Why These 2 Southwest Locations Are Perfect for Your Retirement Plans

The Southwest might be whispering your name if your vision of a pleasant retirement includes plenty of sunshine. The natural scenery in many areas is spectacular, and this area of the country tends to be senior-friendly. These are Investopedia’s top choices for the best retirement locations in the southwestern United States.

Eagle Pass, Texas

Let’s look at dollars and cents first. The cost of living in Eagle Pass is 17.8% less than the national average. U.S. News & World Report ranked the town first—yes, No. 1—on its list of the cheapest places to retire in the United States in 2025 and 2026. And that was after visiting and gauging 859 cities. The median household income here is $58,119. Half of all households enjoy more income than this, and half make ends meet on less.

It’s a medium-sized town in Maverick County, so you won’t be battling crowds if you want to take in its Art and Entertainment District that covers 300 blocks. Eagle Pass is the county seat, tucked up against the Mexican border, and its history is rich. The Texas Mounted Volunteers manned an operation post here on the Rio Grande during the Mexican-American War, located beside a smuggler’s trail that once spanned the river.

Stop by the Lucky Edge Casino if you’re looking for more modern entertainment. It’s the only casino in the state, hosted by the Kickapoo Tribe and located just across the town border.

Amarillo, Texas

Over 15% of Amarillo’s citizens are age 65 or older, so you’ll have some company when you’re enjoying the numerous activities and events that this small city offers. Art is a big theme here, and you can take in various classes and workshops at Arts in the Sunset provided by the Amarillo Art Institute. Local artists are present in its studios.

The Palo Duro Canyon is nearby, located about 30 minutes outside the city, if hiking and taking in scenery are your thing. The canyon is the second largest in the country. You can hike it, bike it, or enjoy it from the back of a horse. The Amarillo Civic Center offers opera, the Lone Star Ballet, and the Amarillo Symphony Orchestra.

Amarillo is a farmer’s market mecca if you want to buy or sell your own fresh produce, and the famed Route 66 runs right through the city. The cost of living is 18% less here than the national average, and housing costs are a significant 42% lower. Your utilities will run you 11% less, and you’ll spend 6% less than the national average to buy groceries and stock your pantry.

This small city is home to a senior citizen center that offers activities and meals Monday through Friday for those age 60 or older who aren’t in the mood to cook.

Arizona, New Mexico, and Oklahoma

Arizona features some infamous and eye-popping views if your idea of retirement includes the great outdoors. Think the Grand Canyon and Hoover Dam. Arizona has been ranked as the second most popular retirement destination in the country, behind Florida, and Florida has all that humidity. Now take a deep breath: The average home value in this state is $417,540 as of Jan. 31, 2026, although that’s down 2.6% from 2025.

New Mexico is known for its interesting annual social events, such as the Roswell UFO Festival and the Albuquerque International Balloon Fiesta. The cost of living in Albuquerque is 3% less than the national average overall, and housing is 9% lower.

Oklahoma City offers the Myriad Botanical Gardens if you want to take a walk along flower-lined paths. Stillwater is home to Boomer Lake Park with a 3.2-mile paved trail, ideal for both walking and biking. The cost of living in Oklahoma City is 19% below the national average, and housing costs are 41% below the U.S. average, matching those in Amarillo.

The Financial Benefits of Retiring in the Southwest

The grocery component of the cost of living in the Southwest tends to be lower than that in other areas of the country, at least if you avoid some frozen or canned food products. These states are replete with hometown farms, ranches, and dairies.

Arizona doesn’t impose Social Security, inheritance, or estate taxes, although it does tax 401(k)s and individual retirement accounts (IRAs). Its sales tax rate is on the high side, but its property tax rates are low, particularly with several relief programs available to seniors.

Social Security income isn’t taxed in Oklahoma, and the state provides tax deductions for other retirement income. Property taxes here are some of the lowest in the country, plus Oklahoma provides property tax exemptions for seniors, based on income levels. The Council for Community and Economic Research gave Oklahoma City an overall cost-of-living score that was 18.8 points lower than the national average as of the fourth quarter of 2025.

Of course, there are a few downsides you might want to keep in mind. Air conditioning will drive up your utility costs in parts of these states, particularly in the summer months. New Mexico’s housing and healthcare costs are higher than those in other states as well. And the cost of living is higher in ski resorts and tourist areas of the Southwest.

Why Texas Dominates Our List

Texas gets our top nod for several reasons. There’s no state income tax here, and the average home value was $294,807 as of Jan. 31, 2026. It was just $171,383 in Santa Anna at that time. The median rent in the state was $1,850 as of February 2026, compared with $2,000 nationally. Texans typically paid $54,060 per person annually for their overall living expenses in 2024.

The Texas population is diverse, so you should find plenty of other residents from different backgrounds with whom you can spend some of your newfound free time. The climate is welcoming most months, although it can get brutally hot in the summer. And Houston is home to the recognized Texas Medical Center if healthcare is of particular concern.

The Bottom Line

Amarillo and Eagle Pass in Texas top our list of perfect Southwest retirement locations, but Arizona, New Mexico, and Oklahoma find places on the list as well. The cost of living is kind here, and a variety of tax breaks are available. And this isn’t even to mention the options they offer for spending your newfound free time.