Retirement doesn’t come cheap.
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 what city you decide to live in. And in some cities—ahem, San Francisco, San Jose—the cost is staggering.
On Thursday, 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 (in this order) 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, San Jose in the $900,000s — the cost is incredibly heavy.” He adds that non-housing costs like health care are also “markedly more expensive” in the Bay Area than in lower cost areas.
In just two cities in America, they will likely spend less than $40,000.
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 Cities like Lubbock, Tex., Wichita, Kan., El Paso, Tex., Winston-Salem, N.C., and Indianapolis round out the top 10. Again, housing drives the cost-of-living with Cleveland and Toledo offering particularly affordable homes — median homes cost under $100,000 — which is one big reason retirees may spend less than $40,000 a year.
That said, many of us want to live near our families who may live 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 cut housing costs. Pay off your mortgage before retiring, downsize as much as you can, look for cheaper neighborhoods, get a roommate.
And if you’re traveling, rent out your place on a site like Airbnb, says Kristin McFarland, a certified financial planner and wealth advisor 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 you and your partner could live with just one car in retirement, or whether moving nearer to public transit might make sense.
The post It Costs Retirees $100,000 a Year to Live in These 4 Cities appeared first on Real Estate News & Insights | realtor.com®.
Source: Housing Trends Feed