, especially in fast-growing metros like Phoenix, Austin, and the greater Tampa Bay area.
• Consider health care access and costs, which can represent the single largest variable expense for retirees over 65 and are not covered in Fidelity’s analysis.
• Work with a financial advisor and tax professional who can model your specific retirement income sources against both your current and target state’s tax treatment.
• Rent before you buy in your target market for at least six months to test whether the real cost of living matches your projections and expectations.

The average retiree household spends roughly $61,432 annually, according to the Bureau of Labor Statistics. A relocation that saves $3,000 in income taxes but adds $5,000 in insurance and property taxes is a net loss of $2,000 per year, compounding over a 25-year retirement.

Sun Belt retirement is not dead, but blind faith in it should be

Fidelity does not argue that the Sun Belt is a bad place to retire. It argues that the cost advantage has been oversold, and your personal circumstances should drive the decision. Where you live now, how your income is structured, and what kind of home you want all matter more than any state’s reputation.

Proximity to family, quality health care, community fit, and walkability are factors that Fidelity’s numbers cannot capture.

The firm recommends working with a financial professional and a tax advisor before making any relocation decision. The cost of getting this wrong compounds every year you spend in a state that costs more than you planned.

Related: Fidelity finds a ticking time bomb in retirement plans