Cost of Living in Illinois for Retirees

Illinois offers a retirement lifestyle as varied as its landscape – from the vibrant energy of Chicago to the slower pace of small towns along the Mississippi River. Whether you picture yourself spending weekends at the Art Institute, golfing in suburban communities or enjoying lakefront walks in Springfield, retiring in Illinois comes with unique financial considerations.

In this guide, we break down the real cost of living in Illinois for retirees, from housing and taxes to hidden expenses and lifestyle choices. If you’re planning your next chapter in the Prairie State, here’s what you need to know to retire with confidence.

HOUSING COSTS IN ILLINOIS

Housing is one of the biggest factors that shape retirement affordability, and although Illinois sits in the middle of the pack nationally, true cost varies widely by region.

As of spring 2025, the median home price statewide is about $285,000, significantly below the national median. In cities like Springfield, Decatur and Peoria, median prices are often under $200,000, offering retirees more value. By contrast, suburban areas near Chicago, including DuPage and Lake Counties, have higher averages, while neighborhoods in the city itself can be considerably more expensive.

Condo owners in Chicago should also anticipate monthly homeowners association fees. While these payments often cover essentials, such as building insurance, common-area upkeep and staff services and amenities, they represent an ongoing cost that can significantly impact your retirement budget.

In addition, many Illinois homes are older properties, which can mean higher maintenance needs over time. Roof replacements, furnace upgrades and plumbing work are common examples of unexpected expenses. Building a cushion for regular upkeep helps ensure you can comfortably age in place without financial surprises.

TAXES AND RETIREMENT IMPLICATIONS

Taxes play a central role in Illinois retirement planning, and while the state provides meaningful advantages for retirees, there are some challenges to be aware of.

Here’s a closer look:

• Social Security benefits: Fully exempt from Illinois state income tax
• Pensions, 401k and IRA withdrawals: Also fully exempt, making Illinois one of the most retirement-income-friendly states in the Midwest
• State income tax: Flat 4.95% rate applies only to earned income
• Property taxes: Among the highest in the nation, averaging 2.0% of a home’s value statewide, with some counties exceeding that level
• Sales tax: Base rate of 6.25%, with local additions that can push the total above 10% in parts of Chicago and Cook County
• Estate tax: Illinois remains one of the few states with an estate tax, with an exemption of $4,000,000 per person (in 2025) and rates ranging from 0.8% to 16% depending on the estate size

While the exemption of retirement income is a clear benefit, high property and sales taxes can offset those savings. Estate tax exposure is another consideration, especially for higher-net-worth households where thoughtful planning can make a significant difference.

HIDDEN COSTS AND LIFESTYLE EXPENSES

Retiring in Illinois is about more than balancing taxes and housing. To enjoy life in one of the state’s many communities, it’s important to factor in seasonal and lifestyle-related expenses.

SEASONAL LIVING COSTS

Illinois experiences four distinct seasons, each bringing potential savings and added costs.

Possible savings:

• Free or low-cost access to natural beauty, including forest preserves, state parks and Lake Michigan’s shoreline
• Access to public transportation in Chicago and the surrounding suburbs may reduce reliance on cars
• Senior discounts and state programs offering property tax relief, prescription assistance and transportation services

Added expenses:

• High heating bills during long Midwestern winters, especially in older homes with less-efficient insulation
• Snow removal or winter maintenance for homeowners, including plowing and de-icing services
• Travel costs for retirees who choose to head south during the coldest months, including airfare, housing and maintaining a second residence

LIFESTYLE AND RECREATION COSTS

Illinois offers retirees a rich mix of cultural and recreational opportunities but enjoying them often requires extra room in your budget.

Consider planning for:

• Dining out in Chicago’s world-class restaurants or exploring local favorites across smaller towns
• Tickets to the theatre, concerts, sporting events and festivals, especially in Chicago and university towns like Urbana-Champaign
• Seasonal travel to Illinois’ lake regions, wine trails and historic sites, from Galena’s charming streets to Shawnee National Forest

For retirees seeking culture without Chicago’s higher costs, cities like Bloomington, Rockford and Springfield offer thriving arts communities, university-based amenities and easier access to nature.

Factoring in these lifestyle expenses ensures your retirement budget supports the life you envision.

IS RETIRING IN ILLINOIS WORTH IT?

The answer depends on your financial picture, lifestyle goals and priorities. Illinois offers excellent health care access, vibrant cultural opportunities and proximity to major transportation hubs, making it appealing for retirees who want both convenience and variety. Retirees also benefit from generous tax treatment of retirement income, including full exemptions on Social Security, pensions and retirement account withdrawals.

At the same time, high property taxes and a state estate tax can impact budgets, particularly for larger estates or homeowners in higher-cost areas. These factors may require careful planning to ensure your retirement savings go as far as possible. Or they may sway you to look elsewhere for retirement.

For those with family ties or a fondness for the state’s unique mix of city life, suburban comfort and small-town charm, the benefits may outweigh the costs. Others may find it helpful to compare Illinois with neighboring states like Indiana or Wisconsin, which offer different tax structures and cost-of-living considerations.

By carefully weighing the pros and cons and building a customized financial plan, retirees can make the most of what Illinois has to offer while maintaining confidence in their long-term security.

PLAN FOR A STRONGER FUTURE IN ILLINOIS

If you’re considering retirement in Illinois, thoughtful planning is key to protecting your income, minimizing taxes and ensuring your money lasts.

Edelman Financial Engines can help you:

• Build a retirement budget tailored to your location and lifestyle
• Optimize your withdrawal strategy to maximize Illinois’ tax advantages
• Plan for estate tax exposure and property tax impact
• Prepare for seasonal expenses and healthcare costs

A financial advisor can help you enjoy the confidence that comes from having a plan, so you can make the most of your Illinois retirement.