Retire in Illinois: From Affordable to Luxurious (in 2025)
Illinois is one of the wealthiest states in the U.S., with a strong economy, good infrastructure, a rich history, and many job opportunities.
Retirement in Illinois is becoming an appealing option for many people nearing their golden years.
In Illinois, you don’t have to pay state income taxes on retirement income, including Social Security, pensions, and retirement savings.
This state also offers outdoor activities and easy access to city life.
However, high property and sales taxes can make Illinois less attractive for retirees, especially the ones who retire early.
Luckily, there are both affordable and luxurious options for retiring in Illinois.
In this guide, you will learn how to retire in Illinois, the benefits of retiring here, and important things to consider before making Illinois your retirement choice.
Why to Retire in Illinois?
1. Tax Benefits
One of Illinois’s best-kept secrets for retirees is its favorable tax treatment of retirement distributions.
Retirees do not have to pay state income tax on their retirement income, which includes Social Security, pensions, and withdrawals from retirement plans. This means they are exempt from the state's 4.95% income tax rate.
When filling out state income taxes, retirees can claim a tax deduction for Social Security, pensions from both private and public plans, and income from retirement savings accounts like IRAs and 401(k)s.
With no taxes on retirement income, your savings can stretch further, making retire in Illinois an attractive choice for retirees looking to maximize their income.
2. Rich Cultural Offerings and Economic Diversity
When you retire in Illinois, you can choose to live in Chicago, the third-largest city in the United States by population.
Chicago offers many cultural and entertainment options, from renowned art museums to theaters.
Plus, the state’s diverse economy ensures easy access to healthcare, quality education, and plentiful entertainment options for a well-rounded lifestyle.
3. Good healthcare
Illinois is one of the best states for healthcare access.
The state has over a dozen hospitals where you can receive quality medical care.
Some of the top hospitals include Northwestern Memorial Hospital, Loyola University Medical Center, and Advocate Good Samaritan Hospital.
Cons of retiring in Illinois
1. High crime rate
Illinois has seen an increase in crime, with about 4.3 incidents for every 1,000 residents.
The most common crimes are related to property and violence.
If you plan to retire in Illinois, research cities and retirement communities that have good security.
2. Unexpected climate
Be ready for different weather, including hot summers and very cold winters.
The state also experiences extreme weather events like hail storms, strong winds, flash floods, heat waves, and thunderstorms.
3. Property taxes and cost of living in Illinois
Illinois has the second-highest property tax rate in the United States, with an effective rate of 2.07%.
Homeowners typically pay about $2,070 each year for every $100,000 of their home’s value, while property taxes that can vary by county and city.
If you are at least 65 years old and your total household income is less than $65,000, you might qualify for the senior citizen homestead exemption.
However, If you choose to live in Chicago or other large cities, expect higher prices for groceries, fuel, housing, and healthcare.
How to Retire in Illionis
Illinois has many benefits for retirees, including different recreational activities and a vibrant cultural scene. It’s also one of the best places to retire.
At Bloom Financial, we have helped many clients in settling down in Illinois by following a clear retirement strategy.
1. Choosing the Right Location: Affordable or Luxurious Options
Illinois offers something for every retiree.
For those looking for a budget-friendly retirement, cities like Springfield and Rockford offer urban-suburban lifestyles at lower costs.
If luxury is your preference, places like Chicago, Evanston, and Naperville provide high-end amenities and vibrant cultural scenes but come with higher housing prices and property taxes.
Ultimately, the best place to retire in Illinois depends on your budget and personal preferences.
2. Safety, Property Taxes, and Community
Before settling on a retirement location, consider important factors like safety and property taxes.
High-income areas often have higher property taxes, so balancing the cost of living with your desired lifestyle is essential.
Our team can help you navigate these factors to make the right choice when you decide to retire in Illinois.
3. Review your budget.
Illinois's high cost of living can be a downside for many people.
However, every retiree should know how they want to spend their time and what kind of lifestyle they want.
The best place to retire in Illinois might fit your budget for healthcare, groceries, and daily life.
Before deciding to retire in Illinois, make sure your dream retirement matches your income plan and the life you want to lead.
4. Lifestyle Trends: Where Are Illinois Residents Heading?
Many Illinois retirees are moving to sunnier climates, with Phoenix, Dallas, and Los Angeles as popular destinations.
Whether you’re interested in a warmer climate or staying in-state, understanding these trends can help you make an informed decision about where to retire.
Retiring in Illinois with Bloom Financial
If you plan to retire in Illinois, start by a retirement strategy that suits your lifestyle and financial goals.
Schedule a consultation with Bloom Financial to explore personalized retirement plans and secure your future in Illinois or beyond.
Discover how Bloom Financial can help you achieve the retirement you’ve always envisioned.
Conclusion
Retiring in Illinois has many benefits for those enjoying their golden years.
This diverse state offers a good mix of affordable living costs, excellent healthcare, and lots of fun activities for everyone.
Each city and town in Illinois has its own unique charm and advantages, from busy urban areas to peaceful rural settings.
Whether you like the excitement of Chicago or the charm of small towns, you can find a place that fits your lifestyle.
Overall, Illinois has a friendly atmosphere, easy access to services, and a high quality of life, making it a great choice for retirement.
But it’s smart to visit and explore a potential retirement area before making a final decision.
Although the information has been gathered from sources believed to be reliable, it cannot be guaranteed. State and federal tax laws are complex and subject to change. This information is not intended to be a substitute for specific individualized tax or legal advice. Neither Osaic Wealth, nor its registered representatives, offer tax or legal advice. As with all matters of a tax or legal nature, you should consult with your tax or legal counsel for advice.
