For many, retiring to California is the dream. You can enjoy the warm weather, expansive beaches, breathtaking wine country, and so much more of what the state has to offer. However, if you want to retire well in California. You have to be prepared. While there are numerous options for relaxation and entertainment, and solid access to critical amenities. California is pretty expensive. If you want to retire well in California. Here’s what you need to know.
Cost of Living
A cost of living score represents how expensive it is to live in a particular area. The United State’s national average is listed at 100. If a score is above that mark. It means it costs more to live there than the average. California’s score is 142.7.
In fact, California costs more than the average in every major cost of living category. The worst area is housing, where California has a score of 203.4. The average home value in California is over $578,000. But certain cities come up far higher. For example, San Francisco is nearly $1.2 million. While San Jose is over $877,000.
Now, some come in below the California average. For instance, Sacramento and Fresno both cost less, sitting at $299,200 and $212,700, respectively. Those are closer to the national average. That average is listed as just shy of $249,000.
But you won’t just pay more for housing. Food, transportation, and utilities all cost more, too. Even its lowest score, a 113.0 in the health category, isn’t a great sign. Essentially, heading to California means spending more than the average across the board.
Tax Considerations
California is known for its high taxes. While the state doesn’t tax Social Security, which is a boon for retirees, it does tax every other kind of retirement income. How much you’ll pay depends on your income level, though it will fall between 1 and 13.3 percent.
Additionally, sales tax can be incredibly high in California. The state charges 7.25 percent. Then, individual districts can take on more, ranging from an additional 0.10 and 1.00 percent. Certain areas even have several district taxes stacked on top of each other, making it even more expensive.
There are some potential property tax breaks available to seniors. However, they are not nearly as generous as some other states make available.
Part-Time Job Opportunities
Usually, part-time job opportunities for retirees in California are plentiful. However, the COVID-19 pandemic altered the landscape dramatically. California is experiencing prolonged business closures and limitations, making it hard for anyone to find jobs.
Until the pandemic resolves, employment is simply more difficult. However, if a recovery occurs, retirees can likely find plenty of options available.
Best Cities for Retirees in California
If you want to retire well in California, heading to the right cities is a must. Your money will go further in some areas, allowing you to enjoy more of what the state has to offer without financial hardship.
Fresno is an excellent choice for retirees, offering lower housing costs and an exceptional location near a variety of national parks. Modesto offers city living at an affordable price, while Sacramento is great for amenities and doesn’t require you to break the bank.
If you want to live beach side. Santa Barbara can be a less expensive choice. It offers warm sand and moderate temperatures. It also offers a slew of outdoor activity options. However, it isn’t necessarily cheap. It just costs less than some other coastal cities.
For wine lovers, Santa Rosa might be the right choice. It’s moderately priced (based on California standards), and has a reputation for being an enjoyable place to live. Especially for retirees.
How Much Money You Need to Retire Well in California
With its higher cost of living, it shouldn’t be a surprise that you’ll need more money to retire well in California. While precisely what you’ll want to have available varies depending on the city you choose. Plan for about $90,500 a year. That would cover your expenses and give you a buffer in many cases, allowing you to enjoy your retirement with greater ease.
Do you have any tips that can make it possible for someone to retire well in California without breaking the bank? Share your thoughts in the comments below.
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