How is Arkansas for retirement?

If you wish to spend your golden years in another state, Arkansas may be a good option. The state stands out as a hidden gem due to the natural beauty of its mountains, lakes, and rivers, historical heritage, and vibrant retirement communities. However, there are certain things to consider if you want to retire in Arkansas.

Arkansas is a relatively friendly state for retirees due to its low cost of living, low property prices, outdoor attractions, and friendly tax system. If you receive Social Security checks, you won’t pay state income taxes on the money. Additionally, seniors aged 59 ½ or older get up to $6,000 in deductions from the state income taxes for other retirement incomes such as 401(k) distributions and pensions.

Is Arkansas tax-friendly for retirement?

Arkansas is a relatively tax-friendly state for retirees. The state exempts Social Security benefits from state income taxes, and this can be beneficial for retirees who rely on Social Security only.

If you receive other retirement incomes such as pension and 401(k) distributions, you may qualify for an exemption of up to $6,000. This exemption applies to seniors aged 59 ½ or older. The deduction applies to the combined total from all retirement incomes like pensions and retirement plan distributions.

If you have both pension and 401(k) distributions, you can claim a single deduction of up to $6,000, or $12,000 if you are a married couple. Incomes above this deduction will be taxed as regular income.

Additionally, Arkansas has one of the highest sales taxes in the United States. The statewide sales tax rate is 6.5%, and the municipalities collect an additional sales tax, which averages 2.97%. However, certain items like prescription drugs, wheelchairs, and prosthetic limbs are exempt from sales taxes. Groceries are subject to a lower sales tax rate of 0.125%.

Are property taxes high in Arkansas?

Arkansas has an average effective property tax rate of 0.57%, which is below the national average. On average, Arkansas homeowners pay about $928 annually in property taxes.

Homeowners may also be eligible for the Arkansas homestead exemption. You can claim a homestead exemption of up to $375 per year on your principal place of residence. Also, seniors who live in a retirement home or nursing home but have a primary residence can also claim the homestead exemption.

Pros of retiring in Arkansas

Affordable cost of living

Arkansas has a relatively lower cost of living compared to other states, most notably in the housing, healthcare, and transportation sectors. This means you won’t spend as much as people living in New York and California, and you will be able to make the most out of your retirement savings. Additionally, the Social Security benefits tax exemption and the homestead property exemption means you will have more money to spend, and stretch the dollar further.

Good healthcare

One of the considerations for retirees relocating to another state is access to good healthcare. Arkansas has a network of healthcare facilities that offer specialized care, and there is a thriving community of healthcare professionals like doctors, nurses, and specialists. You will get access to quality and affordable medical care without having to dent your retirement income.

Diverse recreation opportunities

If you want to reconnect with nature, you may want to explore the natural landscapes of Arkansas. The state is home to numerous mountains, lakes, and rivers, as well as national and state parks, which provide plenty of opportunities for hiking, camping, and fishing. The mild climate also allows retirees to engage in outdoor activities throughout the year and maintain an active lifestyle.

Rich cultural and historical heritage

Arkansas offers plenty of opportunities for retirees who want to learn history and explore historical and cultural sites. One of the iconic historic sites is the Little Rock Central High School, which played a critical role during the Civil Rights Movement.

You can also visit the Clinton Presidential Library and the Arkansas Museums to explore American history and appreciate the state's position in American history. You can immerse yourself in the rich cultural diversity by attending various festivals and events that showcase the state's art, cuisines, and traditions.

Cons of retiring in Arkansas

Natural disasters

Arkansas is prone to various natural disasters such as tornadoes, storms, drought, and flooding. While these disasters are not unique to Arkansas, you should consider the potential risks and prepare for emergencies. The state does a good job of evacuating and helping residents recover from the impact of natural disasters, but you should consider these risks before retiring in Arkansas.

Fewer job opportunities

Arkansas's economy does not offer as many job opportunities as some larger states or metropolitan areas. The situation is worse in rural areas, where positions that would go to retirees are taken up by younger residents who are unable to find work elsewhere. If you plan to find part-time work in retirement, you may have better chances of finding work in metropolitan areas than in rural Arkansas.

Education system

If you have younger school-going children, you may have to endure the below-average education system in Arkansas. The education system is underfunded, and teachers get lower salaries, which affects their motivation. If you desire the best education for your grandchildren, you may want to consider private school tuition, which can cost more. However, if your family is all grown, the education system may not be a deal-breaker for you.

High crime rate

The violent crime rate in Arkansas stands at 0.6%, meaning that there are about 6 incidents for every 1,000 people. While violent crimes are not as prevalent, property crimes such as trespassing, burglary, and vandalism tend to be more common. If you want to retire in Arkansas, you will need to invest in additional security services and products to keep your home safe.

Best places to retire in Arkansas

Little Rock

If you want to retire close to the major metropolitan areas, you should consider retiring in Little Rock, Arkansas’ capital city. This city offers a mix of amenities like healthcare facilities, shopping centers, dining options, and public transportation. It also hosts the Clinton Presidential Library and Museums, where seniors can explore presidential artifacts and see a replica of the Oval Office. Other outdoor attractions include the Arkansas River Trail, Little Rock Zoo, War Memorial Park, and the River Market District.

Hot Springs

Hot Springs is known for its natural hot springs, and it offers a blend of beautiful natural surroundings, historic charm, and ample bountiful shopping. It has a growing downtown area, where you can find art galleries, spas, restaurants, and good public transport. It is also home to the Hot Spring National Park, the Gangster Museum of America, and the Mid-America Science Museum. You will find golf courses, walking trails, lakes, and other recreational facilities.

Mountain home

Mountain home lies between Bull Shoals Lake and Norfolk Lake, and it is often known as the Twins Lake region. The city is a popular destination for outdoor enthusiasts who want to explore the city's warm waters or enjoy fishing, boating, and canoeing. Mountain Home attracts retirees seeking an active outdoor lifestyle, due to the numerous outdoor recreation opportunities.

Bentonville

If you want a blend of small-town and modern Amenities, you may consider retiring in Bentonville. The town has grown from a farming community to the headquarter of the largest retailer in the US, Walmart. It has a vibrant arts scene and a thriving downtown area, and it is home to the Crystal Bridges Museum of American Art. Bentonville is also known as the mountain biking capital of the world, and there are plenty of biking trails and camping options for cyclists.