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Key Takeaways
- Small towns, including the 29 on Investopedia’s top US places to retire, tend to offer a slower, more connected way of life, where everyday routines naturally create opportunities for social interaction.
- Lower housing costs allow retirement savings to go further, though car ownership and longer trips for healthcare often add to expenses.
- Many appealing small-town retirement locations sit in states with no broad personal income tax, but overall affordability still comes down to other factors that make up total living costs.
A small town can mean different sizes to different people. In this article, we’re looking at towns with fewer than 20,000 inhabitants on Investopedia’s list of the 100 best places to retire in the US. These towns often revolve around a modest downtown, such as a Main Street, have a local hospital or clinic, and feature a handful of businesses that provide the essentials for inhabitants.
In the United States, small towns are often far from major metro areas. They’re built around routines that are slower-paced and manageable, especially economically. Many small towns have lower housing costs, fewer places to spend money, and a slower growth cycle.
Socially, they’re places where simple outings are more likely to involve unplanned conversations, community events feel steeped in tradition and authenticity, and feeling connected is less of an effort. When deciding where to retire, these attributes can make small towns appealing.
Small Towns for Retirement Living
Grouped by state, alphabetically, these are the top 29 small towns that Investopedia has named great places to retire in 2026.
- Lewes, Delaware
- Rehoboth Beach, Delaware
- Cape Canaveral, Florida
- Cocoa Beach, Florida
- Cypress Lake, Florida
- Englewood, Florida
- Homosassa Springs, Florida
- Indialantic, Florida
- Sebring, Florida
- South Beach, Florida
- Southgate, Florida
- Conway, New Hampshire
- Algona, Iowa
- Corning, Iowa
- Knoxville, Iowa
- Pella, Iowa
- Niles, Michigan
- Hellertown, Pennsylvania
- Hermitage, Pennsylvania
- Johnstown, Pennsylvania
- Mechanicsburg, Pennsylvania
- New Cumberland, Pennsylvania
- Wilson, Pennsylvania
- Gregory, South Dakota
- Pierre, South Dakota
- Paris, Tennessee
- Omak, Washington
- Pomeroy, Washington
- Evanston, Wyoming
Financial Benefits and Drawbacks of Retiring in a Small Town
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From a financial perspective, small towns can give you room to breathe. Housing is consistently the biggest expense for American households, so lower rents, mortgages, and household operating costs make your retirement savings last longer.
Transportation costs can vary depending on the town, determined by how walkable it is and how close you live to the downtown core. Some small towns make walking for coffee, errands, or social events easy enough, particularly if you live close to Main Street. However, groceries, medical care, and larger retailers may still require a car.
This makes vehicle ownership and fuel ongoing expenses that retirees need to budget for, not to mention the ability to drive at an older age.
Fast Fact
Small towns often have limited housing inventory, which can make finding a suitable home more competitive.
Another important consideration in small towns is access to healthcare. Depending on the location, reaching medical facilities that handle more complex or specialized health needs—particularly those that become more common with age—can take additional time or travel. These long trips may take up a large portion of your time, as well as add to transportation costs.
When it comes to taxes, many of the small towns in our list are located in states with no broad personal income tax: Florida, Tennessee, Washington, South Dakota, and Wyoming. No personal income tax allows you to keep more of your retirement income when you withdraw from retirement funds, such as a 401(k), though other state and local taxes may apply.
However, personal income tax is just one line item when budgeting for retirement; retirees should focus on the total cost of living. Taking into consideration home insurance, property taxes, sales taxes, and health costs can help you make a smart retirement decision that fits your desired lifestyle and your budget.
The Bottom Line
Small towns, defined here as those with less than 20,000 residents, can be appealing for retirement thanks to their slower pace, lower housing costs, and more personal sense of community.
Living expenses are often easier to manage, and in some states, the lack of personal income tax helps retirement savings last longer. At the same time, retirees need to consider access to healthcare and the likelihood of relying on a car for many needs.
