3 smart 403(b) moves you can make right now

If you work for a nonprofit such as a school or a church, you won't be offered the option to save for retirement via a 401(k) account, but there's a good chance you'll be offered a 403(b) account. Should you take advantage of that opportunity? Probably. Here are a few things to keep in mind to help you make the most of your 403(b).

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Image source: Getty Images.

I recently wrote about three smart things you can do, which are:

  • Contribute generously to your account -- because it can help you accumulate hundreds of thousands of dollars for retirement.
  • Consider using a Roth 403(b) if your employer offers one, because it can give you tax-free income in retirement.
  • Invest your money effectively, such as in inexpensive, broad-market stock index funds for long-term dollars.

What other smart moves are there? Plenty. Here are three more:

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Image source: Getty Images.

For greater financial security, pay attention to fees

One way to gain more from a 403(b) is to keep the fees you pay as low as possible. You can accomplish this by choosing low-fee funds from the menu of choices available to you in your plan -- and you can also urge your company to offer lower-fee choices in your plan.

Don't assume that fees aren't a big deal, because they are. Over long periods, seemingly modest differences in fees can amount to many thousands of dollars. Consider this example: Imagine mutual funds A and B, which respectively sport expense ratios (annual fees) of 0.7% and 1.7%. Now imagine that you invest $10,000 in each of them annually for 25 years. If they each grow at an annual average rate of 10%, you'll end up with $968,000 in fund A but only $827,000 in fund B. That single percentage point cost you $141,000!

RELATED: The best US states to retire early:

52 PHOTOS
Best states for early retirement
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Best states for early retirement
51. Connecticut

Average Effective Tax Rate: 3.7%

Annual Health Insurance Cost: $8,945

Non-Housing Cost of Living: 120

Median Annual Housing Costs: $16,776

Average Effective Property Tax Rate: 2.1%

Average State and Local Sales Tax Rate: 6.4%

Index: 0.00

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50. North Carolina

Average Effective Tax Rate: 4.7%

Annual Health Insurance Cost: $10,272

Non-Housing Cost of Living: 100

Median Annual Housing Costs: $10,392

Average Effective Property Tax Rate: 0.9%

Average State and Local Sales Tax Rate: 6.9%

Index: 5.83

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49. Minnesota

Average Effective Tax Rate: 4.5%

Annual Health Insurance Cost: $6,816

Non-Housing Cost of Living: 107

Median Annual Housing Costs: $12,192

Average Effective Property Tax Rate: 1.1%

Average State and Local Sales Tax Rate: 7.3%

Index: 10.83

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48. Massachusetts

Average Effective Tax Rate: 4.5%

Annual Health Insurance Cost: $5,306

Non-Housing Cost of Living: 119

Median Annual Housing Costs: $16,920

Average Effective Property Tax Rate: 1.2%

Average State and Local Sales Tax Rate: 6.3%

Index: 13.06

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47. New Jersey

Average Effective Tax Rate: 2.0%

Annual Health Insurance Cost: $8,347

Non-Housing Cost of Living: 113

Median Annual Housing Costs: $18,000

Average Effective Property Tax Rate: 2.4%

Average State and Local Sales Tax Rate: 7.0%

Index: 13.89

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46. Oregon

Average Effective Tax Rate: 7.1%

Annual Health Insurance Cost: $6,991

Non-Housing Cost of Living: 117

Median Annual Housing Costs: $12,432

Average Effective Property Tax Rate: 1.0%

Average State and Local Sales Tax Rate: 0.0%

Index: 15.00

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45. Wisconsin

Average Effective Tax Rate: 4.4%

Annual Health Insurance Cost: $7,726

Non-Housing Cost of Living: 100

Median Annual Housing Costs: $10,884

Average Effective Property Tax Rate: 1.9%

Average State and Local Sales Tax Rate: 5.4%

Index: 16.39

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43. Nebraska

Average Effective Tax Rate: 4.0%

Annual Health Insurance Cost: $6,862

Non-Housing Cost of Living: 95

Median Annual Housing Costs:$9,900

Average Effective Property Tax Rate: 1.85%

Average State and Local Sales Tax Rate: 6.8%

Index: 41.71

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43. Maryland

Average Effective Tax Rate: 6.5%

Annual Health Insurance Cost: $6,418

Non-Housing Cost of Living: 100

Median Annual Housing Costs: $17,280

Average Effective Property Tax Rate: 1.1%

Average State and Local Sales Tax Rate: 6.0%

Index: 21.39

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42. California

Average Effective Tax Rate: 3.6%

Annual Health Insurance Cost: $7,346

Non-Housing Cost of Living: 111

Median Annual Housing Costs: $17,256

Average Effective Property Tax Rate: 0.8%

Average State and Local Sales Tax Rate: 8.5%

Index: 26.11

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41. Missouri

Average Effective Tax Rate: 3.7%

Annual Health Insurance Cost: $7,757

Non-Housing Cost of Living: 96

Median Annual Housing Costs: $9,744

Average Effective Property Tax Rate: 1.0%

Average State and Local Sales Tax Rate: 7.9%

Index: 27.22

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40. Hawaii

Average Effective Tax Rate: 6.0%

Annual Health Insurance Cost: $6,672

Non-Housing Cost of Living: 145

Median Annual Housing Costs: $18,396

Average Effective Property Tax Rate: 0.3%

Average State and Local Sales Tax Rate: 4.4%

Index: 28.33

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39. Georgia

Average Effective Tax Rate: 3.9%

Annual Health Insurance Cost: $7,286

Non-Housing Cost of Living: 97

Median Annual Housing Costs: $11,364

Average Effective Property Tax Rate: 0.9%

Average State and Local Sales Tax Rate: 7.0%

Index: 30.83

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38. South Carolina

Average Effective Tax Rate: 3.6%

Annual Health Insurance Cost: $7,757

Non-Housing Cost of Living: 102

Median Annual Housing Costs: $9,756

Average Effective Property Tax Rate: 0.6%

Average State and Local Sales Tax Rate: 7.2%

Index: 32.22

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37. District of Columbia

Average Effective Tax Rate: 4.7%

Annual Health Insurance Cost: $6,300

Non-Housing Cost of Living: 108

Median Annual Housing Costs: $18,924

Average Effective Property Tax Rate: 0.5%

Average State and Local Sales Tax Rate: 5.8%

Index: 35.56

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36. Oklahoma

Average Effective Tax Rate: 3.8%

Annual Health Insurance Cost: $7,603

Non-Housing Cost of Living: 95

Median Annual Housing Costs: $9,072

Average Effective Property Tax Rate: 0.9%

Average State and Local Sales Tax Rate: 8.8%

Index: 36.11

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35. Rhode Island

Average Effective Tax Rate: 2.6%

Annual Health Insurance Cost: $6,708

Non-Housing Cost of Living: 117

Median Annual Housing Costs: $13,740

Average Effective Property Tax Rate: 1.6%

Average State and Local Sales Tax Rate: 7.0%

Index: 36.39

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34. New York

Average Effective Tax Rate: 2.9%

Annual Health Insurance Cost: $4,428

Non-Housing Cost of Living: 111

Median Annual Housing Costs: $15,060

Average Effective Property Tax Rate: 1.7%

Average State and Local Sales Tax Rate: 8.5%

Index: 38.06

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32. Maine

Average Effective Tax Rate: 3.0%

Annual Health Insurance Cost: $7,817

Non-Housing Cost of Living: 112

Median Annual Housing Costs: $10,608

Average Effective Property Tax Rate: 1.4%

Average State and Local Sales Tax Rate: 5.5%

Index: 39.72

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32. Indiana

Average Effective Tax Rate: 4.5%

Annual Health Insurance Cost: $7,027

Non-Housing Cost of Living: 93

Median Annual Housing Costs: $9,636

Average Effective Property Tax Rate: 0.9%

Average State and Local Sales Tax Rate: 7.0%

Index: 39.72

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31. Alabama

Average Effective Tax Rate: 4.1%

Annual Health Insurance Cost: $7,380

Non-Housing Cost of Living: 95

Median Annual Housing Costs: $8,724

Average Effective Property Tax Rate: 0.4%

Average State and Local Sales Tax Rate: 9.0%

Index: 40.56

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30. Vermont

Average Effective Tax Rate: 3.1%

Annual Health Insurance Cost: $5,616

Non-Housing Cost of Living: 112

Median Annual Housing Costs: $13,020

Average Effective Property Tax Rate: 1.8%

Average State and Local Sales Tax Rate: 6.2%

Index: 40.83

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29. Idaho

Average Effective Tax Rate: 4.9%

Annual Health Insurance Cost: $7,121

Non-Housing Cost of Living: 96

Median Annual Housing Costs: $9,948

Average Effective Property Tax Rate: 0.7%

Average State and Local Sales Tax Rate: 6.0%

Index: 43.06

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27. West Virginia

Average Effective Tax Rate: 4.1%

Annual Health Insurance Cost: $9,358

Non-Housing Cost of Living: 104

Median Annual Housing Costs: $6,864

Average Effective Property Tax Rate: 0.6%

Average State and Local Sales Tax Rate: 6.2%

Index: 44.17

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27. Kansas

Average Effective Tax Rate: 3.3%

Annual Health Insurance Cost: $6,547

Non-Housing Cost of Living: 94

Median Annual Housing Costs: $10,056

Average Effective Property Tax Rate: 1.4%

Average State and Local Sales Tax Rate: 8.6%

Index: 44.17

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26. Arkansas

Average Effective Tax Rate: 3.5%

Annual Health Insurance Cost: $7,409

Non-Housing Cost of Living: 96

Median Annual Housing Costs: $8,172

Average Effective Property Tax Rate: 0.6%

Average State and Local Sales Tax Rate: 9.3%

Index: 45.56

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25. Virginia

Average Effective Tax Rate: 3.4%

Annual Health Insurance Cost: $7,390

Non-Housing Cost of Living: 95

Median Annual Housing Costs: $14,520

Average Effective Property Tax Rate: 0.8%

Average State and Local Sales Tax Rate: 5.6%

Index: 45.83

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24. Illinois

Average Effective Tax Rate: 0.0%

Annual Health Insurance Cost: $6,766

Non-Housing Cost of Living: 99

Median Annual Housing Costs: $12,624

Average Effective Property Tax Rate: 2.3%

Average State and Local Sales Tax Rate: 8.6%

Index: 46.94

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23. Utah

Average Effective Tax Rate: 4.6%

Annual Health Insurance Cost: $6,163

Non-Housing Cost of Living: 95

Median Annual Housing Costs: $12,576

Average Effective Property Tax Rate: 0.7%

Average State and Local Sales Tax Rate: 6.7%

Index: 50.56

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22. Washington

Average Effective Tax Rate: 0.0%

Annual Health Insurance Cost: $6,166

Non-Housing Cost of Living: 106

Median Annual Housing Costs: $14,400

Average Effective Property Tax Rate: 1.0%

Average State and Local Sales Tax Rate: 8.9%

Index: 51.67

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21. Arizona

Average Effective Tax Rate: 2.5%

Annual Health Insurance Cost: $7,054

Non-Housing Cost of Living: 98

Median Annual Housing Costs: $11,436

Average Effective Property Tax Rate: 0.7%

Average State and Local Sales Tax Rate: 8.3%

Index: 51.67

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20. Iowa

Average Effective Tax Rate: 3.2%

Annual Health Insurance Cost: $7,375

Non-Housing Cost of Living: 95

Median Annual Housing Costs: $9,324

Average Effective Property Tax Rate: 1.5%

Average State and Local Sales Tax Rate: 6.8%

Index: 52.50

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19. Montana

Average Effective Tax Rate: 4.0%

Annual Health Insurance Cost: $8,239

Non-Housing Cost of Living: 98

Median Annual Housing Costs: $9,540

Average Effective Property Tax Rate: 0.8%

Average State and Local Sales Tax Rate: 0.0%

Index: 52.78

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18. Alaska

Average Effective Tax Rate: 0.0%

Annual Health Insurance Cost: $18,300

Non-Housing Cost of Living: 127

Median Annual Housing Costs: $15,012

Average Effective Property Tax Rate: 1.1%

Average State and Local Sales Tax Rate: 1.8%

Index: 53.89

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17. Delaware

Average Effective Tax Rate: 3.1%

Annual Health Insurance Cost: $9,060

Non-Housing Cost of Living: 106

Median Annual Housing Costs: $13,176

Average Effective Property Tax Rate: 0.5%

Average State and Local Sales Tax Rate: 0.0%

Index: 55.00

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16. North Dakota

Average Effective Tax Rate: 1.0%

Annual Health Insurance Cost: $8,340

Non-Housing Cost of Living: 102

Median Annual Housing Costs: $9,276

Average Effective Property Tax Rate: 1.0%

Average State and Local Sales Tax Rate: 6.8%

Index: 55.83

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15. Colorado

Average Effective Tax Rate: 2.4%

Annual Health Insurance Cost: $7,166

Non-Housing Cost of Living: 97

Median Annual Housing Costs: $14,340

Average Effective Property Tax Rate: 0.5%

Average State and Local Sales Tax Rate: 7.5%

Index: 56.94

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14. Michigan

Average Effective Tax Rate: 3.2%

Annual Health Insurance Cost: $6,622

Non-Housing Cost of Living: 96

Median Annual Housing Costs: $10,152

Average Effective Property Tax Rate: 1.6%

Average State and Local Sales Tax Rate: 6.0%

Index: 58.33

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13. Ohio

Average Effective Tax Rate: 1.7%

Annual Health Insurance Cost: $6,494

Non-Housing Cost of Living: 97

Median Annual Housing Costs: $9,912

Average Effective Property Tax Rate: 1.6%

Average State and Local Sales Tax Rate: 7.1%

Index: 58.61

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12. New Hampshire

Average Effective Tax Rate: 0.0%

Annual Health Insurance Cost: $6,792

Non-Housing Cost of Living: 115

Median Annual Housing Costs: $15,168

Average Effective Property Tax Rate: 2.2%

Average State and Local Sales Tax Rate: 0.0%

Index: 59.17

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10. New Mexico

New Mexico is tied with Nevada as the 10th best state for an early retirement. New Mexico ranks well in the cost of living measures. It has the second-lowest average healthcare expense at $5,200 per year, as well as the 10th-lowest average housing cost at $9,300 per year. A potential drawback to retiring early in New Mexico is the lack of doctors’ offices. According to data from the Census Bureau, New Mexico has only 4.7 doctors’ offices per 10,000 residents, which ranks 43rd in the nation.

Average Effective Tax Rate: 2.9%

Annual Health Insurance Cost: $5,244

Non-Housing Cost of Living: 99

Median Annual Housing Costs: $9,324

Average Effective Property Tax Rate: 0.8%

Average State and Local Sales Tax Rate: 7.5%

Index: 64.17

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10. Nevada

High rollers may be pleased to see Nevada crack our top 10. Nevada offers a 0% effective tax rate on income and has the sixth-most doctors’ offices per resident, meaning help is never far away. Living costs in the Silver State can be fairly steep though, including a combined $20,000 per year on housing and healthcare costs on average.

Average Effective Tax Rate: 0.0%

Annual Health Insurance Cost: $8,016

Non-Housing Cost of Living: 110

Median Annual Housing Costs: $12,312

Average Effective Property Tax Rate: 0.7%

Average State and Local Sales Tax Rate: 8.0%

Index: 64.17

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9. Louisiana

Louisiana has a lot to offer as a state for an early retirement. The third-lowest property taxes, seventh-lowest housing cost, ninth-lowest non-housing cost of living and eighth-highest rate of doctors’ offices in the country are all on offer for people looking to retire in Louisiana. Unfortunately, Louisiana is not a utopia for early retirees. There are relatively few arts, entertainment and recreation establishments per 100,000 residents and it has one of the highest sales tax rates in the country.

Average Effective Tax Rate: 1.9%

Annual Health Insurance Cost: $9,002

Non-Housing Cost of Living: 95

Median Annual Housing Costs: $9,060

Average Effective Property Tax Rate: 0.5%

Average State and Local Sales Tax Rate: 9.0%

Index: 65.00

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8. Texas

Texas has a little bit of everything, meaning just about anyone can find themselves at home there. The Lone Star State has no income tax and the non-housing cost of living is low. The average cost of an annual silver healthcare plan in Texas is $6,626. That’s the 14th-lowest. However housing costs can get pretty high relative to everything else. The average Texan pays $11,600 per year in housing costs.

Average Effective Tax Rate: 0.0%

Annual Health Insurance Cost: $6,626

Non-Housing Cost of Living: 95

Median Annual Housing Costs: $11,616

Average Effective Property Tax Rate: 1.8%

Average State and Local Sales Tax Rate: 8.2%

Index: 65.28

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7. Pennsylvania

Like many in the top 10, Pennsylvania is another state which does not tax retirement income which makes it a great option for an early retirement. Pennsylvania also has the 10th-lowest average healthcare costs in the country. The average cost of a silver healthcare plan in Pennsylvania is only $6,500 per year.

Average Effective Tax Rate: 0.0%

Annual Health Insurance Cost: $6,547

Non-Housing Cost of Living: 103

Median Annual Housing Costs: $11,184

Average Effective Property Tax Rate: 1.6%

Average State and Local Sales Tax Rate: 6.3%

Index: 74.17

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6. Florida

The state that is famous for its retirees and bad drivers comes in sixth place for best states for an early retirement. Florida ranks well because of its 0% income tax rate and the 9.15 doctors’ offices per 10,000 residents. But living costs in Florida can get pretty high. Average housing costs are almost $12,000 per year and the non-housing cost of living sits at 102 which rank 30th and 31st respectively.

Average Effective Tax Rate: 0.0%

Annual Health Insurance Cost: $7,243

Non-Housing Cost of Living: 102

Median Annual Housing Costs: $11,976

Average Effective Property Tax Rate: 1.0%

Average State and Local Sales Tax Rate: 6.7%

Index: 75.56

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5. Tennessee

The Southern theme continues with Tennessee claiming the fifth spot for best states for an early retirement. Tennessee is another state with a 0% effective income tax which is only partly offset by the nation’s highest average state and local sales taxes at 9.5%. Tennessee also has 6.55 doctors’ offices per 10,000 residents and 36 arts, entertainment and recreation establishments per 100,000 residents.

Average Effective Tax Rate: 0.0%

Annual Health Insurance Cost: $7,447

Non-Housing Cost of Living: 95

Median Annual Housing Costs: $9,576

Average Effective Property Tax Rate: 0.7%

Average State and Local Sales Tax Rate: 9.5%

Index: 77.78

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4. South Dakota

The Mount Rushmore State is another great option for an early retirement. Other than the gorgeous scenery, South Dakota can offer potential early retirees a 0% effective income tax and some of the lowest housing costs in the country at $8,900 per year on average. Besides gazing at Mount Rushmore, there are plenty of things to do. There are 79 arts, entertainment and recreation establishments per 100,000 residents – the second-highest in the nation.

Average Effective Tax Rate: 0.0%

Annual Health Insurance Cost: $8,208

Non-Housing Cost of Living: 95

Median Annual Housing Costs: $8,964

Average Effective Property Tax Rate: 1.3%

Average State and Local Sales Tax Rate: 5.8%

Index: 87.22

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3. Mississippi

Mississippi is the second-highest-rated Southern state and third-highest overall for best states for an early retirement. Mississippi is similar to Kentucky in that it is a cheap place to retire. It has a 0% effective tax on retirement income. It also has the lowest non-housing cost of living as well as the second-lowest housing costs in the nation. So why isn’t it first or second? There are only 22 arts, entertainment and recreation establishments per 100,000 people – the lowest in the nation. There are also not as many doctors’ offices in Mississippi as there are in other states. Our data shows that it ranks 33rd in this measure.

Average Effective Tax Rate: 0.0%

Annual Health Insurance Cost: $6,922

Non-Housing Cost of Living: 89

Median Annual Housing Costs: $8,136

Average Effective Property Tax Rate: 0.8%

Average State and Local Sales Tax Rate: 7.1%

Index: 95.28

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2. Kentucky

The Bluegrass State comes in a close second, thanks to six metrics scoring in the top 20 and its tax-friendly environment. Particularly attractive for prospective early retirees are the low costs of living. Kentucky ranks fourth in average housing costs per year at $8,600 and fifth in non-housing cost of living. But early retirees in Kentucky may need to develop some personal hobbies. According to data from the Census, there are only 28 arts, entertainment and recreation establishments per 100,000 residents, 44th best in the country.

Average Effective Tax Rate: 1.0%

Annual Health Insurance Cost: $6,593

Non-Housing Cost of Living: 94

Median Annual Housing Costs: $8,628

Average Effective Property Tax Rate: 0.8%

Average State and Local Sales Tax Rate: 6.0%

Index: 96.67

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1. Wyoming

Wyoming jumps two places from last year to take the top spot in our study of best places for an early retirement. This state offers an effective tax rate of 0% on retirement income and has the third-lowest non-housing cost of living. To go with the relatively cheap living costs, Wyoming also has 73 arts, entertainment and recreation establishments per 100,000 people. That score ranks fifth in that metric. What hurt Wyoming (although not enough to prevent it from snagging first place) is the relatively high average healthcare costs. Wyoming ranks second to last in this measure paying an average of $11,000 per year. Only Alaskans pay more.

Average Effective Tax Rate: 0.0%

Annual Health Insurance Cost: $11,705

Non-Housing Cost of Living: 93

Median Annual Housing Costs: $10,296

Average Effective Property Tax Rate: 0.6%

Average State and Local Sales Tax Rate: 5.4%

Index: 100.00

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You can often zero in on the lowest available fees by looking for index funds. Index funds (which passively track established indexes, simply holding what's in the index) actually tend to outperform their more actively managed counterparts -- in large part because they generally sport significantly lower fees. After all, a managed fund needs to charge more in order to compensate its professional money managers, while index fund managers don't have many decisions to make, as they simply hold whatever is in the tracked index. The Vanguard 500 Index Fund(NASDAQMUTFUND: VFINX), for example, charges an expense ratio (annual fee) of just 0.16%, while the SPDR S&P 500 ETF(NYSEMKT: SPY) charges 0.10%. Both passively track the S&P 500 index. Many managed mutual funds, in contrast, charge 1% or more.

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Image source: Getty Images.

Boost your future income by leaving 403(b) money invested

Next, a powerful way to keep your retirement assets growing is to simply leave them in place. A common and potentially devastating mistake many people make is to cash out their 401(k) or 403(b) accounts when they leave a job. It can be tempting to do so if the account doesn't seem to have that much in it because you've only been in the job for a few years. Still, don't do it. Instead, keep that money saved and growing. You may be able to roll the funds over into an IRA or into your next employer's retirement plan. Withdrawing the money can deliver a hefty early withdrawal penalty -- but worse, it means that money won't be growing for you. Imagine, for example, that you cashed out a $25,000 account when you were 35. If it had remained invested and grew by an annual average of 8% for 30 more years until you were 65, it would have become more than $250,000, a rather helpful sum.

Similarly, don't borrow from a 403(b) account if you can help it, either, as that also hurts your financial future. If you remove money from your account for five years, you will lose five years of growth. If you're unable to pay the money back, as can happen, then you can face a penalty, plus you lose all future growth of the money.

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Matching funds are free money. Image source: Getty Images.

Maximize matches for better investment growth

Finally, note that while many 403(b) plans don't offer matching funds (unlike 401(k) plans, where matching money is common), some do. If your employer does offer to match part of your contribution to your 403(b) plan, be sure to contribute enough to grab all available matching dollars -- that's free money, after all, and a guaranteed 100% return. It's hard to find a better deal than that.

Take control of your financial future -- by making the most of your 403(b) account. Don't just leave everything up to chance and Social Security. Social Security can provide a meaningful chunk of your retirement income, but it likely won't be enough.

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