Retiring in South Dakota: a complete guide
Discover South Dakota's unique retirement offerings. Or, answer a few simple questions below and match with a financial advisor for expert retirement advice.
Summary
South Dakota is an excellent choice for retirees looking for a low cost of living, abundant outdoor activities, and friendly communities.
South Dakota is a largely rural state, which may not be appealing to retirees who prefer the amenities and entertainment options of more urban areas.
Sioux Falls is the largest city in South Dakota and offers plenty of amenities for retirees. It also has a low cost of living and a high-quality healthcare system.
A financial advisor can help you meet your financial goals and ensure you have enough money to live out your dream retirement.
Is South Dakota a good place to retire?
South Dakota is becoming an increasingly popular retirement destination for many Americans.
With its natural beauty, friendly communities, and low cost of living, South Dakota offers retirees a unique retirement experience that attracts many every year.
According to data from the U.S. Census Bureau in 2020, South Dakota had a population of approximately 900,000 people, with over 16% of the population over the age of 65.
South Dakota is an excellent choice for retirees looking for a low cost of living, abundant outdoor activities, and friendly communities. With its natural beauty, excellent healthcare, and range of retirement options, South Dakota has something to offer everyone.
Where are the best places to retire in South Dakota?
If South Dakota is your chosen retirement state, here are some of the best places to retire:
How much money do you need to retire in South Dakota?
According to a recent analysis by GoBankingRates, retirees in South Dakota spend $54,047 annually.
While yearly expenses come to just over $54,000, to retire comfortably with a 20% buffer for unexpected costs, the annual amount you need is really $64,856.
The personal finance site used Bureau of Labor Statistics estimates for food, shelter, transportation, health care, and utility expenses to calculate the annual retirement costs for Americans aged 65 and older in each state.
When considering how much you need saved to retire in South Dakota, Kiplinger states you need $789,119. This makes South Dakota the 19th cheapest state in the country to retire in.
How much are retirement taxes in South Dakota?
There is no state income tax in South Dakota. This means income from your retirement savings accounts, such as your 401(K) or IRA, your pension, and Social Security will not be subject to state income tax.
Additionally, South Dakota does not impose inheritance or estate taxes on your beneficiaries, meaning you can pass on your assets without having to worry about your loved ones incurring a large tax bill.
You will, however, have to pay federal taxes on the above, depending on your unique situation.
What are the pros and cons of retiring in South Dakota?
If you’re choosing South Dakota for retirement, you must weigh up the advantages and disadvantages of moving to the state.
Here is a list of some of the most important pros and cons to consider:
The pros of retiring in South Dakota:
Low cost of living: South Dakota is known for its low cost of living, making it an ideal destination for retirees who want to stretch their retirement savings and live comfortably without breaking the bank. The state also has no state income tax and low property taxes.
Outdoor activities: South Dakota is home to some of the most spectacular natural attractions in the country, including the Badlands, Mount Rushmore, and the Black Hills. Retirees can take advantage of the state's abundant outdoor activities, such as hiking, fishing, camping, and golfing.
Friendly communities: South Dakota is known for its friendly communities and welcoming residents. Retirees who move to the state will find a strong sense of community, with plenty of opportunities to get involved in local events and activities.
Healthcare: South Dakota has a robust healthcare system, with several highly rated hospitals and medical centers located throughout the state. The state also has a number of senior care facilities, providing a range of options for retirees who need additional assistance.
South Dakota weather: South Dakota has a continental climate with cold winters and warm summers. While the winters can be harsh, the state's sunny summers make up for it. The state's diverse landscape also means that different parts of the state experience different weather patterns, providing a range of options for retirees who are looking for a particular climate.
The cons of retiring to South Dakota:
Limited cultural scene: While South Dakota has a rich history and culture, its cultural scene may not be as diverse or vibrant as other states.
Sparse population: South Dakota is a largely rural state, which may not be appealing to retirees who prefer the amenities and entertainment options of more urban areas.
What age can you retire in South Dakota?
In South Dakota, there is no legally mandated retirement age, allowing individuals the freedom to retire whenever they are financially prepared.
However, retirees in South Dakota should consider the following age-related benefits and factors:
Social Security benefits: You can start receiving Social Security benefits as early as age 62. However, delaying benefits increases your monthly payments. Full retirement age (FRA) ranges from 66 to 67, depending on your birth year. Postponing benefits beyond FRA can further boost your monthly payments.
Medicare eligibility: Medicare begins at age 65, regardless of whether you are retired. If you retire before 65, you will need alternative healthcare coverage until you qualify for Medicare.
Retirement savings: Regardless of when you plan to retire, it is crucial to start saving early. Financial experts often recommend saving at least 15% of your income for retirement.
Get expert retirement advice
It's important to seek expert financial advice to weigh up all of the costs associated with retiring in South Dakota.
Knowing everything about property taxes, insurance, and living expenses can help you make an informed decision about whether the state is the right choice for your retirement.
Unbiased can match you with an SEC-regulated financial advisor here.
Frequently asked questions
Content writer
Kate has written for leading publications and blue chip companies over the last 20 years.