When you’ve spent most of your adult life working and saving for the future, you want your money to last as long as possible in retirement. Part of that comes down to developing healthy spending habits so you don’t blow through your savings too quickly, but another important factor is where you choose to call home.
Your general cost of living expenses will likely make up the bulk of your spending in retirement, and much of those costs depend on where you live. No matter how careful you are to avoid overspending, living in an expensive area can quickly drain your savings. But move to a more affordable neighborhood, and suddenly every dollar goes a lot further.
Cost of living significantly impacts retirees in particular because they often live on a fixed income. If your daily living expenses are high and you can’t increase your income, it’s easy to get stuck living Social Security check to Social Security check. To avoid that scenario, it’s worth considering whether you could be getting more bang for your buck by moving to a more affordable state.
The most (and least) affordable states for retirees
Some states are more expensive than others, even if you strip your budget down to the bare bones.
Researchers from the Center for Social and Demographic Research on Aging studied each state in the U.S. and determined how much it costs for the average adult age 65 and older just to survive. They calculated essential costs like housing, healthcare, food, and transportation, as well as some basic household items like a phone and hygiene items. What they didn’t include were all the non-essential costs, like vacations, meals at restaurants, entertainment, and gifts. The researchers then ranked all the states in terms of affordability.
The most expensive states for seniors include Massachusetts, Hawaii, Maryland, and New York. Washington D.C. also made the list. In each of these places, it costs more than $40,000 per year for a 65-year-old couple just to survive on the bare minimum.
The least expensive states are Alabama, Kentucky, Arkansas, West Virginia, and Ohio. These states are considerably more affordable, costing the average 65-year-old couple roughly $30,000 per year to cover the essentials. Keep in mind, too, that these are averages across the entire states. Cost of living can vary widely from city to city, so some towns may be more or less expensive than average.
If you’re struggling to save for retirement, moving to a more affordable area might be a good way to help your money last longer. When you’re saving thousands of dollars per year just by living in a place where the basics cost less, that frees up more cash in your budget to splurge on the non-essentials. However, moving is a big decision that shouldn’t be taken lightly, so there are a few things to consider before you start packing your suitcases.
Is it worthwhile to move during retirement?
There are several considerations to make before you uproot your life and move to a new area in retirement.
First, think about it from a financial perspective. If you have a retirement destination in mind, map out all the costs you’ll face to see exactly how much you’ll save by moving. Don’t forget to factor in costs like moving expenses and taxes in your new city, because those expenditures can add up. The more research you do in this stage, the better prepared you’ll be to choose a retirement destination.
Next, think about moving from an emotional perspective. Your decision whether or not to move should be about more than just dollars and cents. If moving to a new city or state would pull you away from friends and family, would you still be happy? If you move from a big city to a small town, will there be enough activities available to keep you busy? Will you be able to make friends and find a community of peers in your new neighborhood?
If you’ve answered all these questions and decided that moving is the right choice, take a couple of weeks to explore your prospective new city before you take the plunge. Any city can look drastically different in person than on paper, so it’s important to get a feel for what your new life will look like. Scope out potential neighborhoods and think about whether you’d feel safe and comfortable living there. Also, try your best to think like a local. What does daily traffic look like? If you intend to eat out often, are there enough restaurants in the area? Think about what your everyday life will look like, and see if you can picture yourself living there happily.
Moving in retirement is a huge, life-changing decision, but it can be one of the best decisions you ever make. You could potentially save tens of thousands of dollars per year by moving to the right city, which can make it much easier to afford an enjoyable retirement lifestyle.