Survey Finds Affordability Is Key to Picking a Retirement Destination

If you’re not living in the best place to retire, you probably know it by now. Just look at your bank account.

The price you pay in your community for groceries, gasoline, housing and other essentials will significantly impact your quality of life. And if you’re having trouble affording them now, imagine doing it while retired on a fixed income.

Americans, in fact, value a community’s cost of living more than just about anything else, according to a recent Bankrate public opinion survey. Eight in 10 said it would be a top concern when deciding where to retire.

Affordability was cited much more often in the survey than other qualities typically associated with retirement such as sunny skies, no-shovel winters, top-flight healthcare and safe streets. The survey also found that people appear to become increasingly sensitive to the cost of living the closer they get to retirement and the less disposable income they have to throw around.

Eighty-four percent of Gen Xers and 83 percent of baby boomers said cost of living is their biggest concern, compared with 74 percent of Gen Zers and 78 percent of millennials. And 85 percent of Americans earning under $50,000 ranked affordability as their top factor, compared with 74 percent of those making over $100,000.

In some cases, affordability can be improved by downsizing your home or trimming your budget. But many Americans have opted for another method: moving to a cheaper location.

If you can sell your place, downsize to an area with a lower cost of living and pay cash, that might make it a great move for you.

— Kerry Hannon
Author of “Retirement Bites”

A median-priced home costs roughly $200,000 less in Florida than it does in New York, for example. If you move from Boston to Charleston, South Carolina, you’ll save about 25 cents per gallon on gasoline, at least $4 every time you grocery shop and over $100 on your electricity bill.

But, as many retirees find out, a cheaper location isn’t always better. Some low-cost states also have the worst healthcare systems, the highest crime rates, more natural disasters. Younger boomers and Gen Xers, Hannon added, are especially aware that traditional retirement destinations — like Florida and Arizona — may no longer be the bargain they once were and introduce other risks.

“It just became sort of ingrained that those were logical places because you didn’t have to deal with inclement weather,” Hannon said. “They’re [Gen Xers and younger baby boomers] more cognizant of the fact that the whole thing has been upended to a certain degree.”

The next generation of retirees are likely to consider a variety of factors before choosing where to spend their golden years. Besides affordability, the survey found that 52 percent ranked weather as a top priority and 48 percent said the same of neighborhood safety. Survey respondents could pick up to three qualities as most important.

6 important considerations for a retirement spot

Considering a retirement move? With inflation eroding buying power and health costs climbing, experts say Americans approaching retirement are weighing trade-offs more carefully than ever.

In addition to affordability, here are six other factors you should weigh when deciding where to settle down, according to retirement experts.

1. Your retirement savings

Before you relocate for retirement, make sure your finances line up. Here are some steps that Collinson and Hannon recommend:

• Know your budget. Track your spending habits so you understand what you can actually afford.
• Figure out your income streams. Add up Social Security, retirement savings and other assets (like home equity) to see how long they’ll last.
• Think about timing Social Security. You can claim at 62, but waiting means bigger checks for life. Benefits grow about 8 percent every year you delay past full retirement age until 70.
• Be realistic about retirement age. Many people stop working at 62 or 63, the median age of retirement, which means fewer years of earnings and more years to cover with savings, according to Collinson.
• Run the numbers. Use Bankrate’s retirement calculator or the “25x rule” (annual income needed × 25) as a quick gut check.
• Use free resources. Your 401(k) or retirement plan provider likely offers free planning tools. Take advantage of them while you have access.
• Consider professional help. A financial advisor can give you personalized guidance and a solid plan.

“ We’ve seen high rates of inflation in past years, which erodes our buying power, so affordability is just that much more important. People are feeling a squeeze, whether they’re in the workforce or retired.” — Catherine Collinson, CEO of Transamerica Center for Retirement Studies

2. Sense of community

Community is critical when choosing a place to retire, and it’s a factor that often doesn’t get enough attention in the decision-making process, according to Hannon.

If you’re considering relocating for retirement, Hannon recommends testing the place out for three to six months before committing. See if you can easily join groups and meet people you can connect with, whether it’s joining a pickleball league or a volunteer organization.

Having that sense of community and human connection is huge to healthy aging. Isolation and loneliness are not something you want to move toward, so look for your community.

— Kerry Hannon
Author of “Retirement Bites”

3. Quality, cost and proximity to health care

Other than housing, Hannon said health care will likely be your biggest cost in retirement. According to a Fidelity analysis, a 65-year-old retiring this year can expect to spend roughly $172,500 in health care and medical expenses throughout retirement, a 4 percent increase from 2024.

Medical and health care costs vary widely throughout the country, which is why it’s important to consider the out-of-pocket health care costs after Medicare wherever you retire. Look for places with reasonable health care costs, as that can lead to sizable savings in retirement.

You should also get a good grasp of the health care quality in the area. Bankrate’s annual study found that several Northeastern and Western states — including Vermont, Massachusetts, Oregon and Washington — ranked at the top for health care quality.

Access matters, too. If the nearest hospital is far from where you want to settle down in retirement, Hannon said that’s something to consider, especially if you plan to go in regularly for health visits.

“You might live somewhere that is beautiful, but maybe it’s very remote and the nearest hospital is an hour away,” Hannon said. “You’re going to have to be helicoptered or transported to get to a medical center, so that should be an important consideration.”

4. Local crime

When you’re deciding where to retire, Hannon said neighborhood safety should be factored into your decision. Living in a community with low crime rates will make you feel more secure walking around, meeting neighbors or even just relaxing at home.

Safety also plays a big role in the long-term value of where you choose to settle down. Areas with lower crime rates tend to have stronger property values, which is important even if you’re not planning on selling your home anytime soon.

Plus, safer neighborhoods often come with better infrastructure, like well-kept parks, active community organizations and more responsive local services. Those things can make daily life easier and more enjoyable in retirement.

5. Taxes

Consider how you’ll get taxed in the city and state you’re interested in moving to for retirement.

Many states that have no income tax have higher property taxes or higher sales tax, which is why Hannon recommends getting a full picture of what taxes would cost you in that area. The best way to do that is by talking to a tax expert who understands how taxes work in your retirement destination.

“Get a real beat on what the tax picture would look like for you,” Hannon said.

6. Weather

It’s tempting to opt for warm, sunnier states with milder winters, like Florida, Arizona and South Carolina, but with natural disasters and temperatures on the rise, you may be shelling out more on electric bills and home insurance in those places. Your home could also be at higher risk of getting hit by a natural disaster, especially in hurricane-prone states, which could cost thousands of dollars to repair, even with insurance.

Many insurers are changing their rates, raising deductibles and excluding certain natural disasters because of the increasing rate of extreme weather. In Florida, three major insurance companies have voluntarily stopped offering homeowner insurance policies over the last few years, which may be partly driving up the cost of home insurance in the state.

Your air conditioning is going to be costly if you want to move toward a coastal community, and your property insurance is going to be higher as we see more of the impacts of climate change.

— Kerry Hannon
Author of “Retirement Bites” and retirement expert

• Methodology
  

  All figures, unless otherwise stated, are from YouGov Plc. The survey gathered a total sample of 2,260 U.S. adults May 14-16. The survey was carried out online and meets rigorous quality standards. It gathered a non-probability-based sample and employed demographic quotas and weights to better align the survey sample with the broader U.S. population.