🔥 FIRE Research · Plootus 2026 · All 50 States · 3.5% Safe Withdrawal Rate

Best States for Early Retirement (FIRE) in 2026: FIRE Number for All 50 States

Q: What is the best state for FIRE early retirement?

Tennessee offers the best overall combination for most early retirees: no state income tax, no estate tax, low annual retirement cost (~$49,500/year, FIRE number ~$1.41M at 3.5%), livable cities (Nashville, Knoxville, Chattanooga), and mild weather. South Dakota is comparable in taxes and costs with better healthcare (ranked #4 nationally) but is more rural. Mississippi offers the cheapest FIRE number ($1.30M) but ranks #49 in healthcare. Choose based on your priorities: lowest cost, best healthcare, or best overall livability.

Q: Should early retirees use 3.5% or 4% safe withdrawal rate?

Early retirees — those planning for a 35-50+ year retirement horizon — should use 3.5% (or even 3.25–3.5%) rather than the classic 4% rule, which was designed for a 30-year retirement horizon. Historical backtesting shows that 4% has experienced some failure scenarios over 40+ year periods, while 3.5% maintains a survival rate exceeding 95% across nearly all historical market environments including the Great Depression and 1970s stagflation. The 3.5% multiplier: FIRE number = annual spending ÷ 0.035 (same as × 28.57). Source: Bengen (1994); Pfau (2011); Kitces Research.

Q: How do early retirees access 401(k) funds before age 59.5?

Three main methods: (1) Roth Conversion Ladder — convert Traditional IRA/401(k) to Roth annually; access those conversions tax-free after 5 years. Start converting the year before early retirement to build the ladder. (2) Rule 72(t)/SEPP — IRS substantially equal periodic payments allow penalty-free withdrawals from IRAs at any age using three IRS-approved calculation methods. (3) 457(b) plans — government employees can access 457(b) at any age after separating from their employer, with no early withdrawal penalty. Most FIRE practitioners use a combination: live on taxable brokerage and Roth contributions (always accessible) while the conversion ladder matures.

The right state can cut your FIRE number by $500,000 or more. Tennessee and South Dakota offer the best combination of low annual cost, zero income tax, and livable infrastructure for early retirees. Here's the data behind every state.

By the Plootus Research TeamUpdated April 2026Sources: BLS CES 2024, MERIC Q3 2025, Plootus Research 2026

$1.30M

Minimum FIRE Number — Mississippi (cheapest)

$3.69M

Maximum FIRE Number — Hawaii (priciest)

3.5%

Safe Withdrawal Rate for Early Retirees

$2.39M

Gap Between Best and Worst FIRE State

Methodology

How We Calculate FIRE Numbers by State

Unlike traditional retirement planning, early retirement FIRE planning excludes Social Security (unavailable before age 62) and uses a more conservative safe withdrawal rate:

FIRE Number Formula (early retirees):
Annual State Cost ÷ 0.035 = FIRE Number
OR: Annual State Cost × 28.57 = FIRE Number

Annual state cost = BLS Consumer Expenditure Survey 2024 (65+ household spending) × state cost-of-living index (MERIC Q3 2025). The 3.5% rate is used instead of 4% because early retirees face 40-50+ year horizons.

For the Social Security bridge period (ages 60–62), most FIRE practitioners maintain a separate 1–3 year cash cushion to avoid tapping the investment portfolio during a potential market downturn at the start of retirement.

Rankings

FIRE Number for All 50 States (2026)

State	Annual Cost	FIRE Number (3.5%)	Tax Grade	HC Rank	Income Tax	SS Tax	FIRE Rating
Tennessee	$49,500	$1.41M	A	#44	None	✅	★★★★★
South Dakota	$52,000	$1.49M	A+	#4	None	✅	★★★★★
Wyoming	$52,000	$1.49M	A+	#33	None	✅	★★★★★
Nevada	$55,000	$1.57M	A	#39	None	✅	★★★★★
Alabama	$46,500	$1.33M	A	#48	5% max	✅	★★★★☆
Arkansas	$46,200	$1.32M	B	#45	4.4% max	✅	★★★★☆
Mississippi	$45,600	$1.30M	B-	#49	4% flat	✅	★★★★☆
Missouri	$49,500	$1.41M	B+	#32	4.5% max	⚠️	★★★★☆
Iowa	$50,200	$1.44M	B	#28	3.8% flat	✅	★★★★☆
Kansas	$48,500	$1.38M	B+	#35	5.7% max	⚠️	★★★★☆
Indiana	$48,800	$1.39M	B	#34	3.05% flat	⚠️	★★★★☆
Georgia	$51,500	$1.47M	B+	#38	5.49% flat	✅	★★★★☆
North Carolina	$55,000	$1.57M	B+	#25	4.25% flat	✅	★★★★☆
Arizona	$55,500	$1.59M	B+	#29	2.5% flat	✅	★★★★☆
Florida	$57,000	$1.64M	A+	#27	None	✅	★★★★☆
Texas	$57,500	$1.64M	A	#30	None	✅	★★★★☆
North Dakota	$49,800	$1.42M	B	#20	2.9% max	✅	★★★★☆
Nebraska	$51,000	$1.46M	B	#22	5.84% max	⚠️	★★★★☆
Idaho	$52,500	$1.50M	B	#18	5.8% max	✅	★★★★☆
South Carolina	$52,500	$1.50M	B	#40	6.4% max	✅	★★★★☆
Oklahoma	$47,500	$1.36M	B-	#43	4.75% max	✅	★★★☆☆
Kentucky	$47,000	$1.34M	B-	#47	4% flat	✅	★★★☆☆
Louisiana	$47,500	$1.36M	B	#46	4.25% max	✅	★★★☆☆
West Virginia	$44,500	$1.27M	B-	#50	5.12% max	✅	★★★☆☆
Michigan	$52,000	$1.49M	B-	#26	4.05% flat	✅	★★★☆☆
Ohio	$50,500	$1.44M	C+	#37	3.5% max	✅	★★★☆☆
Pennsylvania	$56,000	$1.60M	B	#24	3.07% flat	✅	★★★☆☆
Virginia	$58,500	$1.67M	B	#13	5.75% max	✅	★★★☆☆
Delaware	$57,000	$1.63M	A	#15	6.6% max	✅	★★★☆☆
Wisconsin	$54,000	$1.54M	B-	#16	7.65% max	✅	★★★☆☆
Montana	$53,000	$1.51M	C	#21	6.75% max	⚠️	★★★☆☆
Colorado	$61,000	$1.74M	B-	#7	4.4% flat	⚠️	★★★☆☆
Illinois	$57,000	$1.63M	C+	#23	4.95% flat	✅	★★★☆☆
Alaska	$64,000	$1.83M	A	#35	None	✅	★★★☆☆
New Hampshire	$63,000	$1.80M	A	#3	None*	✅	★★★☆☆
Utah	$60,000	$1.71M	C	#10	4.55% flat	⚠️	★★★☆☆
Washington	$67,000	$1.91M	B-	#14	None	✅	★★★☆☆
New Mexico	$51,500	$1.47M	C	#42	5.9% max	⚠️	★★☆☆☆
Minnesota	$57,500	$1.64M	C	#6	9.85% max	⚠️	★★☆☆☆
Maine	$59,000	$1.69M	C	#15	7.15% max	✅	★★☆☆☆
Vermont	$60,000	$1.71M	D	#5	8.75% max	⚠️	★★☆☆☆
Oregon	$65,000	$1.86M	C-	#41	9.9% max	✅	★★☆☆☆
Rhode Island	$64,000	$1.83M	D	#17	5.99% max	⚠️	★★☆☆☆
Maryland	$69,000	$1.97M	C	#19	5.75% max	✅	★★☆☆☆
Connecticut	$74,000	$2.11M	D	#1	6.99% max	⚠️	★★☆☆☆
Massachusetts	$82,000	$2.34M	D	#2	5% flat	✅	★★☆☆☆
New Jersey	$80,000	$2.29M	D	#9	10.75% max	✅	★★☆☆☆
California	$92,000	$2.63M	F	#8	13.3% max	✅	★☆☆☆☆
New York	$95,000	$2.71M	F	#12	10.9% max	✅	★☆☆☆☆
Hawaii	$98,000	$2.80M	F	#11	11% max	✅	★☆☆☆☆

Sources: BLS CES 2024; MERIC Q3 2025; Kiplinger 2026; WalletHub 2026; Plootus Research 2026.

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Critical Consideration

The FIRE Healthcare Gap — Your Biggest Pre-Medicare Risk

The most overlooked FIRE risk is healthcare. Before Medicare eligibility at age 65, you must fund health insurance independently. ACA Marketplace premiums for a 55-year-old can exceed $800–$1,200/month in many states. Income management is the key strategy: keep income below 400% of the federal poverty level to qualify for premium tax credits.

~$24K/yr

Estimated Healthcare Cost at Age 55

ACA Marketplace plan for a single 55-year-old without premium subsidies: approximately $18,000–$30,000/year depending on state and plan tier.

Income Mgmt

The FIRE Healthcare Strategy

Keep MAGI below 400% FPL by using Roth conversions, managing 401(k) withdrawals, and holding an HSA. Qualify for substantial premium tax credits.

Frequently Asked Questions

What is the best state for FIRE early retirement?+

Should early retirees use 3.5% or 4% safe withdrawal rate?+

How do early retirees access 401(k) funds before age 59.5?+

📚 Sources

Bureau of Labor Statistics, Consumer Expenditure Survey 2024 (65+ age group)
Missouri Economic Research and Information Center (MERIC), Cost of Living Index Q3 2025
Bengen, W.P. (1994). Determining Withdrawal Rates Using Historical Data. Journal of Financial Planning
Pfau, W. (2011). Safe Savings Rates: A New Approach to Retirement Planning. Journal of Financial Planning
Kiplinger, Retirement Taxes 2026; WalletHub Best States to Retire 2026
KFF Health Insurance Marketplace Calculator 2025
Plootus Research 2026

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