Retire in Indiana: Cost, Taxes & FIRE Number for 2026
Retiring in Indiana costs about $48,800 a year on average, earning a B retirement tax grade and a #34 healthcare ranking. Here's the full breakdown — cost, taxes, and how much you actually need saved.
What It Costs to Retire in Indiana
The average retiree in Indiana spends about $48,800 a year ($4,067/month), based on BLS spending data for households 65 and older, adjusted for Indiana's cost of living. That works out to a standard retirement number of $1,220,000 under the 4% rule, or $1.39M for early retirees using the more conservative 3.5% FIRE withdrawal rate.
How the numbers below are calculated:
Annual cost = BLS Consumer Expenditure Survey 2024 (65+ household spending) × Indiana's cost-of-living index (MERIC Q3 2025).
Standard Retirement Number = Annual Cost ÷ 0.04 (4% rule, ~30-year horizon)
FIRE Number = Annual Cost ÷ 0.035 (3.5% rule, 40–50+ year horizon for early retirees)
Indiana earns a B retirement tax grade from Plootus Research and ranks #34 of 50 states for healthcare quality. Combined with an average annual salary of $58,460 for working residents (median $48,620), that gives a fuller picture of what building — and eventually spending down — a nest egg looks like here.
Indiana Retirement Snapshot
| Metric | Indiana |
|---|---|
| Average annual retirement cost | $48,800/yr |
| Average monthly retirement cost | $4,067/mo |
| Standard retirement number (4% rule) | $1,220,000 |
| FIRE number (3.5% rule) | $1.39M |
| Retirement tax grade | B |
| State income tax | 3.05% flat |
| Social Security tax | ⚠️ Caution |
| Healthcare quality rank | #34 of 50 |
| FIRE-friendliness rating | ★★★★☆ |
| Average annual salary (working residents) | $58,460 |
| Median annual salary (working residents) | $48,620 |
Sources: BLS CES 2024 (65+); MERIC Q3 2025; BLS OEWS May 2024; Plootus Research 2026.
Your Indiana-Adjusted Retirement Number
Pre-filled with Indiana's average retirement spending — adjust for your own situation.
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How Indiana Compares to Nearby States
| State | Annual Cost | Retirement Number | Tax Grade | HC Rank |
|---|---|---|---|---|
| Indiana (this page) | $48,800 | $1,220,000 | B | #34 |
| Kansas | $48,500 | $1,212,500 | B+ | #35 |
| Missouri | $49,500 | $1,237,500 | B+ | #32 |
| North Dakota | $49,800 | $1,245,000 | B | #20 |
→ Run a full side-by-side comparison in the State Comparison Tool
How Indiana Treats Retirees on Taxes and Healthcare
Indiana carries a B retirement tax grade from Plootus Research — a generally tax-friendly state with one of the lowest flat income tax rates in the country at 3.05%, though retirees should confirm Social Security treatment with a tax professional.
State Income Tax
Indiana's state income tax is a flat 3.05% — one of the lowest flat rates in the nation. This predictable, low rate benefits retirees with larger distributions from retirement accounts.
Social Security Tax
Indiana is flagged for caution on Social Security and other retirement-income taxation — confirm current rules with a tax professional before relying on this state for planning.
Indiana ranks #34 nationally for healthcare — below average. While Indianapolis and other larger cities have solid hospital networks, rural areas of the state face more limited healthcare access. Factor location carefully when planning retirement in Indiana.
Frequently Asked Questions
Indiana earns a B retirement tax grade and ranks #34 of 50 for healthcare quality. Average annual retirement spending runs about $48,800, requiring roughly $1,220,000 in savings under the standard 4% withdrawal rule. Indiana warrants caution on Social Security and retirement-income taxation — confirm current rules with a tax professional before relying on this state for planning.
Indiana is flagged for caution on Social Security and other retirement-income taxation — confirm current rules with a tax professional before relying on this state for planning. Check current thresholds directly with the state, since exemptions often apply below certain income levels.
Using the standard 4% rule, retiring in Indiana on its average annual cost of $48,800 requires approximately $1,220,000 in savings. That figure excludes Social Security, which most retirees layer on top to reduce the amount they need from their own portfolio.
At a 3.5% safe withdrawal rate — the more conservative rate recommended for early retirees facing a 40–50+ year horizon — Indiana's FIRE number is approximately $1.39M, based on its $48,800/year average cost. Early retirees should also budget separately for healthcare before Medicare eligibility at 65.
- Bureau of Labor Statistics, Consumer Expenditure Survey 2024 (65+ age group)
- Missouri Economic Research and Information Center (MERIC), Cost of Living Index Q3 2025
- Bureau of Labor Statistics, Occupational Employment and Wage Statistics (OEWS) May 2024
- Kiplinger, Retirement Taxes 2026; WalletHub Best States to Retire 2026
- Plootus Research 2026 (tax grades, healthcare rank, FIRE ratings)
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