The Complete Guide to Retiring in Illinois

Whether you're planning for retirement in bustling Chicago or a peaceful small town, Illinois offers something for everyone. The state combines the best of Midwest living with plenty of choices for your next chapter.

Illinois stretches from Lake Michigan's shores in the north to the Mississippi River in the west, creating natural borders that give residents beautiful outdoor spaces to enjoy year-round. While Chicago draws many retirees with its world-class healthcare facilities and cultural attractions, smaller communities offer a slower pace and tight-knit neighborhoods that many prefer.

Known as the Land of Lincoln, as the 16th president was born here, most people live in urban areas like Chicago or near St. Louis, Missouri, but you'll find charming small towns scattered throughout the farmlands and along the rivers. Each community, whether large or small, has its own character and opportunities for active retirement.

How affordable is it to live in Illinois as a retiree?

Understanding Illinois's cost of living helps you plan for a comfortable retirement, whether you rely on Social Security benefits, pensions, or other personal savings. While Illinois generally ranks as one of the more expensive states, costs vary significantly depending on where you choose to live.

Healthcare costs, housing expenses, and everyday items like groceries and utilities affect your retirement budget differently across the state. Chicago and its suburbs tend to have higher living costs, while many smaller communities offer more affordable options that help stretch retirement income further.

Rankings by Bankrate, the Elder Index, and WalletHub track Illinois's cost of living and affordability:

• Illinois ranks #16 on Bankrate's list based on affordability, wellness, the quality and cost of healthcare, weather, and crime.

• It ranks #41 on WalletHub where it is #47 in affordability, #16 in quality of life, and #26 in healthcare

• The Elder Index rates Illinois at #36. The average benefit is $1,934, monthly living costs are $2,572, and The percent of living costs covered by benefits is 75.2%

Living in the state means high prices for food, healthcare, housing, and property taxes.

What else determines a good place to settle in retirement?

Besides affordability, other variables figure into a great retirement location. So, how is Illinois as a retirement destination?

Climate

Climate and weather can significantly impact your retirement satisfaction. In Illinois, you have a continental climate with four seasons. Northern Illinois has hot, humid summers and cold winters, with as much as 38" of snow in an average winter. South of Carbondale, winters are more moderate, with just 14" of snow. Whether you like summer or winter sports, the Illinois climate will make it easy to enjoy what you like.

Healthcare

Having good healthcare options available in the area is particularly important to senior citizens. Illinois has award-winning hospitals throughout the state, with a large concentration in the north.

Medicare in Illinois: There are 2.3 million Illinois Medicare beneficiaries, making up 18% of the state's population. Most beneficiaries are on Medicare due to age, but about 11% are on Medicare due to disability, 34% of Illinois Medicare beneficiaries also choose Medicare Advantage.

Transportation

There are 63 public transportation systems that serve Illinois, with the Chicago Transit Authority (CTA) being the second-largest in the nation. It transports over 545 million riders a year. Seniors and those with disabilities in the north are eligible for a free ride permit so holders can ride free on the CTA, Metra, and Pace fixed-route services, courtesy of the Illinois Department on Aging's Benefit Access Program (BAP). Other cities have senior-friendly paratransit as well.

For those who want easy airport access, the state has major airports in all the major cities, including Chicago, Bloomington, Springfield, Peoria, Rockford, and more.

Safety

The crime rates in the area where you choose to live will make the difference between your feeling safe and secure vs. fearful and vulnerable. While crime rates in Chicago are above the national average, according to City-Data.com, many nearby suburbs are much safer. Some of the safest communities in Illinois include Naperville, Clarendon Hills, Hinsdale, Buffalo Grove, and Campton Hills.

Activities

Whether you like indoor or outdoor activities, Illinois has plenty to do. Every town and city has churches, senior centers, golf courses, pools, or other places you want to be. Numerous parks, lakes, and forests throughout the state provide ample opportunities to enjoy hiking, camping, fishing, and boating. According to Bikelink.org, the state ranks #11 in the nation for biking trails.

Culture

If you like to visit world-class museums and galleries and enjoy the performing arts, the state offers it all. The Chicago Jazz Festival, the Illinois State Fair, and the Art Institute of Chicago's annual Block Party are popular with people of all ages. Local towns have festivals, flea markets, and other events that appeal to seniors, too.

Is Illinois tax-friendly for seniors?

The average rent is $1,695, so home prices make it attractive to buy rather than rent. However, property tax rates are a killer that adds to housing costs.

Illinois taxpayers pay the second highest property tax rate in the U.S. Fortunately, some tax breaks are in place that offer some relief for those over 65, including:

• Homestead exemptions for seniors, long-term homeowners, disabled veterans, other disabled seniors, and low-income seniors

• Tax freezes on real estate tax increases in some areas due to rising property values

• No property tax in 42 cities

While Illinois has a state income tax, it doesn't tax pension distributions or retirement plan income, including IRAs, 401(k) plans, and government retirement plans.

Sales taxes are also high. In addition to the 6.25 percent statewide tax, cities may levy a local sales tax, which can be no more than 4.75 percent. This makes the average combined sales tax rate in Illinois 8.85 percent. In Chicago, the combined sales tax is 10.25 percent.

While you might need more retirement savings to live in Illinois, you can make your money go farther based on where you live. Chicago, the third largest city in the U.S., is an exciting place to live, but it is among the most costly locations in the state and nation. There is a lot more to Illinois than Chicago. Some places in the state have much lower costs of living than the national average and present great choices for where to spend your golden years.

Best places to retire in Illinois

Throughout the state, seniors often choose to live in these popular locations, which make many lists of the best cities to live in.

1. Naperville: Located in the Chicago metropolitan area, Naperville is often considered the #1 best place to retire in Illinois. With low crime rates and numerous parks and nature preserves for outdoor recreation. It offers plenty of activities for seniors just a short ride from Chicago.

2. Springfield: Springfield, the state capital of Illinois, offers a lower cost of living than many other Illinois cities. Its vibrant cultural scene includes museums, galleries, and historic sites like the Abraham Lincoln Presidential Library and Museum. The city also has plenty of senior living facilities that offer built-in networks for new friends.

3. Bloomington: Bloomington is another good choice. The unemployment rate is low, and the cost of living is slightly below the national average. Bloomington offers cultural events and outdoor activities like hiking and boating on Lake Bloomington. As the home of Illinois State University, Bloomington offers a college-town feel.

4. Rockford: Located in northern Illinois, Rockford has a low cost of living. Many love its numerous parks and recreational opportunities, such as the Anderson Japanese Gardens and Rock Cut State Park. It also offers easy access to nearby cities such as Chicago and Milwaukee. 

5. Carbondale: Carbondale, in southern Illinois, is home to Southern Illinois University. With its laid-back, small-town feel, it boasts a low cost of living and easy access to outdoor activities such as hiking and boating on Lake Murphysboro. 

According to Houzeo.com, some cities considered among the least expensive places to live include Hoopeston, Decatur, Granite City, Freeport, Clinton, Charleston, Belleville, Peoria, Bloomington, and Rockford.

Retiring in Illinois

While Illinois generally ranks as a more expensive state, it has plenty of retirement options, ranging from vibrant city life to peaceful small towns. While Chicago provides world-class healthcare facilities and cultural attractions, smaller communities throughout the state offer more affordable living options and tight-knit neighborhoods. The state also experiences all four seasons, with warm summers and cold winters.

If you're interested in retiring in Illinois, consider visiting different areas of the state to find the right fit for your retirement lifestyle and budget.