Building energy retrofitting provides a sustainable solution to enhance the thermal performance of existing structures. Building energy retrofitting has proven to be beneficial in alleviating the pressure of energy shortages in developed countries. However, an economic analysis is necessary to determine technically feasible and economically viable measures in a particular region. Furthermore, residential buildings in developing countries tend to have lower-performance construction and energy systems than modern commercial buildings. Building energy retrofitting is more cost-effective for improving energy efficiency than reconstruction. This study proposes a cost-effective approach for retrofitting existing residential buildings. A well-known dynamic algorithm was used to examine several retrofitting assumptions. Hence, this work examines the importance of thermal retrofitting in the case study of Afghanistan. Based on the quantitative findings of energy modeling, a priority guide was created for the most viable and practical retrofitting solutions for residential buildings, and financial analysis of initial investment versus return was done. This comprehensive approach was applied to the reference building, a typical mid-rise apartment complex in Afghanistan. The findings show that retrofittingexisting buildings has substantial advantages and can increase the energy efficiency of buildings. These findings will aid in the energy efficiency of Afghanistan’s residential sector and provide valuable references for futurethermal retrofit research and innovation in local and global contexts. Moreover, the findings of this research could be used to assist stakeholders in determining the most efficient and suitable thermal retrofit solution for a particular set of targeted buildings and allow Afghan residents to weigh the benefits of improved energy performance from envelope retrofit and the associated capital outlay.