Deciding where to spend this golden phase of life is a crucial decision, especially for individuals who seek not only comfort but also financial security.
Among the various states gaining traction for retirement, Iowa stands out as an appealing option. Nestled in the rural beauty of the Midwest, Iowa offers a unique blend of affordability, quality of life, and peace that is hard to find elsewhere.
In this blog, we will explore the benefits of retiring in the Hawkeye State and discuss how Johnson Wealth and Income Management can help you make the most of your retirement in the Heartland.
1. Cost of Living
One of the most compelling reasons to retire in Iowa is its relatively low cost of living. Iowa consistently ranks below the national average for living expenses. Currently, the cost of living in Iowa is approximately 6% lower than the national average, providing retirees with substantial savings on everyday expenses and housing.
For retirees, this means more of their investment income can be used to enjoy their lifestyle, travel, or support charitable causes, rather than being spent on the basics. Iowa’s affordable housing market further amplifies these savings. The median home price in Iowa was about $215,000 in 2023, compared to the national median of $387,000, according to the Iowa Association of Realtors.
| City, State | Compared to State Average | Compared to National Average |
| Spencer, IA | 19% higher | 12% higher |
| Spirit Lake, IA | 17% higher | 9% higher |
| Estherville, IA | 16% higher | 9% higher |
| Mason City, IA | 4% higher | 3% lower |
| Ames, IA | 1% higher | 6% lower |
| Sac City, IA | 0% | 6% lower |
| Iowa City, IA | 1% lower | 7% lower |
| Council Bluffs, IA | 1% lower | 7% lower |
| Carroll, IA | 1% lower | 7% lower |
| Cedar Rapids, IA | 3% lower | 10% lower |
| Dubuque, IA | 3% lower | 10% lower |
| Davenport, IA | 5% lower | 11% lower |
| Storm Lake, IA | 5% lower | 11% lower |
| Burlington, IA | 6% lower | 12% lower |
| Des Moines, IA | 7% lower | 13% lower |
| Waterloo, IA | 9% lower | 14% lower |
| Sioux City, IA | 15% lower | 20% lower |
Data sourced from RentCafe.com.
2. Tax Benefits for Retirees
Iowa offers several tax advantages that can benefit retirees. The state provides a generous exemption for Social Security income and offers a variety of tax credits for retirees. In 2023, Iowa retirees could exclude up to $6,000 of retirement income from state taxes if they were over the age of 55. This is particularly advantageous for individuals with significant retirement savings.
Additionally, Iowa’s property tax rates are among the lowest in the nation. The average effective property tax rate in Iowa is approximately 1.5%. The relatively low property tax burden, combined with affordable housing costs, makes Iowa an attractive state for retirees seeking to preserve their wealth.
3. Quality Healthcare Services
Access to quality healthcare is a top priority for retirees. Iowa boasts a robust healthcare system with several highly rated facilities. In 2023, the Iowa Health System received high marks for quality and patient satisfaction. According to U.S. News & World Report, the University of Iowa Hospitals & Clinics was ranked among the top hospitals in the nation for various specialties, including cardiology, orthopedics, and geriatrics.
Furthermore, Iowa has a lower average cost for healthcare services compared to many other states. The average annual premium for a Medicare Advantage plan in Iowa was $34 in 2023. This cost-effectiveness in healthcare is a significant benefit for retirees who need reliable and affordable medical care.
4. Access to Cultural and Recreational Opportunities
Retiring in Iowa doesn’t mean sacrificing cultural and recreational activities. The state offers a diverse array of experiences, from charming small towns to vibrant cities. Des Moines, the state capital, boasts a thriving arts scene, with numerous museums, theaters, and music festivals. The city also features an extensive network of parks and recreational facilities.
Additionally, Iowa’s natural beauty provides ample opportunities for outdoor activities. The state is home to numerous state parks and scenic byways, offering retirees opportunities for hiking, fishing, and exploring picturesque landscapes. In 2023, Iowa’s state parks welcomed over 15 million visitors, underscoring the appeal of its natural attractions.
5. Strong Community and Low Crime Rates
A welcoming community and safety are crucial considerations for retirees. Iowa is known for its friendly and supportive communities. In 2023, Iowa was ranked as one of the safest states in the country, with a crime rate that is 20% lower than the national average. This sense of security contributes to a high quality of life for retirees.
The state’s smaller communities and tight-knit neighborhoods also foster a sense of belonging and support. Many towns in Iowa are recognized for their community spirit and active social scene, making it easy for retirees to stay engaged and connected.
6. Travel and Connectivity
While Iowa offers the tranquility of rural living, it’s also well-connected to major metropolitan areas. Retirees who enjoy the occasional trip to the city can easily access places like Chicago, Minneapolis, and Kansas City, all within a reasonable driving distance. This proximity allows retirees to enjoy the best of both worlds—peaceful living in Iowa and the excitement of city life just a short trip away.
Iowa’s infrastructure is well-developed, making travel both within and outside the state convenient. The state’s highways are well-maintained, and there are several regional airports that offer flights to major hubs across the country. For those who prefer to travel by train, Amtrak services are also available, providing another convenient way to explore the country during retirement.
Where Are the Best Places in Iowa to Retire?
Iowa offers several attractive locations for retirement, each with its unique charm and benefits. Here are some of the best places in Iowa to consider for retirement:
1. Humboldt
Why It’s Great:
- Small-Town Charm: Humboldt offers a peaceful, small-town atmosphere, ideal for retirees looking for a slower pace of life.
- Affordable Living: The cost of living in Humboldt is below the national average, making it an attractive option for those on a fixed income.
- Outdoor Recreation: The town is surrounded by natural beauty, with access to parks, the Des Moines River, and extensive walking and biking trails.
- Community Spirit: Humboldt has a close-knit community with numerous local events, farmer’s markets, and volunteer opportunities.
- Healthcare: Humboldt is home to the Humboldt County Memorial Hospital, providing essential healthcare services to the community.
Notable Neighborhoods: South Taft, East River Drive, and the downtown area.
2. Clear Lake
Why It’s Great:
- Lakeside Living: Clear Lake offers beautiful lakeside views and recreational activities, making it a haven for outdoor enthusiasts and those who enjoy water-based activities.
- Vibrant Community: The town hosts various events throughout the year, including concerts, festivals, and the famous Clear Lake Surf Ballroom, fostering a lively and engaged community.
- Affordable Cost of Living: Clear Lake provides a cost of living that is lower than the national average, appealing to retirees looking to stretch their retirement savings.
- Healthcare: The community is served by reputable healthcare facilities, including the MercyOne Clear Lake Family Medicine and surrounding healthcare providers.
Notable Neighborhoods: North Shore Drive, Venetian Village, and the downtown area.
3. Des Moines
Why It’s Great:
- Cultural and Recreational Opportunities: Des Moines, the state capital, boasts a vibrant arts and cultural scene with numerous museums, theaters, and festivals. The city also has a variety of parks and recreational facilities.
- Healthcare: The city is home to top-rated hospitals and medical centers, including the Iowa Methodist Medical Center and the University of Iowa Hospitals & Clinics.
- Cost of Living: While slightly higher than some smaller Iowa towns, Des Moines still offers a relatively low cost of living compared to national averages.
Notable Neighborhoods: Historic East Village, Downtown Des Moines, and the Grand Avenue area.
4. Cedar Rapids
Why It’s Great:
- Affordable Housing: Cedar Rapids offers affordable housing options, with a cost of living below the national average.
- Community Activities: The city has a strong sense of community with various local events, cultural attractions, and recreational opportunities.
- Healthcare: Cedar Rapids has reputable healthcare facilities, including UnityPoint Health – St. Luke’s Hospital.
Notable Neighborhoods: Kingston Village, Noelridge Park, and the downtown area.
5. Iowa City
Why It’s Great:
- University Town: Home to the University of Iowa, Iowa City has a vibrant cultural scene and numerous events, thanks to the university’s presence.
- Healthcare: The University of Iowa Hospitals & Clinics provides top-notch healthcare services.
- Walkability: Iowa City is known for its walkable downtown area and charming historic neighborhoods.
Notable Neighborhoods: Downtown Iowa City, Northside, and the Riverfront area.
6. Ames
Why It’s Great:
- Educational and Cultural Activities: Ames is home to Iowa State University, which provides a range of cultural and educational events and activities.
- Community Feel: The city offers a strong sense of community with numerous local events and recreational facilities.
- Cost of Living: Ames has a relatively low cost of living and affordable housing options.
Notable Neighborhoods: The District, West Ames, and the North Grand area.
7. Decorah
Why It’s Great:
- Natural Beauty: Located in northeastern Iowa, Decorah is known for its picturesque landscapes, including rolling hills, rivers, and outdoor recreational opportunities.
- Small-Town Charm: The town offers a charming, small-town atmosphere with a strong sense of community and a slower pace of life.
- Cultural Events: Decorah hosts various cultural and community events, including festivals and local markets.
Notable Neighborhoods: Historic downtown Decorah and the surrounding rural areas.
8. Dubuque
Why It’s Great:
- Scenic Location: Dubuque is situated along the Mississippi River and offers beautiful riverfront views and outdoor activities.
- Historic Charm: The city has a rich history with well-preserved architecture and historic sites.
- Healthcare: Dubuque boasts good healthcare facilities, including MercyOne Dubuque Medical Center.
Notable Neighborhoods: Downtown Dubuque, the Millwork District, and the Dubuque Riverfront.
Each of these locations provides a unique blend of cultural, recreational, and community benefits, making them excellent choices for retirees seeking to enjoy their golden years in Iowa.
How Johnson Wealth and Income Management Can Help
Navigating retirement planning requires careful consideration of various financial factors, and Johnson Wealth and Income Management is here to help support retirees in making the most of their retirement in Iowa. With offices in both Humboldt and Clear Lake, Johnson Wealth and Income Management brings local knowledge to the table, offering personalized solutions that cater to the unique needs of the community. Our extensive experience in wealth preservation and retirement planning helps ensure that your financial strategy is tailored to align with your retirement goals, helping you achieve a more secure and fulfilling retirement.
- Personalized Retirement Planning: Our team of Fiduciaries will work closely with you to create a customized retirement plan
that considers your unique financial situation and objectives. From optimizing your investment portfolio to managing income streams, we help ensure that your retirement plan is designed to provide financial security and support your desired lifestyle. - Tax Optimization Strategies: With Iowa’s favorable tax environment, it is essential to leverage tax optimization strategies to help maximize your retirement income. Johnson Wealth and Income Management provides knowledgeable advice on how to take advantage of Iowa’s tax benefits, including retirement income exemptions and property tax strategies.
- Investment Management: Effective investment management is key to sustaining your wealth throughout retirement. Our team offers strategic investment solutions tailored to your risk tolerance and financial goals, helping you achieve long-term growth and stability.
- Healthcare and Long-Term Care Planning: Planning for healthcare and long-term care is crucial for a secure retirement. Johnson Wealth and Income Management provides guidance on healthcare costs, insurance options, and long-term care planning, helping ensure that you are prepared for any medical needs that may arise.
Contact us today to schedule a complimentary consultation.
Final Thoughts
Retiring in Iowa offers a unique combination of financial benefits, quality of life, and community that is hard to match. From its low cost of living and favorable tax policies to its excellent healthcare and a strong sense of community, Iowa is an ideal destination for retirees looking for a peaceful and fulfilling retirement. By partnering with professionals like Johnson Wealth and Income Management, you can help ensure that your retirement in Iowa is not only comfortable but also financially secure.
Iowa Retirement FAQs
- What are the main tax benefits of retiring in Iowa?: Iowa offers several tax benefits for retirees, including exemptions on Social Security benefits and reduced income tax rates for pension income. Recent tax reforms are making the state even more tax-friendly for retirees.
- How does the cost of living in Iowa compare to other states?: Iowa is approximately 6% lower than the national average, making it a more affordable option compared to coastal states like California or New York.
- Are there luxury retirement communities in Iowa?: Yes, Iowa has several luxury retirement communities that offer amenities such as golf courses, fitness centers, and educational programs, catering to the needs of retirees.
- How can I find a retirement planner in Iowa?: You can find a retirement planner in Iowa by researching local financial advisory firms, such as Johnson Wealth and Income Management, which is highly experienced in retirement planning.
- What recreational and cultural opportunities are available for retirees in Iowa?: Iowa offers a range of recreational and cultural activities for retirees. The state is home to numerous state parks and natural attractions, providing opportunities for outdoor activities such as hiking and fishing. Cities like Des Moines offer a vibrant arts scene with museums, theaters, and music festivals. Small towns and rural areas also feature community events and local attractions that foster a sense of belonging and engagement.
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