Retiring in Texas: What Does It Really Cost?

Big skies, warm weather and low taxes – Texas checks a lot of boxes for retirees. Whether you’ve spent your life in the Lone Star State or are considering relocating for retirement, the idea of living out your next chapter in a community-oriented, affordable state can be appealing. But what does it really cost to retire in Texas?

The answer depends on where you live, what kind of lifestyle you want and how prepared you are for some of the state’s unique financial considerations. Below, we explore the major factors that influence retirement costs in Texas, from housing and taxes to insurance and everyday spending.

HOME PRICES VARY DRAMATICALLY BY REGION

Housing is typically the largest retirement expense, and in Texas, prices range widely by location. While the state’s overall cost of living is lower than the national average, hot markets like Austin and Dallas have seen rapid growth in recent years, pushing up home prices.

As of mid-2025, the median home price in Texas was approximately $340,000. But in Austin, that figure is closer to $573,000. Meanwhile, in smaller cities such as Lubbock, Beaumont or Tyler, homes can be found in the $160,000–$260,000 range.

Texas also offers a variety of 55+ communities and retirement developments that cater specifically to older adults. These communities often include pools, walking trails, clubhouses and organized activities. HOA fees typically range from $100 to $400 per month, depending on amenities and services.

If you're looking to get more value for your housing budget, suburban and rural areas outside of major cities may offer more space at a lower cost. Just keep in mind that living farther from urban centers can also mean less immediate access to amenities like shopping, restaurants and cultural events.

Whether you’re downsizing, relocating or planning to stay in your current home, it’s important to consider more than just the listing price. Older homes may need repairs or updates, which can add to your overall expenses. Newer properties – especially in planned communities – may include features and services that help reduce maintenance or additional spending over time.

TEXAS OFFERS BIG TAX ADVANTAGES FOR RETIREES

Texas is one of the few states with no personal income tax, and for retirees, that can translate into meaningful savings.

Here’s how the tax picture breaks down:

• No state income tax: This means that Social Security benefits, pensions, annuities and withdrawals from traditional IRAs or 401k plans are not taxed at the state level
• Sales tax: The statewide base rate is 6.25%, but local governments can add up to 2% more. In some areas, the combined sales tax can reach 8.25%
• Property taxes: While there’s no state income tax, property taxes in Texas are relatively high and governed by local taxing units. The average effective property tax rate is 1.63%, among the highest in the U.S.

Still, there are important tax relief opportunities for retirees. Homeowners age 65 and older can qualify for a senior homestead exemption, which reduces the taxable value of their primary residence and freezes school district taxes at current levels. Some local governments offer additional property tax reductions for older adults, so it’s worth researching what’s available in your county.

Additionally, Texas does not impose estate or inheritance taxes, which may simplify estate planning and allow more of your assets to pass to your heirs.

WEATHER AND LOCATION MAY AFFECT INSURANCE COSTS

Texas’s weather is as diverse as its landscapes. While that makes for interesting travel and lifestyle choices, it also affects what you’ll pay for homeowners insurance.

Here are a few location-specific risks to be aware of:

• Gulf Coast regions are vulnerable to hurricanes and tropical storms. Homes in these areas may require additional coverage for wind and flood damage.
• North Texas experiences frequent hailstorms and tornadoes, which can increase insurance premiums.
• Hill Country and rural areas often face wildfire risks, depending on drought conditions.

Depending on your location, standard insurance may not be enough. You may need to purchase separate windstorm or flood policies, and those costs can add up quickly. For example, FEMA’s National Flood Insurance Program (NFIP) premiums can range from a few hundred to several thousand dollars per year, depending on your home’s flood zone rating.

Before buying a home in Texas, it’s wise to consult with an insurance agent who can help estimate your potential premiums based on the property and region. These extra costs can impact your overall housing budget and should be factored into long-term financial planning.

LIFESTYLE CAN DRIVE DISCRETIONARY SPENDING

While the basics – housing and taxes – make up the foundation of retirement planning, your lifestyle choices also play a major role in determining how much you’ll spend each month.

Texas has no shortage of entertainment, dining and recreation opportunities. Whether it’s live music in Austin, art walks in San Antonio or wine tasting in the Hill Country, it’s easy to stay busy – and spend money doing it.

A few things to consider:

• Dining and entertainment costs vary by city. In major metro areas, expect to pay more for meals, concerts and cultural events. In smaller towns, those same activities may be more budget-friendly.
• Transportation expenses can add up. Texas is a driving state, and unless you live in a walkable downtown area, you’ll likely rely on a personal vehicle. That means budgeting for gas, insurance, maintenance and possibly a second car if you’re a two-driver household.
• Experiencing all the state has to offer. Travel within the state is common for retirees looking to explore all the diverse options across Texas. From Big Bend National Park to the Gulf Coast, there’s no shortage of road trip destinations, but distances can be long and lodging costs can vary widely.

Texas doesn’t have the “hidden luxury tax” that some coastal states do, but it’s still easy to overspend, especially if you’re enjoying an active retirement full of events, travel and leisure.

READY TO RETIRE IN TEXAS? HERE’S HOW TO PREPARE.

Texas offers an appealing mix of affordability, tax advantages and lifestyle flexibility, making it a strong choice for many retirees. But to make the most of what the state has to offer, it’s important to have a plan tailored to your goals, your income sources and the specific costs tied to where and how you want to live.

That means understanding how property taxes and insurance costs may affect your budget, estimating lifestyle expenses with accuracy and putting a tax-smart withdrawal strategy in place that helps your money go further. Whether you’re downsizing in Dallas, relocating to a lakeside cottage or planning to split time between Texas and another state, your financial plan should be built around your vision for retirement.

At Edelman Financial Engines, we can help you navigate every step of that journey. Our experienced advisors offer personalized guidance to help you model your retirement costs, build a reliable income plan and stay on track – no matter where life takes you.

With the right plan in place, retiring in Texas can be as financially rewarding as it is personally fulfilling. We can help get you there.