Making the decision on where to spend your retirement is one of the biggest you will ever make. It’s a major life transition, but it’s also a critical financial one. The goal isn’t just to stop working; it’s to build a life where your resources work for you, allowing you to thrive. Many people look at brochures with beautiful mountain views, and we certainly have those.
But as everyone knows, a strong life needs a solid financial foundation. That is why we want to give you a direct, no-nonsense breakdown of the three financial pillars that make retiring in East Tennessee such a sound and logical choice. We will look at the real numbers behind our taxes, our cost of living, and our home values, so you can see the blueprint for a secure and prosperous retirement.
Pillar 1: The Tennessee Tax Advantage – Keeping More of Your Money
When financial advisors talk about retirement planning, taxes are always a huge part of the conversation. It’s not about what you earn or what your investments return; it’s about what you get to keep. This is where the financial case for retiring in East Tennessee begins, and it’s an incredibly strong start. The tax structure in our state is designed in a way that truly benefits retirees, allowing you to protect the nest egg you worked so hard to build. Let’s break down the specific advantages one by one.
The Big One: No State Income Tax
This is the headline advantage, and it’s impossible to overstate its impact. Tennessee is one of only a handful of states with no state income tax. For a working person, that means a bigger paycheck. For a retiree, the benefits are even more consequential. Think about your sources of income in retirement.
- Social Security Benefits: In Tennessee, your Social Security checks are yours, period. The state does not tax them.
- Pension Payments: If you have a pension from a former employer, that income is not taxed at the state level.
- 401(k) and IRA Withdrawals: When you start drawing down your retirement accounts, you will not owe any Tennessee state income tax on those distributions.
This is a massive financial benefit. In a state with a 5% income tax, a $50,000 withdrawal from your 401(k) would cost you $2,500 right off the top. Here, that $2,500 stays in your pocket. It can go toward travel, hobbies, or simply provide a thicker cushion of financial security. Over a 20 or 30 year retirement, this single benefit can add up to tens or even hundreds of thousands of dollars in savings. Many people considering retiring in East Tennessee find this to be the most compelling factor.
Some people may have heard of something called the “Hall Tax.” This was a state tax on some interest and dividend income. It’s important for you to know that this tax was fully and permanently repealed. This move solidified Tennessee’s status as a true no-income-tax state, removing any confusion and making the financial picture for retiring in East Tennessee even clearer and more attractive.
Property Taxes: A Realistic Look
The next question people usually ask is, “If there’s no income tax, are the property taxes sky-high?” It’s a logical question, but the answer here is another pleasant surprise. Property taxes in Tennessee are assessed and collected at the local level, by counties and cities.4 Here in the Tri-Cities region, our rates are consistently well below the national average.
Let’s look at the three main counties in our area: Washington County (where Johnson City is), Sullivan County (home to Kingsport and Bristol), and Carter County (where you’ll find Elizabethton). While the exact rates can change slightly year to year, they remain remarkably low.
To make this practical, consider a home valued at $350,000. In many parts of the country, the annual property tax bill on such a home could be $5,000, $7,000, or even more. Here, you can expect that bill to be significantly less, often less than half of what you might pay in a high-tax state in the Northeast or Midwest. This is a direct, year-after-year saving that makes homeownership much more affordable. For those on a fixed income, this predictable and low expense is a cornerstone of a manageable budget. Successful retiring in East Tennessee often comes down to predictable costs like these.
Furthermore, the state of Tennessee offers a Property Tax Relief Program for seniors who meet certain age and income requirements. This is another layer of financial protection designed to help retirees stay in their homes without being burdened by rising tax assessments.
Sales Tax Considerations
Now, in the spirit of integrity and providing a complete picture, we must talk about sales tax. Tennessee’s sales tax rate is higher than the national average. This is the trade-off for not having an income tax. The state funds its services through taxes on goods and services, or consumption.
However, it’s important to put this in perspective. First, you have direct control over how much sales tax you pay. If you spend less, you pay less. Second, and this is a key point for daily living, the sales tax on groceries is significantly lower than the general rate. Since food is a major and consistent part of any household budget, this lower rate helps to lessen the impact.
When you do the math, most retirees find that the enormous savings from no income tax and low property taxes far outweigh the extra cost of the sales tax. The decision of retiring in East Tennessee remains a financially sound one even with this factored in. It is a consumption-based system that tends to benefit those who are saving and living on a fixed income rather than those with high annual earnings.
Pillar 2: The Cost of Living – Your Dollar Stretches Further Here
Beyond taxes, the success of your retirement budget depends on your day-to-day expenses. How much does it cost to keep a roof over your head, the lights on, and food on the table? This is another area where the numbers strongly favor retiring in East Tennessee. Our region consistently ranks as one of the most affordable places to live in the United States. Your retirement savings and Social Security income simply have more buying power here.
The Housing Equation (My Expertise)
As a home builder, this is the area I know best. The cost of housing is the biggest expense for most American families, and it’s where you can find the most significant savings when retiring in East Tennessee. The median home price in the Johnson City, Kingsport, and Bristol areas is substantially lower than in most other popular retirement destinations, whether you’re looking at Florida, Arizona, or the Carolinas.
This affordability presents you with powerful options. You can buy an existing home for a great price, or you can take the money you saved by selling a more expensive home elsewhere and use it to build a brand new, custom home perfectly suited for your retirement years. Let’s explore that second option, as it is a path more and more retirees are choosing.
Building a new home when you retire might sound like a major undertaking, but the long-term benefits are immense.
- Aging-in-Place Design: When we build a custom home for a retiree, we build for the future. This means incorporating “aging-in-place” or universal design principles. These are not clinical features; they are smart designs that make life easier and safer for everyone. This includes things like single-level living to eliminate stairs, wider doorways to accommodate walkers or wheelchairs if ever needed, and zero-entry showers that you can walk right into without a curb to trip over. Building new allows you to plan for the next 30 years, not just the next five.
- Energy Efficiency: A home built today is vastly more energy-efficient than one built 20 or 30 years ago. From the quality of the insulation and windows to the efficiency of the heating and air conditioning (HVAC) system, modern building standards result in dramatically lower monthly utility bills. This is a “retirement paycheck” that pays you back every single month for the life of your home. A key financial benefit of retiring in East Tennessee can be a brand-new home with incredibly low energy costs.
- Predictable Maintenance: An older home comes with question marks. When will the roof need replacing? Is the furnace on its last legs? These surprise expenses can wreck a retirement budget. With a new home, everything is new. The roof, the appliances, the water heater, the HVAC system. You have warranties and years of worry-free living ahead of you. This predictability is priceless when you are on a fixed income. The peace of mind that comes with a new build is a major factor for those retiring in East Tennessee.
Utilities, Groceries, and Healthcare
The affordable cost of living extends beyond just housing. Other core expenses are also very reasonable in our region.
- Utilities: Our electricity is primarily provided through local utilities that get their power from the Tennessee Valley Authority (TVA). The TVA was created decades ago to provide affordable and reliable power to the entire region. As a result, our electricity rates are typically at or below the national average, another small but consistent monthly saving.
- Groceries and Daily Expenses: Whether it’s a gallon of milk, a tank of gas, or a haircut, you will find that the general costs for daily life are lower here. These small savings add up over the course of a year, freeing up more of your money for the things you want to do.
- Healthcare: Access to quality, affordable healthcare is a top priority for every retiree. The Tri-Cities is served by Ballad Health, a large and comprehensive regional health system. This means you have access to excellent hospitals, specialists, and primary care physicians right here, without the high costs and logistical challenges of a major metropolitan area. This combination of quality and affordability is a critical component of a successful plan for retiring in East Tennessee.
Pillar 3: Home Value & Protecting Your Biggest Investment
When you buy or build a home in retirement, it’s more than just a place to live. For many people, it is their single largest asset and a key part of their financial portfolio. You want to know that this investment is secure and has the potential to grow. The housing market in our region offers a compelling blend of stability and steady appreciation, making retiring in East Tennessee a sound investment strategy.
A Stable and Growing Market
Some housing markets are like a roller coaster, with dramatic booms and painful busts. The East Tennessee real estate market, by contrast, is more like a steady, gentle climb. We don’t typically experience the wild price swings seen in other parts of the country. Instead, we have a history of consistent, sustainable growth.
This stability is incredibly important for retirees. It means your investment is protected from market volatility. The value of your home is likely to grow at a sensible pace, preserving your equity and providing a valuable asset for your future or for your heirs. This growth is supported by a diverse local economy, a growing population of people discovering the benefits of the region, and the timeless appeal of the Appalachian Mountains. People are drawn to the quality of life here, which creates a constant and healthy demand for housing. This makes retiring in East Tennessee a smart move for asset protection.
The Value of New Construction
From a builder’s perspective, I can tell you that a new, well-built home is an excellent investment in any market, but especially here. When the time eventually comes to sell, a modern home has significant advantages.
Buyers today are looking for open floor plans, modern kitchens and bathrooms, and energy-efficient features. An older home may require tens of thousands of dollars in renovations to meet these expectations. A new home already has them. It is move-in ready for the next owner. This often allows a newer home to command a better resale price and sell more quickly than its older counterparts.
By choosing to build a custom home, you are not just getting the exact layout and features you want for your retirement; you are also making a strategic investment. You are creating a highly desirable property that will hold its value and be a sought-after asset in the local market. Protecting your investment is just as important as growing it, and this is a key consideration for anyone thinking about retiring in East Tennessee.
Direct Answers to Your Financial Concerns
When I talk to people who are considering a move here, they often ask the same practical questions. Here are direct answers to the most common financial concerns about retiring in East Tennessee.
- Is Tennessee a tax-friendly state for retirees? Yes, absolutely. In fact, it is consistently ranked as one of the most tax-friendly states in the entire country for retirees. The combination of no state income tax on any form of retirement income (including Social Security, pensions, and 401k/IRA withdrawals) and low property taxes is the primary reason. This tax structure allows you to keep significantly more of your money compared to most other states.
- How much money do you need to retire comfortably in Tennessee? This is a personal question that depends on your lifestyle, but the answer is almost always “less than you would need elsewhere.” Because the overall cost of living is so low, particularly for housing, your retirement nest egg goes much further. A budget that would feel tight in a high-cost state can allow for a very comfortable and active lifestyle here. Many financial experts note that retiring in East Tennessee allows for a higher quality of life on a smaller budget.
- Does Tennessee tax Social Security or pensions? No. This is a critical point that I want to repeat. The state of Tennessee does not tax Social Security benefits or income from pensions.14 That money is 100% yours at the state level.
- What are the pros and cons of retiring in East Tennessee? It’s important to look at both sides.Pros: The financial pros are immense, as we’ve discussed: no income tax, low property taxes, and a low overall cost of living. Beyond the numbers, you have four distinct but mild seasons, incredible natural beauty with the mountains and lakes, less traffic and congestion, and friendly communities.Cons: The main financial con is the higher sales tax, though most find it is more than offset by other savings. From a lifestyle perspective, if you desire the amenities of a massive city like New York or Los Angeles, you won’t find that here. We have a more relaxed pace of life. And yes, it can be humid in the summer, but our mountain elevation often provides cooler evenings than in other parts of the South.
Conclusion: Building Your Financial Future in the Appalachian Highlands
Making the decision to relocate for retirement is about finding the right intersection of lifestyle and financial security. It’s about building a future where you can worry less about money and focus more on enjoying the years you’ve worked so hard for.
As we’ve laid out, the financial case for retiring in East Tennessee is built on three solid pillars. First, a powerful tax advantage that keeps more of your retirement income in your pocket. Second, a low cost of living, anchored by affordable housing, that makes your money go further every single day. And third, a stable and growing real estate market that protects and enhances your single biggest investment.
A smart retirement plan is an efficient one. It is a plan that makes your resources work for you. Here in the mountains of East Tennessee, the financial advantages are clear and compelling. They provide the solid foundation upon which you can build a rich, fulfilling, and secure retirement. The numbers work, allowing you to focus on what truly matters: your health, your family, your hobbies, and enjoying your new home in this beautiful corner of the country.
