Can You Retire on $2,500 a Month? These States May Make It Possible

Retiring on $2,500 a month may be possible in states with lower housing and living expenses, including Oklahoma, Mississippi, and Alabama. Housing costs, healthcare access, and unexpected expenses can determine whether a modest retirement budget works. New Africa/Shutterstock

Retiring on $2,500 a month might sound impossible when groceries, housing, insurance, and healthcare costs keep climbing. But depending on where you live, that amount could provide a modest retirement without requiring a six-figure annual income. The key is location, particularly when it comes to housing expenses.

According to the Social Security Administration, the estimated average monthly retirement benefit for January 2026 was $2,071, meaning a $2,500 monthly retirement income isn’t far above what many Americans receive. Meanwhile, the Missouri Economic Research and Information Center (MERIC) reports significant differences in living expenses across the country, with several states offering costs well below the national average.