Benefits of Retiring In South Dakota (Pros & Cons)

‍What are the Benefits of Retiring in South Dakota? (Pros and Cons)

Located in the northern region of the United States, the state of South Dakota is known for its vast land, beautiful scenery, and well-preserved Native American culture that still has influence in the state today.

Not only is that Native American culture still prominent in the state, but it is revered in a way that isn’t always seen in the other states. Many museums, art galleries, and exhibitions honor the Native American Lakota tribe that inhabited this state for years before it became the 40th state of the union on November 2, 1889.

From that vast expanse of the Badlands National Park to the well-known (and often visited!) Mount Rushmore, this state is big on natural beauty and capable of striking awe in just about every person who visits it.

In fact, South Dakota is officially named the “Mount Rushmore State,” but it is also known as the “Coyote State,” for the prominence these deft four-legged creatures have throughout the state.

As of the last census, it is estimated that less than 900,000 live in the entire state. This means that - though South Carolina is the 17th largest state by land mass, it’s one of the smallest by population.

In fact, when you consider its landmass and population, there are only 10 people per square mile that inhabit this state!

From a retirement standpoint, this could be a positive or a negative, depending on your personality, your needs, and your wants. If you are someone who prefers wide-open spaces, this may be perfect for you.

On the other hand, if you crave the closeness and community of other people, then South Dakota might feel a bit too expansive and empty for your tastes.

Want to dive in deeper? Let’s look at some of the biggest pros and cons of calling South Dakota your retirement home.

1. Pro: Low Cost of Living

Anyone who lives in South Dakota, or has considered moving there is definitely going to see the low cost of living as being one of the best reasons to call this state home.

And - for those who are at retirement age and are living on a more fixed income, this pro might be all you need to motivate you to make the move to this inexpensive state.

Let’s start with housing, since this is usually the largest budget item for most of us.

Across the United States, the average cost for a three-bedroom, two-bathroom home is around $200,000 to buy, not including property taxes, home insurance, or any upkeep or maintenance costs.

In South Dakota, that same home is going to cost you around $150,000, which is significantly less than the nationwide average.

Since South Dakota is still a relatively young state, homes will also be newer and therefore may not need as much remodeling or upkeep as a home in another, more established state in our country.

As far as renting is concerned, the average rental price for a two-bedroom apartment is around $1100 on average across the United States.

And in South Dakota? That same apartment (with comparable amenities) is only going to cost you about $700 a month.

Housing is clearly less expensive in this great state, which is a big pro, since it’s said that we probably spend about ¼ to ⅓ of our take-home income on our housing needs.

There are other items that make living in South Dakota less expensive as well.

From groceries to gas, many of our everyday expenses will cost less in South Dakota, meaning your retirement dollars are going to stretch much farther if you choose to spend your golden years in the Mount Rushmore state.

2. Pro: Excellent Tax Benefits

Here is a big benefit for retirees who may be looking for a state that has some friendly tax laws for retirees.

South Dakota is one of the few states in our country that has no state income tax.

Yep. That’s right. Any money you make will still be federally taxed, but the state of South Dakota doesn’t want any of your income for tax purposes.

As one of only nine states that offer this benefit, it’s a big pro for those who want their dollars to stretch farther when they retire.

Retiring to Alaska, Nevada, Florida, Tennessee, Washington, Texas, New Hampshire or Wyoming will give you the same tax-free retirement lifestyle as well.

South Dakota also has no inheritance tax either. This means that any money that may be left to you upon a loved one’s death will not be taxed in this state.

And another big tax pro in this state is that there are no property taxes withheld either. So, whether you are buying a home, a vehicle, or a piece of land, you won’t pay a single dime to the state of South Dakota when you make that purchase.

Taxes are something we can’t completely avoid, no matter what our age, income, or place in life. That said, living in a state where taxes are either minimized or nonexistent can lead to a big benefit for those trying to budget out their retirement income and make it last long into their later stages of life.

3. Con: Extreme Weather Changes

From a financial standpoint, we can see that South Dakota has a lot to offer a retiree. But when it comes to weather, you may want to think twice as to whether or not this is the state to settle in.

Though South Dakota boasts some summer temps that are ideal for being outdoors, it can get quite cold once the fall months show up on the calendar.

There is relatively no humidity in South Dakota, which many retirees look forward to. But that lack of humidity can also mean that the cold weather feels significantly more extreme when it shows up…and it shows up pretty quickly in this far northern state.

For example, it is common for the high temperatures to not get above 70 degrees as early as September and to get as low as 49 degrees on those early fall evenings.

And, if that doesn’t concern you, how about this…during the months of January and February, it is common for the average temperature to not climb above 45 degrees and to dip down to under 15 degrees for the majority of the winter nights.

But it’s not just the cool temperatures in this state that might make you think twice as to whether or not you want to retire here.

The weather in South Dakota can also be extreme, and not just seasonally.

It is very common to wake up to a blue sky day in the morning, and by mid-afternoon have a foot or more of snow on the ground. It’s also not unheard of to have a cold front sweep through the state in the summertime and bring with it temperatures that could drop well below the mid-70s normal temps within just a couple of hours.

Another aspect of North Dakota’s weather extremes is the high winds that are relatively frequent in this state.

Being made up of vast and open plains, North Dakota is not well-protected from wind gusts and the damage (and discomfort) they bring with them.

It may not seem like a big deal, but believe me, it really can be. As someone who has spent some time living in the plains, dealing with ongoing wind gusts that howl all day long can be problematic and annoying.

For most of us in retirement, we are looking for milder weather, not more extreme. After years of shoveling snow, or dealing with an unpredictable Mother Nature, it’s normal to long for comfortable temperatures and consistency in our weather.

If drastic weather issues are something that doesn’t sound appealing to you, then South Dakota may not stay on your list of possible places to spend your retirement years.

4. Con: Low Wages

For many retirees, the idea of living in a state where the wages are low may not seem like a big deal.

If you are retired, why would low wages concern you?

There are a few reasons. One, many people in retirement decide that they would like to do some part-time work. Finding a job that will provide you with a reasonable wage may be challenging in a state where wages tend to be much lower than the national average.

It’s also possible that part of the reason you are looking to retire to a state that has a low cost of living like South Dakota means you need more than a part-time job, or are worried that your retirement savings are not adequate enough to last you for your remaining years.

As Americans begin to live longer than ever before, many of us haven’t prepared for the idea that our savings may need to last well into our nineties.

So, living in a state where wages are low may be a bit concerning if you want the reassurance that job opportunities are available if and when you need them.

Another reason that living in a state with low wages might be problematic is that this will also say something about the economy as a whole.

A state that traditionally can offer higher wages usually pulls in a more robust and diverse working population. High wages are equated with more jobs and more opportunities.

Having lower wages means that South Dakota might not have as much diversity in its population, or have an economy that is growing at the rate that it could, if there were more jobs and better pay associated with them.

Again… if you have no need or plans to work in any aspect upon your retirement, then a state like South Dakota that has lower wages than most may not be much of a concern to you.

But - if there’s a chance you may want - or even need - to work at some point in retirement, you may really want to think about whether or not you want to live somewhere where the wages are low, and job opportunities may not be as rich and varied as in some other potential retirement states.