The Complete Guide to Retiring in Kentucky
If you’re looking for a great mix of outdoor recreation and cultural activities to enjoy in your retirement, Kentucky might be a state to consider. Kentucky’s affordable cost of living and tax benefits also appeal to many retirees.
In this article, we’ll give you more detail about what it’s like to retire in Kentucky, including information about the climate, tax rate, and access to healthcare.
Key Takeaways
Kentucky is a tax-friendly state for retirees and has a lower cost of living.
With Mammoth Cave National Park and a number of rivers, Kentucky is a prime location for outdoor activities.
Kentucky is more rural, so it can be difficult to access quality healthcare.
There is a risk of severe weather, such as flooding and tornadoes.
What to expect from retiring in Kentucky
Kentucky experiences all four seasons. While summer can be hot and humid, winters tend to be a bit milder than in the more northern states.
Kentucky has a diverse, scenic landscape that provides many opportunities for outdoor activities. Mammoth Cave and Red River Gorge are great places to hike and explore caves, while Kentucky’s numerous rivers are popular for canoeing, fishing, and kayaking. If you’re someone who enjoys adventure, there are also opportunities for rock climbing and ziplining.
Those who enjoy a little more of a slower pace outside might enjoy knowing that Lake Cumberland is considered the “Houseboat Capital of the World”. Kentucky’s small towns also have a close-knit community feel, and there’s no shortage of Southern hospitality in the state to make you feel welcome.
Known as “The Bluegrass State”, music is deeply appreciated in Kentucky. Bluegrass, country music, and folk music are popularly played at small venues, local festivals, and fairs.
The Pros and cons of retiring in Kentucky
Now that we’ve given you an idea of what retiring in Kentucky might look like, let’s explore some more specific pros and cons.
Pros:
Kentucky is a more affordable state to retire in, with a cost of living that is 6% lower than the national average. Lower property and sales taxes also make it more affordable.
Kentucky doesn’t tax Social Security income and offers tax benefits on other types of retirement income, making it a tax-friendly state for retirees.
If you enjoy a slower pace of life and spending time outdoors, there’s plenty to do. Hiking, paddling, and exploring caves are popular activities in the state.
Cons:
While larger cities offer cultural activities and other entertainment options, there may be less to do in smaller cities and more rural areas.
Kentucky can be prone to extreme weather and natural disasters like flooding and tornadoes.
It can be difficult to access quality healthcare services. This is especially true for those in rural areas.
How retirement taxes work in Kentucky
Kentucky is a more tax-friendly state for seniors, offering retirement income deductions and homestead exemptions.
No Social Security tax: Kentucky does not tax Social Security income. If you rely on Social Security for part of your retirement income, this can be helpful.
Retirement income deductions: Kentucky allows you to deduct up to $31,110 of your retirement income.
Homestead exemption: Individuals who are 65 or older are eligible for a homestead exemption. For 2025, this amount is $49,100. However, this amount is adjusted every two years for inflation.
Estate and inheritance taxes: There are no estate taxes in Kentucky. There is also no inheritance tax for immediate family members. This includes children, spouses, parents, grandchildren, and siblings.
Low property taxes: The average effective property tax rate in Kentucky is 0.8%.The median annual payment is $1,418, which is 53% less than the national median.
Is it expensive to live in Kentucky?
Kentucky is a more affordable state. The cost of living is 6% lower than the national average. Housing costs are 22% lower than the national average. The home prices average around $263,000, with rent averaging at $1,366. Utility costs are also lower in Kentucky than the national average.
According to the U.S. News & World Report’s Affordability Rankings, Kentucky ranks #10 in affordability and #5 for housing affordability.
Housing and cost of living in Kentucky
While Kentucky has more affordable housing costs, there are also some more expensive areas. Housing in an affluent neighborhood like Glenville can run you $1.1 million, whereas smaller cities like Middlesbrough average around $105,000.
Like utilities, grocery costs are below the national average in Kentucky. Kentucky’s state tax is a flat 6%, with prescription drugs and most groceries being tax-exempt.
How does retiring in Kentucky compare to Tennessee or Missouri?
All three states offer the opportunity to enjoy all four seasons, but Kentucky and Tennessee have milder winters compared to Missouri, which can appeal to those who don’t enjoy the cold. All three states are also affordable, but Kentucky offers generous exemptions on retirement savings.
If you enjoy a slower pace of life and outdoor activities, Kentucky might be a good fit for you. But if you’re looking for an urban environment with more amenities and entertainment options, you might prefer Tennessee or Missouri.
It’s important to note that it can be more difficult to access healthcare services in Kentucky, especially in more rural areas. You’ll want to ensure that you have access to the healthcare that you need.
Best places to retire in Kentucky
While Kentucky is a more affordable state to retire in, there are some locations that are higher-end. These include:
Prospect: A suburb of Louisville, with waterfront homes, golf courses, and scenic views of the Ohio River. More amenities are available in Louisville, which is just a short drive away.
Lexington: A Southern city with luxurious homes, boutique shopping, and fine dining. Lexington is home to the distillery district, which offers eateries, live music venues, and art galleries.
Owensboro: A city on the Ohio River that boasts a number of scenic walking trails. Owensboro is home to the Bluegrass Music Hall of Fame & Museum and also hosts numerous festivals throughout the year.
If you’re looking for a more affordable option that still allows you to enjoy the outdoors, you might consider:
Georgetown: Georgetown’s cost of living is about 14% lower than the national average. It offers a small town feel, but it’s close to Lexington, which offers more services and entertainment.
Berea: A small town in the foothills of the Appalachians. Home to Berea College, arts and crafts are featured heavily in the town, with lots of art galleries and regular festivals to celebrate artisans.
Somerset: A town located near Lake Cumberland that offers a lake lifestyle at a more affordable price. Fishing, boating, and camping are favored activities in the area.
Retirement communities in Kentucky
If you’d like easy access to activities, prepared meals, and a built-in social community, you might consider a retirement community. While there are more than 560 in the state, some popular options include:
Village Crossing Retirement Community: Located in Louisville, Village Crossing focuses on offering a luxurious retirement community. 24/7 concierge service, meal delivery, and weekly housekeeping give you more time to enjoy the chef-made meals, 150-seat theater, and daily social activities. Home care support is also available.
Spring Hill Village: Located near downtown Cincinnati, Spring Hill Village is 25 acres of patio homes, paved walking paths, and a stocked lake. You’ll have access to the fitness center, community center, and outdoor patio. Home care is available, and there’s also a care clinic.
Vitality Living: With four locations in Kentucky, Vitality Living offers a number of programs like meditation, book clubs, art and music classes, and nature walks. Licensed nursing care and personal care are available.
Senior health in Kentucky
Kentucky is ranked as the 46th least healthy state in America’s Health Rankings’ Senior Report. Healthcare costs are rising in Kentucky, which can make it difficult to access affordable care. It can also be difficult to access healthcare services, especially in more rural areas.
Quality of healthcare in Kentucky
The University of Kentucky Albert B. Chandler Hospital, Baptist Health Louisville, and Saint Joseph Hospital are highly-ranked hospitals in Kentucky. The University of Kentucky Albert B. Chandler Hospital is nationally ranked in specialized care like cancer care and ear, nose, and throat.
Kentucky also has a program called Program of All-inclusive Care for the Elderly (PACE), for individuals who need a nursing facility level of care but who want to remain living at home. This program helps individuals access services like meals, primary care, physical and occupational therapy, and personal care.
Medicare in Kentucky
Kentucky has about 989,000 Medicare beneficiaries. This makes up about 21% of the state’s population. 54% of these individuals are on KY Medicare Advantage plans, while 46% are on Original Medicare.
If you want to learn more about Medicare in Kentucky, you can speak with a Chapter Medicare Advisor. Call us at (855) 900-2427 or schedule a free consultation.
Retiring in Kentucky
If you’re looking for a slower lifestyle with opportunities for outdoor recreation, Kentucky can be a good fit. Many seniors also appreciate the affordable cost of living.