California is not the most expensive state for retirees in the US, but it's close, according to a new study

Ed Walsh

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San Francisco Bay Area housing costs are high but California is not the most expensive for retireesEd Walsh

Housing costs in the San Francisco Bay Area are higher than anywhere else in the United States but overall the cost of living in California takes a second seat to Hawaii, accoriding to a study released on Thursday, April 29.

Reaearchers from the financial Web site MagnifyMoney.com looked at the prices to retire in every U.S. state, including costs for housing, food, transportation, Medicare Part B and Part C, entertainment and personal care. The study found Hawaii is the most expensive state overall in which to spend your golden years. The least expensive state is Arkansas, according to the report.

The study's top five least expensive states in which you can retire: are respectively Arkansas, West Virginia, Mississippi, Alabama, and Indiana.

The top five most expensive states in which to spend your retirement years are Hawaii, California, New Jersey, Massachusetts, and New York

"From the gorgeous beaches to the warm weather year-round, it’s no wonder people would want to spend their retirement years in the Aloha State," the researchers said of Hawaii. "But all that beauty comes at a cost. In fact, the annual cost of retirement living in Hawaii is nearly $23,000 more than that of retirement living in Arkansas (the least expensive state on the list).

"Housing is particularly pricey in Hawaii, where median housing costs are $2,472 a month for those with a mortgage — highest in the nation. Food also costs more in Hawaii than anywhere else in the country, averaging $656 a month, as does transportation ($745 a month), entertainment ($237 a month) and personal care ($71 a month). Note that when calculating these costs, researchers accounted for regional price parities across each state, so some areas may be more or less expensive than others."

But the study found heath care costs overall are less expensive in Hawaii than North Dakota. The average cost for Medicare Part B and C in Hawaii is $195 a month, according the researchers, compared to North Dakota ($225 a month) with the highest.

The study's authors found that in general the least expensive places in which to spend your retivement years are in the South and Midwest.

"Looking for a less expensive place to retire? You might want to head south to Arkansas or West Virginia," the researchers stated. "Or, you can practice the spelling of Mississippi (“M, I, crooked letter, crooked letter…”), which is the third-least expensive state, followed by Alabama and Indiana (the latter repping the Midwest)."

Here are the report's key findings as stated by the study's authors:

  • "Americans spend less as they get older. Consumers 65 and older spend 20% less annually, on average, than all Americans. For consumers 75 and older, that figure jumps to 31% less. That may or may not be by choice, as the average annual income for those 65 and older declines significantly — $55,656 for those 65 and older, versus $99,606 for those 55 to 64 years old.
  • Older Americans prioritize spending differently. Consumers 65 and older spend 32% more annually, on average, on health care than all Americans. They’re also cutting back on food and transportation — retirement spending in these areas equates to spending that is 19% and 30% less, respectively, than typical.
  • Hawaii is the most expensive state in which to spend your retirement years. While the Aloha State tops the list as the most expensive state in which to retire, California and New Jersey aren’t far behind. The annual costs for housing, food, transportation, Medicare Part B and Part C, entertainment and personal care in these states exceeds $50,000 on average.
  • The least expensive states in which to spend your retirement years are in the South. Arkansas, West Virginia and Mississippi wrap up the list as the least expensive states in which to spend your retirement years. In these states, annual costs by older adults in key spending categories average below $30,500.
  • Two of the more popular retirement destinations have similar annual costs. When mentioning retirement, two states often come to mind — Florida and Arizona — and both have similar annual costs for retirement living when considering these key spending areas. Annual costs in these retirement hot spots average between $36,000 and $38,000 a year."

FULL STUDY LINK https://www.magnifymoney.com/blog/news/retirement-years-study/

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