Retirement Cost Of Living Comparison By State


Best States To Retire

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Retirement might be the end of your career, but it doesnt have to be the end of financial security or life satisfaction. Retirement generally coincides with the age at which we may receive Social Security or pension benefits. However, not everyone can retire when they want to. In fact, in 2019, 26 percent of non-retired adults had no money saved for retirement, though not necessarily through any fault of their own. Furthermore, with the financial stress Americans have faced during the COVID-19 pandemic, its likely that many were unable to save in 2020 as well. A recent study even found that a quarter of Americans expect to retire later than originally anticipated due to the economic impact of COVID-19.

In addition to when to retire, a good question to ask is where. Finding the best states to retire can be difficult without doing lots of research. Even in the most affordable areas of the U.S., most retirees cannot rely on Social Security or pension checks alone to cover all of their living expenses. Social Security benefits increase with local inflation, but they replace only about 39 percent of the average workers earnings. Plus, while affordability is one of the biggest concerns when deciding where to retire, there are plenty of other factors to consider like how safe the state is and how good its health care is , as well as what activities it offers to keep retirees busy.

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Estate Planning Leaving Money Once You Are Gone

Research shows many retirees do not spend big . Some may worry about preserving capital so their money doesnt run out, some may be keeping money aside in case they need aged care late in life, but its also possible that some have estate planning in mind. This means leaving behind the family home and other assets to children and other dependants. Super does not automatically form part of your estate, so always seek legal and financial planning advice. Estate planning can be complex from a tax, legal and financial perspective.

Work out how much you would like to leave behind to your spouse or children. You will need to be clear as to who your beneficiaries are and how any proceeds are to be distributed.

What Is A Retirement Community

When digging into costs for different senior living options, its essential to understand the difference between a retirement community and an assisted living facility or a nursing home.

Retirement communities, also called senior living communities or independent living communities, are designed for people in their mid-50s and beyond who are desirous and capable of living independently and dont require specialized medical care. These communities can offer different types of housing, including single-family homes, duplexes, condos, and apartments.

In terms of amenities, retirement communities can provide things such as:

  • On-site gyms and fitness centers
  • Cleaning and laundry services
  • Golf course or swimming pool access
  • Community recreational events
  • On-site dining

Assisted living facilities and nursing homes, on the other hand, are for seniors who need some level of help managing daily life. That can range from assistance with basic chores, such as laundry or cleaning, to round-the-clock medical care.

A third type of community, called continuing care, offers a full range of services from independent living through assisted living, memory care and nursing home care. This allows residents to age in place regardless of their health needs going forward and can also accommodate couples in which one partner needs a higher level of care than the other.

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Using This Retirement Cost Of Living Calculator

Our Retirement Cost of Living Calculator allows you to itemize your pre-retirement and post-retirement income and expenses so you can assess how your current cash flow compares to what you project during your retirement. After completing your inventory of income and expenses, your results will indicate an increase or decrease in your retirement income, expenses and net cash flow, including a bar graph that summarizes your changes in cash flow at retirement. In addition, you can view a detailed data table showing the differences between all your current sources of income and those at retirement, along with the differences between all your current living expenses and projected expenses at retirement.

Why Do A Cost Of Living Comparison

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When youre considering moving to a new city, its helpful to compare the cost of living with the standard of living there.

Cost of living refers to how much youll pay for essentials such as rent and groceries, along with extras such as dining out and entertainment. Standard of living refers to how many hours you need to work to cover those expenses and your overall quality of life.

You might work the same 40-hour week in San Francisco, California, and Scottsdale, Arizona, but your costs and standard of living will be quite different in those places. In San Francisco, you might find yourself living paycheck to paycheck, barely covering the essentials with little left over for savings and splurges.

On the other hand, you might find that in Scottsdale, you can rent a large apartment, comfortably afford to shop at gourmet grocery stores and save for big-ticket items each month. The cost of living in Scottsdale is 33% lower than in San Francisco, freeing up some of your income and potentially giving you a bit more breathing room.

The standard of living in a city refers to other factors as well. Some questions to ask before choosing a new place to live include:

  • Is healthcare affordable?
  • Is there a range of affordable housing options?
  • Is there a substantial gap between rich and poor residents?
  • Is the local environment safe and free of dangerous toxins?
  • What is the climate like year-round?

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Worldwide Cost Of Living Survey

The Economist Intelligence Unit produces a semi-annual worldwide cost of living survey that compares more than 400 individual prices across 160 products and services. They include food, drink, clothing, household supplies and personal care items, home rents, transport, utility bills, private schools, domestic help and recreational costs.

The survey itself is an internet tool designed to calculate cost-of-living allowances and build compensation packages for corporate executives maintaining a western lifestyle. The survey incorporates easy-to-understand comparative cost of living indices between cities. The survey allows city-to-city comparisons, but for the purpose of this report all cities are compared to a base city of New York City, which has an index set at 100. The survey has been carried out for more than 30 years.

The most recent survey was published in March 2017. Singapore remains the most expensive city in the world for the fourth year running, in a rare occurrence where the entire top five most expensive cities were unchanged from the year prior.Sydney and Melbourne have both cemented their positions as top-ten staples, with Sydney becoming the fifth most expensive, and Melbourne becoming the sixth. Asia is home to more than five most expensive cities in the top twenty but also home to eight cheapest cities of the cheapest ten.

How Much Do You Save In Retirement By Living In A State With Lower Taxes

The more money you have to withdraw in retirement, the more potential you have to save on your tax bill. Someone who withdraws $1.5 million per year could save 13.3% by moving from California to a state without an income tax, like Wyoming. That’s nearly $200,000 in savings every year. However, most people won’t withdraw more than a million dollars every year in retirement, so their tax brackets are much lower.

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Cost Of Living Index By State

A cost of living index is meant to compare how expensive or cheap it is to live in certain areas. When looking at a cost of living index by state, you can see how various states compare in terms of housing, transportation, utilities, food, healthcare, insurance and more.

A 100 on the index is the average cost of living for the entire country. States with numbers below 100 are cheaper to live in, and states with a cost of living above 100 are more expensive.

For example, Hawaii is 195.8 on the cost of living index, which means its 95.8% more expensive to live there than the national average. Mississippi is 84.78 on the index, meaning its 15.22% less expensive to live there than the national average.

Cost Of Living In Arizona

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Despite nearly year-round sunshine and gorgeous landscapes, the cost of living in Arizona is about on par with the national average, if not slightly cheaper. Thats likely due, in part, to the extreme heat that residents have to deal with for a good portion of the year.

In fact, summer temperatures range from 90 to 120 degrees Fahrenheit. Plus, much of the landscape outside of major metropolitan areas such as Phoenix can be pretty barren.

If you dont mind the desert environment, youll be pleased to find affordable housing and relatively low costs for goods and services in Arizona.

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Retirement Cost Of Living: How Much Does A Comfortable Lifestyle Cost

As you approach retirement, one of the challenges is to work out your likely spending habits once you stop work for good.

To make your job easier, we have reviewed some industry reports to see how much retirees are spending. This can be a springboard to help you assess what your own needs and preferences might be.

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Best Places To Retire

What constitutes a place as being the best for retirement? Some would say it requires the perfect climate year-round. Other seniors would agree that safety, financial security, and outdoor activities fit the bill. If you are interested in moving to the best cities, states, or countries for your retirement, we have the information you need to get started on your search.

How To Use A Cost Of Living Calculator

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To get started with MoneyGeeks cost of living calculator, select your current city and the city to which youre considering moving. Then, input your annual salary.

The calculator will update based on the information you provide. Youll see a summary screen showing the difference in the cost of living between the two cities and how they compare to the national median.

You can click on the housing tab to see how home prices and rental costs compare in the two cities as well. The third tab provides a breakdown of all the different expenses you should consider before moving.

In some cases, you may find that although housing prices are reasonable, the other costs are more expensive than you expected. Taking a holistic view of a potential destination is key to making an informed decision.

Expenses to consider include:

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Cost Of Living In Florida

The state is a popular destination for people in northern states during their retirement years. Depending on the area in Florida where you lay down roots will depend on how much you can stretch your dollars.

Overall, Florida is pretty middle-of-the-road when it comes to cost of living. It ranks as the 31st cheapest state. However, there is one area where youll pay a lot more in Florida: insurance.

Florida has some of the highest home insurance rates. Youll likely pay more for coverage in The Sunshine State than elsewhere. Floridians pay more for home insurance, for instance, because of the areas weather and claims history. Hurricanes often strike the state whether along the east coast, west coast or the panhandle. Youll want to keep that in mind if you decide to move to Florida.

States With The Lowest Cost Of Living

1. Mississippi

Mississippi has the lowest cost out of living of all 50 states. Mississippi’s cost of living index is 84.8. At a housing index of 66.7, Mississippi has the lowest housing costs in the country, with the average home price at $128,000 ad the average rent for a two-bedroom apartment at $795 per month. With the lowest cost of living in the country comes the lowest median household income of $43,567 per year.

2. Oklahoma

Oklahoma has the second-lowest cost of living in the United States. Oklahoma’s housing costs are also very low, with the average two-bedroom apartment costing $879 per month and the median home value equaling $130,001. Oklahoma also has low transportation costs, with regular gasoline costing $2.262 per gallon as of January 2020, the second-lowest in the country. The living wage in Oklahoma is $46,159, and the median household income is $51,424.

3. Arkansas

The state with the third-lowest cost of living in Arkansas. Arkansas has a cost of living index of 87.8, with housing, transportation, and healthcare costs all being significantly lower than the national average. Arkansas’s housing index is just 75.2, meaning that residents spend about $708 per month on average on rent or mortgages. To live comfortably in Arkansas, one would need to make only $44,571 for a family, which is just below the median household income of $45,726.

4. Kansas

5. Missouri

6. Georgia

7. Alabama

8. New Mexico

9. Tennessee

10. Indiana

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Cheapest States To Retire

If you are looking to save some money while in retirement, start by choosing one of the cheapest states to retire. The following are a few of the cheapest states based on tax rates for retirees, cost of living for seniors, and health care costs.

Alabama is considered a tax-friendly state for retirees according to Kiplinger. This means that most senior benefits including Social Security and pension funds are not taxed by the state. In addition, homeowners who are over 65 do not have to pay property taxes to the state. Alabama doesnt have an estate or inheritance tax either. You will have to pay for sales taxes on food, personal items, and medicine, which is something to consider.

Arizona offers a cost of living for seniors that is nearly 4 percent lower than the US average. It is little wonder that Arizona is home to some of the biggest senior cities in the nation including Peoria, Tempe, and Mesa. In fact, Kiplinger notes that Prescott, Arizona is one of the cheapest cities to live for seniors in Arizona, while still offering a goldmine of senior services and activities for retirees. Plus, Arizona offers some of the best weather in terms of sunshine and mild winters, which is why it is a hot place to go for senior snowbirds from northern states.

Here are some of the other cheapest states to retire to:

  • Akron, Ohio
  • Montgomery, Alabama
  • States With The Best And Worst Climate

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    Your overall comfort and quality of life in retirement are heavily influenced by the activities you undertake. States with mild weather afford more opportunity for outdoor activities. If you like being outdoors, the climate of the state in which you live is important to your physical and mental well-being.

    The average number of sunny days in the United States is 205 a year, according to Sperling.

    The top five states for the annual number of sunny days are:

    • Arizona: 286
    • Alaska: 121

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    San Pancho Travel And Visit Specifics

    Airport to SP: Cheapest is the bus, by far. Taxis are going to run you a fair bit more. The bus makes a number of stops, but its not so bad. I had a friend who luckily was able to pick me up my first day, but after that I frequently made the trek into Puerta Vallarta via bus. Where ever you book for accommodation will also be able to arrange a taxi pick-up if you reach out beforehand. If you are already in the area, the bus is straightforward and takes 45 minutes to an hour from downtown PV.

    Finding Accommodation: I recommend arriving in San Pancho before trying to find a place to stay, otherwise you will only find vacation rentals listed. Once you are in town, you can rent a bicycle for the day or walk around town and you will see many signs for rent. You can also talk with local expats and ask around. With average Spanish, you will have no problem finding something in just a few days, especially if its low season . If you dont speak Spanish, or you came in high season, pop into the real estate agencies. They handle rentals too and are fantastic resources on any city mentioned.

    If youre in Sayulita, my friends rented a nice place from Villas Vista Suites for three months I would start there for online hunting. If youre using Sayulita as your base, consider the Aurinko Bungalows or Casa Pia as a mid-range option and then daytrip over to San Pancho. These all come recommended, and if you plan to move to the area they are a good base.

    Checklist To Managing Your Spending

    • Set your goals for the standard of living you want in retirement and discuss with your spouse or partner.
    • Track expenses using a monthly budget or another means.
    • Find cheaper alternatives across the spectrum, whether it be generic food products or lower-cost, environmentally-sound home renovations.
    • Delay purchases if cheaper versions of a product or service will be released at a later point and look at how innovative credit and debit arrangements can help.
    • Spend wisely on discretionary or luxury items if their cost is beyond your budget.
    • Seek multiple quotes for professional services, whether they be advisers, tradies or medical specialists, and ensure they hold the relevant qualifications and licences.
    • Consider how much money or assets you want to leave behind to your spouse, children or dependants.

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