Retirement doesn’t come cheap, and that’s more true in some locales than others.
The average over-65 household spends just over $49,000 a year, on average, which shakes out to roughly $4,000 a month, according to data released by the Bureau of Labor Statistics. Housing eats up the largest share of that (more than $16,000 a year), though health care, transportation and food also factor in heavily.
But what you spend in your golden years will vary widely depending on where you decide to live. And in some cities — San Francisco and Bay Area neighbor San Jose, notably — the cost is staggering.
On Thursday, the personal finance site GoBankingRates.com calculated the likely average spending for the over-65 set in roughly 100 cities across America, using government expenditure and cost-of-living data. In four spots, retirees likely must spend an average of more than $100,000 a year:
5 most expensive cities to retire in America
Projected annual spending for people over 65
1. San Francisco: $151,103
2. San Jose, Calif.: $128,809
3. New York: $103,543
4. Seattle: $101,066
5. Honolulu: $99,579
Rounding out the top 10 are Oakland, Calif.; Los Angeles; Washington, D.C.; Boston; and Long Beach, Calif.
The biggest reason the Bay Area takes three of the top 10 spots on this list? Housing costs, explains GoBankingRates’s Lead Researcher and Data Analyst Andrew DePietro: “Housing is the biggest component of overall cost of living, and with median home prices just above and below $1 million — San Fran is over $1 million, [and] San Jose in the $900,000s — the cost is incredibly heavy.” He adds that nonhousing costs like health care are also “markedly more expensive” in the Bay Area than in lower cost areas.
In two Ohio cities, in contrast, retirees will likely spend less than $40,000 annually.
5 most affordable cities to retire in America
Projected annual spending for people over 65
1. Cleveland: $38,147
2. Toledo, Ohio: $38,643
3. Buffalo, N.Y.: $40,624
4. Fort Wayne, Ind.: $41,120
5. Memphis, Tenn.: $41,615
Lubbock, Texas; Wichita, Kan.; El Paso; Winston-Salem, N.C.; and Indianapolis round out the top 10. Again, housing drives overall cost of living, with Cleveland and Toledo offering particularly affordable homes — median homes there cost under $100,000 — which is one big reason retirees may spend less than $40,000 a year.
Wondering where your city fits in? Here’s a list of cities by how much you’ll likely spend in retirement in each.
What it costs to retire in America
Projected annual spending for people over 65 Less than $45,000 Cleveland, Toledo, Buffalo, Fort Wayne, Memphis, Lubbock, Wichita, El Paso, Winston-Salem, Indianapolis, St. Louis, Greensboro, Mobile, Columbus, Milwaukee, Tulsa, Cincinnati, Columbia, Corpus Christi $45,000 - $49,999 Oklahoma City, Kansas City, Pensacola, Knoxville, Pittsburgh, Omaha, Lexington, Louisville, Lincoln, Baltimore, Spokane, San Antonio, Albuquerque, Tucson, Jacksonville, Baton Rouge, Tallahassee, Norfolk $50,000 - $54,999 Durham, Lawrenceville, Houston, Charlotte, Fort Worth, Saint Petersburg, Dallas, Fresno, New Orleans, Arlington, Tampa, Bakersfield, Saint Paul, Nashville, Madison, Philadelphia, Raleigh $55,000 - $59,999 Orlando, Phoenix, Colorado Springs, Glendale, Mesa, Atlanta, Virginia Beach, Minneapolis, San Bernardino, Chicago, Las Vegas, Plano, Marietta, Stockton $60,000 - $69,999 Naples, Modesto, Chandler, Newark, Reno, Sacramento, Henderson, Austin, Aurora, Hialeah, Islip, Miami, Anchorage $70,000 - $79,999 Denver, Riverside, Portland, Silver Spring, Santa Ana $80,000 - $89,999 Jersey City, Chula Vista, Anaheim, San Diego, Long Beach, Boston $90,000 and up Washington, Los Angeles, Oakland, Honolulu, Seattle, New York, San Jose, San Francisco
That said, many of us want to live near our families in our retirement years, and they may reside in expensive cities. So MarketWatch asked experts for some of their best advice on cutting costs in retirement — even if you live in a pricey place.
Because housing is the No. 1 expense for the over-65 set, the first thing you can do to slash costs dramatically is to cut housing costs. Pay off your mortgage before retiring, downsize as much as you can, look for cheaper neighborhoods, or even get a roommate.
And if you’re traveling, rent out your home on a site like Airbnb, says Kristin McFarland, a certified financial planner and wealth adviser at Darrow Wealth Management in Boston. “Given the recent trend of new retirees opting for low-maintenance condo living closer to a city, their property may be desirable to other vacationers.”
Transportation is often the second largest cost for those 65 and up, so consider whether moving nearer to public transit might make sense or whether you and your partner could live with a single car in retirement.
Here’s a list of other helpful ideas for slashing costs in retirement.
