The Lonestar State has several notable cities, but one under-the-radar Texas city to explore as a place to settle down in retirement is Fredericksburg. Despite having a small population of only around 10,875, it has grown by 4.9% since 2020. And this population is older; The average age is 50.7 years and approximately 1 in 3 people are 65 or older.

Located in the Texas Hill Country west of Austin and north of San Antonio, Fredericksburg earned its place on our list. The best places to retire in the South. A clue as to why: its overall affordability, Texas’ lack of income tax, small-town quirky charm and natural beauty. Learn more about what Fredericksburg has to offer.

Below Average Cost of Living

though not fredericksburg The most affordable place to retire in the SouthIt has a slightly higher median housing cost than the South overall, keeping it in the top 10 regions for affordability. While Fredericksburg’s average monthly housing cost is $1,254, the figure in the South is $1,163, or about 8% higher.

Homes in Fredericksburg are slightly more expensive than some other areas. The median home price as of October 2024 is $530,706, which is above the median national sales price of $420,400 as of the third quarter of 2024. However, you can definitely find homes for $300,000 or less.

Why Is This the Key to an Affordable Retirement?

Housing is the biggest expense for Americans, accounting for 32.9% of all household spending in 2023, according to the Bureau of Labor Statistics. Therefore, one of the best ways to ensure that you spend less in retirement is to choose a place and home that fits your budget.

There are a few places in the South that are cheaper than Fredericksburg when it comes to housing, but the good news is that home prices range widely and rents are relatively affordable, so you should be able to find a place to stay. Live within your budget.

No State Property Tax

Texas doesn’t actually have a state property taxesbut the county collects taxes. The average tax rate for Gillespie County, where Fredericksburg is located, is 1.140%. This means the average property tax on a home with an average price of $530,706 would be $6,050.

While this isn’t cheap, it’s a lower rate than you’d pay in a larger Texas city like Austin (Travis County), where the average tax rate is 1.770%.

Why Is This the Key to an Affordable Retirement?

Even if you buy a home with cash, property taxes are a constant expense you’ll have to deal with, and you should pay close attention to how much it will cost. Depending on where you move from, property taxes in Fredericksburg may actually be cheaper for you.

For example, if you are used to owning a home in a state with a very high property tax rate, such as New York or New Jersey, your bill will be significantly lower in Fredericksburg. However, it may be on the high side compared to other Southern cities.

Below Average Income Tax

Texas is one of seven states without an individual income tax-and that’s a big deal for people living on a retirement budget. For comparison, the top income tax rate in New Mexico is 5.9%, while in California the rate rises to 13.3%.

State and local sales tax is also lower than most, at 8.20%. In fact, Texas ranks 4th in the country for this metric. When combined with the lack of any income tax and low state and local sales tax, these two aspects of Texas tax code help residents keep more money in their pockets, which is important for people living on a fixed income.

Why Is This the Key to an Affordable Retirement?

States with no income tax, such as Texas, are sometimes referred to as “retirement-friendly” and tend to be popular with retirees. This is because residents do not need to pay taxes. pensionsocial security benefits or distributions IRAs or 401(k)s. Depending on your retirement income, not having to pay income tax could be equivalent to thousands of extra dollars you’ll keep.

Lower state and local sales tax can help make your money go further when purchasing groceries and other necessities. These small savings add up over time and give retirees extra spending power.

Other Surprising Benefits of Fredericksburg, Texas for Retirees

If you’re a wine lover, you’ll be pleased to learn that Fredericksburg is located in the heart of Texas wine country. There are more than 60 wineries, vineyards and wine tasting rooms to explore. The city has also remained a center of German-American culture since its founding by German settlers in 1846.

Active retirees and nature lovers will enjoy the Enchanted Rock State Natural Area, which features 10 miles of hiking trails as well as lakes and beautiful spring-growing wildflowers. It has also been designated by the International Dark Sky Association as a great place to enjoy stargazing.

Fredericksburg residents have access to quality healthcare with Methodist Hospital Hill Country, which offers a full range of medical services.

In conclusion

If you’re considering settling in Texas or somewhere in the South for your retirement years, Fredericksburg is worth a look. It’s a small but growing city that offers something for everyone and attracts more older residents every year.

From a financial perspective, Texas’ favorable tax treatment and the region’s lower cost of living, especially compared to more expensive urban areas, allow retirees to stretch their budgets a little further. Add to that a pleasant climate, solid healthcare, and an eclectic urban culture; Fredericksburg could be your golden years shortlist contender.

Methodology

Selected places for 2024 The South’s Best Places to Retire The list is drawn from all Census Designated Places in the southern states (Alabama, Arkansas, Florida, Georgia, Kentucky, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, and West Virginia). Median household income and monthly housing cost estimates were collected from the 2022 American Community Survey (5-year) for each location in the South. Locations where estimates contained large margins of error were excluded from the initial list.

The final list of locations was selected based on the following considerations:

1. housing affordability by South (comparing each location’s monthly housing costs to a weighted average of states in the South);
2. Average income in each location (as a proxy for taxes collected, which may be related to community resources; and
3. Individual reports on proximity to parks or shoreline, recent changes in the community, and previous reports from Southern Living highlighting the best places to retire.