5 Small Towns With Loads of Christmas Spirit to Make Retirement Even Merrier

Key Takeaways Small towns may offer favorable tax treatment on Social Security and retirement income. Average home values in towns like Branson, Missouri, or Frankenmuth, Michigan, are often moderate, making homeownership more attainable for retirees. Towns with strong holiday traditions or year-round festive activities create a welcoming and engaging atmosphere for retirees. Affordability and comfort are two of the most important qualities retirees seek, and some small towns deliver both with an extra touch of holiday magic. Across the country, these communities transform their quiet main streets into celebrations of tradition and togetherness each December, often carrying the spirit well beyond the holidays. If Christmas is your favorite holiday, consider moving to a town where you can enjoy the spirit year-round.Alvaro Gonzalez / Getty Images From twinkling lights and cozy markets to neighborly gatherings, these towns bring warmth and cheer all winter long. Many also offer favorable tax treatment of retirement income , helping your dollars go further. Here are five small towns with exceptional holiday cheer that's perfect for a joyful retirement. Santa Claus, Indiana The small town of Santa Claus, Indiana truly lives up to its name, offering a year-round Christmas spirit that defines the town. Visitors can explore attractions like Holiday World & Splashin’ Safari, Santa’s Candy Castle, and the Santa Claus Museum & Village. In December, the town comes alive with a festive celebration, featuring a parade and a drive-through lights display. With an average home value of $294,208, Santa Claus is a comfortable, small-town option for retirees. The state’s tax structure can also benefit retirees: Social Security benefits are not taxed at the state level, while pension income and withdrawals from traditional IRAs and 401(k)s are treated as ordinary income and subject to Indiana’s 3.05% income tax. As a result, Indiana is particularly favorable for retirees relying mainly on Social Security, though those drawing mostly from tax-deferred retirement accounts should plan for state taxes when budgeting for retirement. Frankenmuth, Michigan Frankenmuth radiates Christmas cheer, thanks largely to Bronner’s Christmas Wonderland, the world’s largest Christmas store. The town is also home to the Silent Night Chapel, which is where Silent Night was first sung in 1818 on Christmas Eve. Beyond the attractions, shopping, and activities, the town’s German-inspired architecture and festive decor create an unmistakable holiday atmosphere to be enjoyed all year long. Fast Fact Frankenmuth is known as “Michigan’s Little Bavaria.” With an average home value of $310,671, Frankenmuth offers retirees an affordable small-town option. Social Security benefits aren’t taxed, while income from pensions, traditional IRAs, and 401(k)s are taxed as ordinary income at the state’s 4.25% rate. Some deductions are available through a tiered system, but beginning in 2026, all retirement income will be fully exempt, making Michigan especially appealing for retirees seeking major tax breaks. Bethlehem, Pennsylvania Bethlehem, Pennsylvania, or Christmas City, is famous for its festive holiday spirit that fills the town each winter. The beautifully decorated streets, lively events, and walking tours allow residents and visitors to experience the town’s rich...

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