Dueling Retirement States: Sun and Lower Cost of Living on the Gulf Coast

November 7, 2015 — In this installment of our “Dueling Retirement States” we compare and analyze retirement in the warm states that surround the Gulf of Mexico. Alabama, Mississippi, Louisiana, and Texas are better known and appreciated by residents of the South, while Florida is popular with retirees from all over the nation and Canada. See Further Reading at end for links to the other comparisons in the series.

Do warm sandy beaches call to mind your dream retirement lifestyle? The states that border the Gulf of Mexico – Florida, Alabama, Mississippi, Louisiana, and Texas – offer many advantages for retirement living. For one, they are almost always much less expensive than either the West or East Coasts. They have some of the warmest winters in the U.S. They represent 5 of the lowest tax states in the nation. And they are generally uncrowded and less congested than many other retirement locations.

The attraction for many folks is the opportunity to enjoy beautiful beaches that go from the West Coast of Florida all the way to southern Texas, where the Lone Star State runs into Mexico. In this article we will compare and contrast these 5 Gulf Coast states: Alabama and Florida, Mississippi, Louisiana,and Texas. (links go to our mini-retirement guides to each state). Population and income data is from American Fact Finder-U.S. Census Bureau.

A Few Facts
Texas, with its close to 27 million population, is by far the more populous of the 5 states. Florida’s total estimated 2014 population increased to just under 19.9 million, adding 1 million people from 2010. Its West Coast is not as crowded as its East Coast, where more of the population lives. There were an estimated 4.8 million people in Alabama, 4.6 million in Louisiana, and 3 million in Mississippi during 2014.

Florida has the highest percentage of 65+ population of the 5 states – 17.3%, while Texas is the youngest with 10.3% of its population 65+. For Alabama this percentage was 13.8%. The 65+ population in Louisiana was 12.3%, compared to 12.8% in Mississippi. The total U.S. % over 65 (2010) is 13.0%.

Economics and Home Prices – All 5 Under the U.S. Median.
All of these states have statewide home values under the nationwide Zillow Home Index of $182,000 (Oct. 2015). Florida has by far the most expensive homes of these 5 states, although the median there is still below the national. Texas was next highest for home prices at $150,300. Homes in Florida and Texas experienced much better price appreciation in 2015 than the other 3, which were essentially stagnant. Louisiana, Mississippi, and Alabama all represent great real estate bargains compared to the rest of the country, where retirees also enjoy some of the lowest property taxes in the U.S. Source: Zillow
Alabama, Louisiana, and Mississippi have per capita incomes well below the national average of $42,473, but Florida and Texas incomes are just below that level.

[jcolumns]
State
Florida
Texas
Louisiana
Alabama
Mississippi

[jcol/]
2015 Home Price
$177,700
$150,300
$130,000
$122,400
$113,000

[jcol/]
2015 % Change
+7.5%
+9.3%
-%
+.5%
+1.1%

[/jcolumns]

Home Prices by City
Home prices in this section are from the National Association of Realtors® (NAR), which generally publishes the most reliable sales data (and seem generally higher than those reported by Zillow). As is the case everywhere, home prices can vary tremendously from area to area and city to area. Places closer to the Gulf will generally command higher prices, as do very desirable areas such as Naples or thriving cities like Houston. The highest priced Metro in all of the Gulf states in 2015 was Naples, where the median home selling price was $423,000. Mobile, at $127,000, had the lowest home prices of any of the Gulf Metros we looked at. The West Coast Florida Metro with the lowest home prices was Pensacola at $167,000. Cape Coral/Ft. Myers had a median home selling price of $218,000 in 2015’s 2nd quarter. In Ft. Walton Beach/Destin it was $193,900. Prices all over Florida have experienced dramatic recoveries since the 2008 housing crash hit this region so hard.

In the other Gulf states prices were usually below the national median, with the exception of some big cities in Texas. In Alabama: Huntsville home prices were $174,000 compared to $127,000 in Mobile. Over in Mississippi the college town of Jackson had median prices of $172,000 vs. $131,000 in Biloxi. Louisiana home prices ranged from New Orleans’ $154,000, Shreveport’s $160,000, to more expensive Baton Rouge at $184,000. Houston/Sugarland $221,000 had the most expensive homes in Texas at $221,000. At $140,000 Beaumont/Port Arthur was the biggest housing bargain, compared to $199,000 in San Antonio and Corpus Cristi at $186,000.

Cost of Living
The Numbeo.com Cost of Living + Rent Index shows that most of the larger Gulf Coast cities have fairly close costs of living. That Index shows 53 for New Orleans, 48 for Ft. Myers, 58 for Houston, Huntsville at 46, and San Antonio at 50. For comparison, New York City is 100, so anything lower than that index is comparatively less expensive. Unfortunately, data on cost of living is not readily available for many of the smaller cities in these states, but it is probably safe to assume they are for the most part even lower than in the larger cities.

Climate
All of these Gulf Coast states share fairly similar weather. It is generally hot and humid in the summer with almost daily showers, and relatively mild and dry during the winter. In Houston for example the average daily January temperature ranges from 45 to 63, whereas in July that range is from 75 to 92. Fort Myers (FL) is a bit warmer in winter with its average daily January range of 54 to 75, although the summer temperatures are almost identical to Houston’s. Mobile, considerably north of Fort Myers, has lower average January temperatures, ranging from 40 to 61, but the July temps are similar, from 72 to 90. The further you get from the water the cooler the winter temperatures.

Tax Environment Comparison
Florida and Texas would have to be considered the 2 very tax-friendly Gulf Coast states; neither one has an income tax. The other 3 have modest marginal tax rates compared to many other states.

Louisiana, Alabama, and Mississippi have some of the lowest property tax rates in the nation. Florida is in the middle of the pack for property taxes, which are high in Texas. Most of these states offer senior property tax exemptions of some type. Florida, for example, has one of the most generous Homestead protection laws in the country. For homes in the Florida program the assessed value generally can not higher than the rate of inflation. None of the Gulf Coast states have inheritance or estate taxes, and all exempt all or most retirement income from taxation. The data below is from the Tax Foundation and Tax-Rates.org. For more detail about taxation and other information about each state see our mini State Retirement Guides.

[jcolumns]
State
Florida
Texas
Louisiana
Alabama
Mississippi

[jcol/]
Tax Burden
31st
24th
47th
43rd
41st
40th

[jcol/]
State Inc Tax
None
None
2-6%
2-5%
3-5%

[jcol/]
State Sales Tax*
6%
6.25%
4%
4%
7%

[jcol/]
Med Prop Tax**
.97%
1.81%
.18%
.18%
.52%

[/jcolumns]
*Localities may add additional sales taxes
** On appraised market value

[jcolumns]
State
Florida
Texas
Louisiana
Alabama
Mississippi

[jcol/]
Taxation of SocSec
No
No
No
No
No

[jcol/]
Taxation of Pensions
No
No
No
No
No

[jcol/]
Inher/Estate Tax
No
No
No
No
No

[/jcolumns]

Where to Live by State
All of these Gulf states are renowned for their outdoor recreational possibilities, with outstanding fishing, boating, and beaches. The more populous states like Texas and Florida have many towns cities to choose from and a range of other choices. For example Topretirements has reviews of 102 towns and cities in Florida, but only 12 in Alabama and fewer than that in Mississippi. They all have interesting college towns to choose from, such as Oxford, MS (Old Miss), Baton Rouge, LA (LSU), and Tampa, FL (U of South Florida and U of Tampa).

There are also plenty of beach towns, not only on Florida’s West Coast but in all the other states as well. Those might include Orange Beach (AL), Biloxi (MS), and many in Texas such as Port Isabel.

On our Top 100 List
Scanning our 2015 List of the Most Popular Places to Retire, we find 16 cities and towns from the Gulf Coast area. Those include 7 in the top 20. Those include:

The planned and charming town of #3 Venice, FL

The popular Navy town on Florida’s Panhandle of Pensacola, (#18).

The former Utopian community on Mobile Bay, #36 Fairhope, AL

The Sparkling City by the Sea,” in South Texas,Corpus Christi, TX, #86

Some peoples’ favorite old Florida town, Dunedin

The beach town on Alabama’s Gulf Coast, Gulf Shores.

These states all have a variety of 55+ and active communities to choose from. You can find many more interesting places to retire in these states listed in our State Directories.

Bottom Line
The Gulf Coast states all offer superb recreation and many types of places to live. They are all inexpensive and very tax-friendly, making them desirable for any boomer anxious to move away from state taxation.

For further reference:
State Retirement Guides
Dueling Mountain States: NV, CO, UT, ID, WY, MT
Retirement 101 Mid-Atlantic States: MD, DE, VA, NJ
Florida Retirement 101
Dueling States Mid-South: TN, GA, KY, AL
Dueling Carolinas: NC vs. SC
Dueling States: Arizona vs. Florida
California Retirement 101
Retirement in the Southwest: AZ, NM, and Utah
Comparing the Pacific Northwest: Oregon and Washington for Retirement

Comments? We and all your fellow members love to know what you are thinking. Please share your thoughts about retirement in these states in the Comments section below.