The 6 worst states for military retirees right now

When you hang up the uniform, where you land matters more than most folks think. Taxes, cost of living, access to VA care, and how a state treats your retirement pay can either stretch your pension or burn through it faster than expected. Some states go out of their way to welcome military retirees. Others… not so much.

If you’re trying to make your money last and keep your quality of life where you want it, it pays to know where the friction is. Here are six states that tend to work against you more than they help when you’re living on military retirement.

California Hits You on Taxes and Cost of Living

You don’t need a spreadsheet to feel it—California is expensive. Housing alone can take a big bite out of your retirement income, especially anywhere near the coast or a major metro. Even inland areas that used to be more affordable have climbed.

On top of that, California fully taxes military retirement pay as regular income. That’s a tough pill when many other states offer partial or full exemptions. Add in high fuel prices, utilities, and everyday costs, and you’re looking at steady pressure on a fixed income. If you’re trying to stretch your pension, this state makes it harder than it needs to be.

New York Doesn’t Play Friendly with Overall Costs

New York does offer some tax relief on military pensions, which helps. But that’s only one piece of the puzzle, and the rest of it leans expensive. Property taxes in many areas are among the highest in the country, and that can quietly drain your budget year after year.

Then there’s the cost of daily living. Groceries, utilities, and housing—especially downstate—stack up fast. Even if your pension isn’t getting hit as hard by the state, everything else is. For a retiree trying to keep things steady and predictable, New York can feel like you’re constantly pushing uphill.

Illinois Brings Heavy Property Taxes into the Mix

Illinois doesn’t tax military retirement income, and that’s the good news. The problem is what comes next. Property taxes here are some of the highest in the country, and they don’t ease up much over time.

If you own a home, that annual bill can offset the tax break you get on your pension. And if you’re renting, those costs tend to get passed along anyway. Add in financial instability at the state level, and there’s always a sense that costs could shift again. It’s not the worst place on paper, but once you live with the numbers, it can feel like you’re giving back what you saved.

New Jersey Taxes and Housing Can Wear You Down

New Jersey offers limited exclusions on retirement income, but not enough to make a real difference for many military retirees. You’ll still see a portion of your pension taxed depending on your total income.

Where it really hits is property taxes and housing. They’re consistently among the highest in the U.S., and that’s not changing anytime soon. Even smaller homes come with large tax bills. Day-to-day expenses aren’t cheap either. When you stack it all together, it becomes a place where your retirement income has to work harder than it should.

Massachusetts Keeps the Pressure on Living Expenses

Massachusetts doesn’t tax military retirement income, which is a plus. But like a few others on this list, the tax break only goes so far. The overall cost of living—especially housing—remains high.

Utilities, healthcare, and general expenses tend to run above the national average. If you’re near Boston or the surrounding areas, it gets even tighter. For retirees who want predictability, the steady expense load can be a problem. You’re not necessarily getting hit in one place—it’s the accumulation that makes it tough to manage long term.

Hawaii Combines Isolation with High Costs

Hawaii doesn’t tax military retirement pay, and that’s often what draws people in. But once you’re there, the cost of living changes the conversation. Nearly everything is more expensive, largely due to the state’s isolation.

Housing prices are steep, groceries cost more, and even basic services can run high. Travel back to the mainland adds another layer of expense, especially if you’ve got family spread out. It’s a beautiful place, no question—but from a financial standpoint, it can stretch a retirement budget thin in a hurry.