Retiring in Indiana: 5 Pros and Cons

Affordable, friendly, and less crowded: the perks of retiring in Indiana focus on a more relaxed pace of life. The “big” cities are smaller than those in other states, which means they’re less crowded. But will you still have access to everything you need by choosing to retire in Indiana? The Hoosier State isn’t considered a “retirement destination” state. However, the advantages and disadvantages are worth a closer look. 

Pros of Retiring to Indiana

Affordable Cost of Living

Indiana has a relatively low cost of living. Almost everything you need to spend money on–housing, groceries, and healthcare–costs under the indexed national averages. Locals spent 9% less than most places in the United States, ranking it no. 14 for 2023. That’s great news as you transition to a fixed income. Lower living costs can help you maintain a higher quality of life.

Housing costs were notably 24% below 2023’s median rate. Housing is often the highest spending item in personal budgets, and lower costs in this category can stretch retirement income so it lasts longer. That’s important as people are living longer, healthier lives.

Tax Benefits

Social Security benefits are not taxed in Indiana. Military retirement pay is also exempt. However, income from pensions and retirement savings account distributions are subject to income tax. Those over 65 qualify for a $1,000 income tax exemption. Low-income individuals may qualify for the Unified Tax Credit for the Elderly.

Indiana has a flat income tax rate of 3.05% as of 2024. The plan is to lower the state income tax to 2.9% by 2027. Do be aware that some cities also levy an individual income tax. 

Inheritances are not taxed, which is excellent for estate planning.

Low property tax rates benefit retirees. In 2023, the average percent of home value paid as real estate tax was 0.84%. Indiana caps its property taxes at 1-3% of property value, with owner-occupied homes at the 1% cap. More good news: homeowners over 65 may qualify for a reduction in the property’s assessed value of up to $14,000. There’s also a “circuit breaker “program that limits property value increases. 

The state sales tax rate of 7% applies to the sale of most goods, but there are no local sales taxes on top of that. Sales taxes are exempt for groceries and prescription drugs. 

Outdoor Activities

Time spent outdoors is time well spent. Indiana has taken its special places and preserved them for all to enjoy. The Indiana Dunes National Park is a prime example. Its miles of unspoiled shore are unique among the Great Lakes region. It’s the star of a system with 24 state parks, eight reservoirs, and two state forest recreation areas.   

What will you do with your newfound free time as a retiree? Indiana recreational activities run the full gamut. Hit the trails for hiking, biking, or horseback riding. Take your tent for backcountry camping, or hook up the RV lakeside. Find the hidden (and no-so-hidden) waterfalls of southern Indiana. Step back in time at pioneer villages and old mills, or go underground into striking caves. In the winter, get into winter sports like cross-country skiing. If you have grandkids, they’ll probably like to ride the toboggan run at Pokagon State Park. 

You’ll find organized activities, too. About half of the state’s golf courses are public or municipal. Community centers and local county parks have tennis, pickleball, and swimming facilities. Many run programs for retirees to keep them engaged and active. 

The Arts

Indiana delights with intimate venues for listening to live music or admiring art. Indianapolis may get most of the attention because of its larger theaters and museums. With its domed glass ceiling, the Anderson Museum of Art in Anderson is impressive. But even small towns have embraced public art initiatives. Indiana has 12 designated art and culture districts in places like Carmel and Wabash.

Indiana University and Purdue University promote the arts through museums like the Eskenazi Museum of Art. These museums showcase the state’s creativity. Explore talents from glass makers to literary icons like Kurt Vonnegut.

Community and Lifestyle

Many small towns and cities in Indiana have a friendly, close-knit community feel. It rises from the state’s roots as an agricultural center. People had to lean on each other to survive and build community. That friendly, Midwestern hospitality can appeal to retirees looking to connect with neighbors. If active adult living is what you’re looking for, you can find dedicated retirement communities with tailored perks to fit your needs. 

Cons of Retiring to Indiana

Hit-or-Miss Weather

Indiana experiences all four seasons in full glory, including cold winters with an average of 22 inches of snowfall. Northern Indiana gets lake-effect snow, but don’t think you’re exempt from white-out conditions living in southern Indiana. The cold and blustery weather sweeps across the state’s fields and flat landscapes. Not everyone wants to keep shoveling snow and salting the front stoop for months.

On the flip side are humid, hot summers. Even though it’s landlocked, Indiana gets muggy. That creates severe thunderstorms that bring tornadoes, hail, and heavy rains. 

The swinging weather can be a drawback for those who prefer a milder climate year-round.

Additionally, living in Indiana requires you to be weather alert. Tornadoes and severe thunderstorms are risks in spring and summer months. 

Limited Public Transportation

Most Indianans own a car because it’s the best and sometimes the only way to get where they need to go. Public transportation is limited outside major cities like Indianapolis or northwest Indiana. Owning a car and being able to drive as you age are considerations for retirees to think about. How will you get to a medical appointment or the grocery store if you have limited mobility? Affordable living matters, but so does independent living.

Cultural Scene

The larger cities have theaters, museums, and festivals. Smaller towns might have fewer entertainment and dining options. That may be exactly what you want if you want a quiet retirement life, to avoid congestion, and save money. You’ll be golden if you’re okay living in towns where all the shops and diners are closed by 10 pm. Each Indiana region has different cultural attractions, but most are concentrated around central Indiana.

Economic Factors

Industrial decline has impacted some areas in Indiana. The “heartland of America” is a hub for logistics, but strength in this sector and others like education aren’t equally distributed in the Hoosier State. The downturn in job opportunities trickles across the economy. Certain regions need more robust infrastructure, from repaired roadways to healthcare access. Lack of jobs influences the overall economic health and culture of where you choose to retire.

Healthcare Access 

While Indiana has some solidly performing healthcare facilities, the state has room to grow in healthcare. It has some lower outcomes, but some of this links to the state’s higher rates of obesity and maternal care. Additionally, rural areas may have less access to medical services. Retirees in these areas might need to travel to larger cities for specialized care. 

That limited access impacts healthcare costs. Even though Indiana runs community health centers that provide comprehensive services and base payment on income, a need to travel for care increases expenses.

Indiana is working on actively recruiting and keeping its doctors. Indiana University is the nation’s largest medical school, and it has an aim to bring more providers into underserved areas. 

Retiring in Indiana

Indiana can be a great place to retire for those who value affordability, community, and access to quality healthcare. However, it has some drawbacks that should factor into where you want to live in Indiana. Be prepared for the weather and possibly limited public transportation. Each retiree’s preferences and needs will ultimately determine if Indiana is the right choice for their golden years. Talking with a financial advisor can also help set you up for success. If you’ve narrowed down where you want to retire in Indiana, let a local expert help you find the right home.