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What Where You Live Says About Your Retirement

Jan 16, 2019 3 Min Read Karen Kroll

Key Takeaways

  • Expenses for housing, healthcare, transportation and taxes vary widely by state.
  • Even within the same state, property taxes can be quite different.
  • Online tools can help you figure out your ideal retirement location.


The thought of developing a retirement budget and addressing the question, “How much do I need to retire?" can feel like a daunting undertaking. After all, you may need enough money to see you through several decades of retirement. And if you're considering downsizing or moving closer to other family members, you'll want to find a cost-of-living map that offers guidelines on how your expenses might change from one part of the country to another.



To get off to a sound financial start in retirement, consider all the expenses you're likely to incur, and how they might change based on where you live.

For instance, The Elder Economic Security Standard Index measures “the income that older adults need to meet their basic needs and age in place with dignity" without public or private assistance, in counties across the country. To be sure, this is a bare-bones budget; it doesn't account for entertainment or emergency funds for auto and home repair, among other expenses.

Even so, results can vary dramatically. For instance, an elder couple without a mortgage in La Crosse county in Wisconsin would need about $32,448 to meet their basic needs each year. That compares to about $43,200 for the same couple in Westchester county in New York.


A large portion of the differences in the Elder Index are driven by housing costs. The couple in Westchester county would need almost $1,400 monthly for taxes, insurance, utilities and housing, while a couple in La Crosse would need about $525. (These numbers assume the couples have paid off their mortgages.)

Entering retirement with a mortgage? You're not alone. About one-third of people 65 and older held mortgages in 2012.

If your mortgage is particularly large, you may be debating whether or not it makes sense to move to a smaller place to free up enough cash for living expenses. This may be a prudent move. Before taking this step, however, you'll want to consider connections to your community and proximity to medical professionals, transportation and other amenities.



Transportation costs can vary significantly from one part of the country to another. If you're in an area with strong public transportation systems, or the ability to easily use ride-sharing apps such as Uber and Lyft, you may be able to get by without a car, or to downsize from two (or more) cars to one.


Health Care

Many retirees obtain health care coverage through Medicare. While Medicare is a federal program, costs for some Medicare programs, such as Medicare Part D (which covers prescription drugs), can vary from one part of the country to another.

For instance, a 65-year old Michigan resident who retired in 2015 would spend more than $150,000 over a 20-year period for Medicare Parts B (covers medically necessary and preventative services) and D and supplemental coverage, according to calculations from Healthview Services, a producer of health care cost-projection software. That compares to $112,500 for a retiree in Hawaii.

You'll want to consider these Medicare programs in retirement planning, as Medicare Part A and Part B, often referred to as “traditional Medicare," don't cover many medical procedures used by seniors, such as long-term care, most dental care, eye exams and hearing aids.

Traditional Medicare also doesn't cover deductibles, coinsurance or copayments. For these, you'll likely need a Medicare Supplemental Insurance policy, or Medigap.



Not all taxes disappear in retirement. If you own a home, you'll pay property taxes. Your tax bill will depend on where you live. For instance, the average per-person property tax collected in New Mexico in 2015 was $770, according to the Tax Foundation. In Illinois, it was $2,087, also per the Tax Foundation.

Even within a state, property tax rates can vary widely. The Illinois average included both Cook county (in Chicago) where the average annual property tax was about $4,600, and Wayne County in southern Illinois, at about $800.

Sales tax can also stick around after retirement. Again, it will vary by both state and city. Five states don't impose a statewide sales tax: Alaska, Delaware, Montana, New Hampshire and Oregon, according to the Tax Foundation. Alaska and Montana allow municipalities to charge local sales taxes.

For those states that allow state and local sales taxes, the rates range from 5.5% in Maine to 10.02% in Louisiana, also per the Tax Foundation. These are average combined local and state sales tax rates.


What you can do next

Your expenses in retirement can change based on where you live. While you want to consider this, it's also important to take into account your preferences, as well as your connections to family and friends, and access to health care, transportation and entertainment. Use online calculators, and other tools to gain an understanding of how your retirement expenses may change based on where you're living. Use these tools to estimate how much you should be saving.


Karen Kroll is an experienced freelance writer and editor, with a focus on corporate and consumer finance. Her articles have appeared in AARPBulletin.com, Bankrate.com, Business Finance, CFO, CreditCards.com, Global Finance, and many other publications.


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