In the years leading up to retirement, people often ask themselves, “When should I retire?” As retirement becomes a closer reality, the question turns to “Where should I retire?” And then, as financial anxiety sets in you might ask, “Where are the cheapest places to retire?”
There are many different affordable retirement destinations.There are numerous lists online for the cheapest places to retire. Most lists assess places for affordability, climate, availability, and costs of healthcare as well as tax treatment for retirees. Here is a run down of some of the most useful lists and a way to assess where you should retire for financial security.
With the concept of affordability in mind, GOBankingRates conducted a cost-of-living comparison of the 75 most populous cities in the United States in order to determine how much money a single person needs to earn in that city to adhere to a 50-30-20 budget. In a 50-30-20 budget, 50% of a person’s income is spent on necessities, 30% is used to purchase discretionary items, and 20% is put into savings, according to GOBankingRates.
The U.S. cities where people need the lowest annual incomes to live comfortably are:
- Tucson, Arizona – $39,966
- El Paso, Texas – $40,227
- Wichita, Kansas – $40,616
- Fresno, California – $42,496
- Mesa, Arizona – $42,654
On the other hand, the U.S. cities where people need the highest annual incomes to live comfortably are:
- San Francisco – $119,570
- San Jose, California – $89,734
- New York City – $87,446
- Boston – $84,422
- Washington, D.C. – $83,104
These statistics can be used to predict how you’d fare if you decided to retire in San Francisco, as opposed to Fresno, California. In San Francisco, it may prove more difficult to stick to a 50-30-20 budget, especially on a fixed income that is less than $119,570. If your annual income in retirement will be well over $42,496, Fresno may not be the place for you. Who knows, you may even decide to toss the 50-30-20 budget out of the window entirely.
Kiplinger magazine had a different approach to finding the cheapest places to retire. They identified attractive cities for retirement in all 50 states and then assessed which ones were particularly cheap for retirement. Five of their 23 cheapest places to retire are:
- Decatur, Alabama: On the Tennessee River with below average cost of living and healthcare costs.
- Prescott, Arizona: There are lots of retirees in Prescott, and Arizona is one of the most tax friendly states.
- Hot Springs, Arkansas: The hot springs might not be a fountain of youth, but housing and health care costs are low in Hot Springs.
- Punta Gorda, Florida: There are lots of retirement communities here. Florida is a tax friendly state. While the cost of living is lower than average, healthcare costs are a little higher.
- Boise, Idaho: The cost of living and health care costs are below average in Boise, a university town near the great outdoors.
International Living is a web site devoted to helping people retire abroad. They identified 5 towns where you can live on $1,000- $2,000 a month.
- Santa Fe, Panama
- Granada and San Juan del Sur, Nicuaragua
- Campeche, Mexico
- Vicabamba, Ecuador
- Penang, Malaysia
What if your plan for retirement is to live in a senior housing community? Or, what if you will eventually need some kind of assisted living?
Should you choose to retire in a senior housing community, as opposed to your own home, affordability by city will also be quite different depending on where you live.
Most Expensive: Washington, D.C., Boston, and New York are the top-three most expensive metros for senior living or assisted living and memory care, according to data from A Place for Mom released in April. A Place for Mom is a senior living referral information service that provides resources and personalized assistance in finding senior care and housing.
Least Expensive: Tampa, Las Vegas, and Miami are the top-three least expensive cities for senior living.
Additionally, in any given place, there can be a wide range in terms of the cost of senior housing and care. For example, senior living in Manhattan is between 9% and 10% more costly than the New York metro as a whole. In Baltimore, it is more expensive to live in the city center than in the surrounding metro area.
U.S. News has a list of cheapest places to retire. Their list is focused on housing prices. They have 50 Affordable Places to Buy a Retirement Home. Low cost locales include:
- Wheeling, West Virginia
- Muncie, Indiana
- Owensboro, Kentucky
- Beckley, West Virginia
- Weirton-Steubenvile, West Virginia and Ohio
- Dothan, Alabama
- Fort Smith, Arkansas
- Parkersburg-Vienna, West Virginia
- Terra-Haute, Indiana
Before looking at the cheapest places to retire, you might want to assess where you live now for affordability. The NewRetirement retirement calculator lets you compare how your own finances compare to other people’s in your zip code.
Perhaps more importantly, the tool lets you see what will happen to your lifelong retirement plan if you were to downsize to a less expensive home in a location with a less expensive cost of living.
To use these features, you will create a NewRetirement account and spend five minutes documenting your current retirement plans. You will receive a complete assessment, including zip code comparisons. You can then start assessing changes to your plans and immediately see the impact of lowering your cost of living or releasing some of your home equity to use for retirement expenses.
The decision of where to retire can make a big difference in terms of your retirement finances, and is not a decision that should be taken lightly. The NewRetirement retirement calculator was recently named a best retirement calculator by the American Association of Individual Investors (AAII). The system can help you figure out out how to retire, even if you have not saved enough.
