Retirees across the United States are feeling the squeeze in 2025, but in some states, rising costs are eroding purchasing power far more quickly than Social Security benefits or fixed retirement incomes can keep up. Inflation has cooled compared to the pandemic years, yet essential expenses such as housing, utilities, groceries, and healthcare remain stubbornly high in many regions. The following 12 states stand out as places where retirees are losing purchasing power at the fastest rate due to a combination of soaring living costs, rising medical expenses, and limited affordability relief.
1. Hawaii
Hawaii remains the most financially punishing state for retirees, with a cost-of-living index hovering near 185, almost double the national average. Housing alone can exceed three times the national median, and even everyday items like milk, fresh produce, and utilities cost significantly more because nearly everything must be imported. A 2025 estimate suggests retirees may need over $2.2 million to sustain a comfortable lifestyle here, making it the most difficult state for Social Security recipients to stretch their monthly checks.
2. California
California continues to drain retiree budgets with its steep housing prices, expensive utilities, and high taxes. A cost-of-living index above 140 places it among the most costly states overall. Coastal cities like San Diego and San Francisco push expenses even further, but even inland counties have grown expensive. Healthcare premiums and long-term care costs, combined with modest Social Security increases, mean many retirees are losing buying power every year despite careful budgeting.
3. New York
New York’s statewide cost index of around 148 tells only part of the story. New York City dramatically pushes the averages upward, with rent and groceries among the highest in the country. Even retirees living outside the city face rising property taxes and healthcare costs. As day-to-day prices continue to outpace the annual COLA on Social Security, retired residents are seeing their income stretch less and less each year.
4. Massachusetts
Massachusetts blends world-class healthcare with equally world-class expenses. Housing is expensive across the state, especially in Greater Boston, where medical services and prescription drugs often exceed national averages. With a cost index around 141, retirees must rely heavily on their savings to maintain a comfortable lifestyle. Annual healthcare inflation alone puts pressure on fixed budgets, causing purchasing power to decline faster than in most other New England states.
5. New Jersey
New Jersey’s housing market is burdensome for retirees, but property taxes are the real budget-breaker—they are among the highest in the nation. Even though the statewide cost index sits around 114, many suburban areas near New York and Philadelphia have living expenses closer to major metropolitan levels. Retirees relying primarily on fixed income often find themselves squeezed by rising utility bills and grocery prices that continue to erode what their monthly benefits can buy.
6. Connecticut
Connecticut’s charming coastal towns and affluent suburbs come with a steep price tag. Housing and healthcare costs remain stubbornly high, and even with a strong median income among working residents, retirees often struggle to keep pace. Social Security alone rarely covers essentials, and inflation in medical care contributes significantly to purchasing-power erosion. Retirees in 2025 must bring substantial savings to maintain the standard of living many associate with the state.
7. Washington
Washington has seen housing prices surge over the past decade, especially around Seattle and the Puget Sound region. Even as the market cools, property taxes, utilities, and insurance premiums remain elevated. Retirees renting in metropolitan hubs face the steepest losses in purchasing power, with food and healthcare continuing to rise above national averages. The state’s relatively high cost structure means fixed incomes buy less each year.
8. Oregon
Oregon shares many of Washington’s challenges, with rising healthcare expenses and inflated rental prices in cities like Portland and Eugene. Its cost-of-living index remains significantly above average, and retirees often feel the pinch as utilities, groceries, and supplemental insurance premiums increase. While Oregon offers attractive natural beauty and a laid-back lifestyle, it comes at a cost that steadily chips away at the value of Social Security benefits.
9. Colorado
Colorado’s popularity has driven housing prices higher year after year, especially in Denver, Boulder, and mountain communities. Retirees often face rising property taxes and insurance premiums, while healthcare expenses continue to climb. Even modest inflation erodes savings faster here because state averages sit well above national cost benchmarks. Fixed-income households experience the sharpest decline in purchasing power when unexpected expenses hit.
10. Alaska
Alaska’s cost of living remains one of the highest in the country because of transportation costs, extreme weather, and limited local supply chains. Essentials like groceries and fuel can swing widely in price depending on season and shipping difficulty. Retirees often see their monthly expenses fluctuate dramatically, making it harder to rely on predictable Social Security benefits or fixed pensions. As a result, purchasing power erodes quickly and unevenly.
11. Maryland
Maryland’s proximity to the Washington, D.C., region boosts salaries for working adults but burdens retirees with higher housing, medical, and transportation costs. Property taxes and insurance premiums routinely exceed national norms, while healthcare costs continue to trend upward. Retirees in counties near the capital feel this most acutely, as expenses outpace the modest yearly increases in Social Security.
12. Virginia
Like Maryland, Virginia experiences significant cost pressure near its metropolitan hubs. Northern Virginia neighborhoods have some of the highest living expenses in the South, driven by housing, taxes, and medical costs. Retirees without substantial retirement savings find themselves allocating more of their monthly income to basics, leaving less for discretionary spending. The spread between Social Security income and required monthly expenses continues to widen, causing rapid erosion in real purchasing power.