How to Retire Well in South Dakota

As retirement draws near. Many people start looking beyond how much they are saving and toward their future. At times, this means considering new places to live. Ensuring that they can capture their ideal lifestyle based on how much they have set aside. Every state has something different to offer. And each one comes with a different price tag. If your goal is to retire well in South Dakota, or you simply view the state as one potential option. Here’s what you need to know about heading to the Mount Rushmore State for your golden years.

Cost of Living

When you want to explore the financial implications of moving to a particular state. Examining the state’s cost of living scores is a great place to start. At a glance, you can assess how affordable one state is in comparison to the national average. As well as to other states that may be on your shortlist.

Cost of living metrics are fairly straightforward overall. The national average is forever set at 100. Whenever a state has a cost of living score under 100. That means it is less expensive than the national average. Scores above 100 suggest that it costs more to live.

However, you don’t have to stop with just national average comparisons. Since each state is being judged based on the same scale. You can compare states to each other. Whichever state has the higher score in your comparison is the one that’s more expensive.

Overall, South Dakota has a cost of living score near the national average. It comes in at 99.8, which is just 0.2 below the national average score of 100.

When it comes to individual categories. Most of the state’s scores are below 100. Groceries and healthcare come in at 99.5 and 96.7, respectively. For transportation, the Mount Rushmore State has a score of 91.9. Additionally, the lowest category score for South Dakota is in the utility category. Which sits at 89.9.

However, South Dakota does come in above 100 in a crucial area: housing. With a score of 114.6, housing tends to cost a bit more than the national average.

Now, this may seem surprising since the average home value in the Mount Rushmore State is $225,662 while the national average is $269,039. The thing is, there’s more to the housing cost of living score than property values. The cost of rentals plays a role. As well as certain associated costs, like maintenance and insurance. As a result, housing can cost more than the national average when all of the related costs are examined. Even if home values are lower.

Tax Considerations

Another important facet to examine when you’re selecting a state for your retirement is taxes. When tax rates are higher. More of your savings may need to go toward covering that cost. As a result, high tax rates can put a significant strain on your budget. While lower ones give you more room or could help you retire comfortably for less.

South Dakota is actually one of only nine states that don’t tax individual income. Additionally, the Mouth Rushmore State is one of seven states that don’t tax income as well as dividends or other investment-driven income.

That means retirees won’t have to worry about handing over any of their income for state income taxes. Which includes income from Social Security, IRA distributions, 401(k) distributions, annuities, or most other resources. Overall, that can be a boon for retirees with limited savings or who really want to retire well in South Dakota.

Now, it is important to note that South Dakota does have a sales tax. The base rate is 4.5 percent, though municipalities do have the ability to add onto that amount. Typically, municipal sales tax can add 1 to 2 percent to that rate. While municipal gross receipts tax can impose an additional 1 percent. As a result, the highest sales tax you’ll usually encounter in South Dakota is 7.5 percent. Barring some potential special cases.

Another Consideration is Property Taxes

Property taxes are another consideration. Generally, South Dakota has slightly higher property tax rates than some other states. However, retirees may be able to reduce that burden. For example, if you’ve owned a property for at least three years or have been a resident of the state for a minimum of five years and are also at least 70 years old, you may qualify for the Homestead Exemption Program.

There is also the Sales & Property Tax Refund for Senior & Disabled Citizens program, which could help, as well as the Assessment Freeze for the Elderly & Disabled and Property Tax Reduction from Municipal Tax for the Elderly & Disabled programs. Eligibility requirements for those programs can vary, but it’s worth exploring them if to determine if you may qualify.

Part-Time Job Opportunities

For many seniors, retirement doesn’t mean a complete end to their participation in the workforce. Instead, many decide that having a part-time job is a better choice.

In some cases, part-time employment is a necessity, giving them access to extra cash to cover their needs. For others, it’s a way to stay active and engaged, which can also be important.

Overall, finding a part-time job in South Dakota isn’t overly challenging. While where you live and the type of work you want certainly play a role, low unemployment means opportunities are typically available, at least in certain fields or industries.

Even during the height of the pandemic, South Dakota’s unemployment rate never crossed 10 percent. Instead, it reached a high of 9.2 percent in April 2020, a time when the national average was 14.8 percent.

The Mount Rushmore State also recovered fairly quickly. By December 2020, the unemployment rate was back down to 3.3 percent, just 0.4 percentage points above pre-pandemic levels. During that month, the national average was 6.7 percent, which is a full 3.2 percentage points above pre-pandemic levels.

Generally, if you’ll be moving close to a larger city or town, you can likely find some kind of part-time work in South Dakota with relative ease. As long as you’re open-minded about the job type, opportunities are probably available.

Best Cities for Retirees in South Dakota

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When you’re picking a place for your retirement, you need to look beyond the state. After all, every city and town brings something unique to the table, and choosing the right destination for you means selecting one that meets your needs.

If you aren’t sure where to begin, there are a few cities in South Dakota that should be on your shortlist.

When it comes to larger cities, Sioux Falls can be a great choice. Along with plenty of access to medical care, you’ll also enjoy great air quality. Plus, as a major city, you can enjoy a range of entertainment options and amenities. You’re also still close to great spots for outdoor adventures, which is a nice bonus.

Rapid City can be an excellent choice for retirees, as well. It’s near the Black Hills, ensuring you’ll have quick access to outdoor activities and attractions. Plus, the town has plenty of amenities, including numerous restaurants, senior centers, and medical facilities.

You May Want to Consider Pierre

If you want to be near the water, consider Pierre. It’s a well-appointed smaller city, allowing it to maintain a small-town feel while having plenty of amenities. Plus, there are plenty of opportunities for water recreation, thanks to the Missouri River.

For something a bit more rural, Sisseton is a solid choice. It offers up quaint living along with quick access to outdoor recreation opportunities and historic sites. Plus, the area is also awash in Native American culture and is also home to numerous art galleries, museums, and other attractions.

If you are a motorcycle lover, then you might enjoy retiring in Sturgis. The city is home to the Sturgis Motorcycle Rally, an event that draws enthusiasts in from near and far every August. However, outside of the rally, the city still has plenty to offer. There are outdoor recreation opportunities all year-round, an active community center, and plenty of critical amenities.

How Much Money You Need to Retire Well in South Dakota

While the Mount Rushmore State has a moderate cost of living, that doesn’t mean you shouldn’t aim for a decent amount in savings if you want to retire well in South Dakota. That way, you won’t experience a surprise financial hardship during your golden years.

Overall, if you have access to around $63,200 per year in retirement income, retiring well in South Dakota could be within reach. You’ll be able to address your needs with relative ease and also cover some wants, making your retirement comfortable and fulfilling.

To prepare well for retirement, we recommend you sign up to these retirement apps that will help you save.

Can you think of any other must-know tips that may help seniors retire well in South Dakota? Share your thoughts in the comments below.

Read More:

• How to Retire Well in Mississippi
• Ready for Retirement? Here’s How to Retire Well in Washington
• How to Retire Well in Massachusetts

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Tamila McDonald

Tamila McDonald is a U.S. Army veteran with 20 years of service, including five years as a military financial advisor. After retiring from the Army, she spent eight years as an AFCPE-certified personal financial advisor for wounded warriors and their families. Now she writes about personal finance and benefits programs for numerous financial websites.