Retire in South Dakota: Cost, Taxes & FIRE Number for 2026
Retiring in South Dakota costs about $52,000 a year on average, earning an A+ retirement tax grade and a #4 healthcare ranking. Here's the full breakdown — cost, taxes, and how much you actually need saved.
What It Costs to Retire in South Dakota
The average retiree in South Dakota spends about $52,000 a year ($4,333/month), based on BLS spending data for households 65 and older, adjusted for South Dakota's cost of living. That works out to a standard retirement number of $1,300,000 under the 4% rule, or $1.49M 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) × South Dakota'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)
South Dakota earns an A+ retirement tax grade from Plootus Research and ranks #4 of 50 states for healthcare quality. Combined with an average annual salary of $55,820 for working residents (median $47,080), that gives a fuller picture of what building — and eventually spending down — a nest egg looks like here.
South Dakota Retirement at a Glance
| Average annual retirement cost | $52,000/yr ($4,333/mo) |
| Standard Retirement Number (4% rule) | $1,300,000 |
| FIRE Number (3.5% SWR) | $1.49M |
| Retirement Tax Grade | A+ |
| State Income Tax | None |
| Social Security Tax | ✅ No tax |
| Healthcare Quality Rank | #4 of 50 |
| FIRE-Friendliness Rating | ★★★★★ |
| Avg. Annual Salary (working residents) | $55,820 |
| Median Annual Salary (working residents) | $47,080 |
Sources: BLS CES 2024 (65+); MERIC Q3 2025; BLS OEWS May 2024; Plootus Research 2026.
Your South Dakota-Adjusted Retirement Number
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How South Dakota Compares to Nearby States
| State | Annual Cost | Retirement Number | Tax Grade | HC Rank |
|---|---|---|---|---|
| South Dakota | $52,000 | $1,300,000 | A+ | #4 |
| Michigan | $52,000 | $1,300,000 | B- | #26 |
| Nebraska | $51,000 | $1,275,000 | B | #22 |
| Ohio | $50,500 | $1,262,500 | C+ | #37 |
How South Dakota Treats Retirees on Taxes and Healthcare
South Dakota carries an A+ retirement tax grade from Plootus Research — one of the most tax-friendly states in the country for retirees.
State Income Tax
South Dakota has no state income tax at all, so wages, pensions, Social Security, and retirement account withdrawals aren't taxed at the state level.
Social Security Tax
South Dakota does not tax Social Security benefits, one of the factors behind its A+ tax grade. Confirm current rules with a tax professional as exemptions can vary.
South Dakota ranks #4 nationally for healthcare quality — one of the strongest states for retirees who prioritize access to care.
Frequently Asked Questions: Retiring in South Dakota
South Dakota earns an A+ retirement tax grade and ranks #4 of 50 for healthcare quality. Average annual retirement spending runs about $52,000, requiring roughly $1,300,000 in savings under the standard 4% withdrawal rule. Whether it's a good fit depends on your priorities — South Dakota has no state income tax, and it does not tax Social Security.
South Dakota does not tax Social Security benefits, one of the factors behind its A+ tax grade. Confirm current thresholds and exemptions with a tax professional, since rules change year to year.
Using the standard 4% rule, retiring in South Dakota on its average annual cost of $52,000 requires approximately $1,300,000 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 — South Dakota's FIRE number is approximately $1.49M, based on its $52,000/year average cost. Early retirees should also budget separately for healthcare before Medicare eligibility at 65.
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
- 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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