For many people, retirement is a time to relax and enjoy a more leisurely lifestyle. However, it can also be a time when finances become tight. This is especially true if you plan to retire in one of the most expensive states in the country.
Calculating each state’s affordability level is crucial in your retirement plans. Bankrate studied the Community and Economic Research’s July 2022 cost of living index and Tax Foundation’s 2022 rankings for property tax rates. The data showed that the sunny state of Hawaii tops the list of the most expensive state to retire in 2022.
According to a CNBC report, the seven states below are the most expensive states for retirement, based on the cost of living and median home prices.
- New Jersey
- Rhode Island
Hawaii: With its beautiful beaches and year-round warm weather, Hawaii is a popular retirement destination.
According to CNBC Make It contributor Sam Dogen, “The median household income in Honolulu County, for example, is $88,000. If someone wanted to withdraw that $88,000 from their assets each year, they’d need about $2,200,000 in investments to withdraw at a rate of 4%.”
California: Another popular retirement destination, California has the 2nd highest cost of living in terms of tax prices. Retirement costs in the Golden State average $1.40 million to comfortably retire.
Connecticut: Retirement in Connecticut can be pricey, with an average retirement budget of $1.25 million.
Other expensive retirement locations
New Jersey: Its proximity to New York and excellent airport access make it a great location for retirees. However, its high-priced monthly home ownership costs would require a savings of $1.20 million to retire.
Massachusetts: Massachusetts is home to some of the best colleges and hospitals in the country. But it also has high taxes and a high cost of living. It also has a reasonably high retirement cost averaging $1.16 million.
Rhode Island: Although small in land size, Rhode Island is not small in retirement costs. In addition to expensive housing and healthcare, retirees in Rhode Island also face some of the country’s highest taxes on retirement income. Avg. cost of a comfortable retirement is $1.09 million.
Vermont: Like other New England states, Vermont has a high cost of living, making retirement expensive. In addition, the state has higher-than-average property taxes and healthcare costs. You’ll need to save $1.07 million to retire in Vermont.
Considering which state you’ll retire in is essential. A comfortable retirement differs for everyone. Head of advice and planning for wealth and investment management at Wells Fargo, Michael Liersch, said, “When retirement is not defined, then it’s very difficult to be prepared emotionally or financially speaking.”
It’s important to consider what matters most when choosing a location. Also, planning how much it will cost to maintain your lifestyle is key to living the most of your retiring age.