Additional Coverage:
- 15 States To Avoid if You Want To Live Just on Social Security (financebuzz.com)
The Golden Years Getaways: Where Your Social Security Might Not Stretch So Far
As many Americans eye their well-deserved retirement, the dream of a new beginning in a fresh locale often comes to mind. But before you pack up the U-Haul and head for greener pastures, it’s crucial to understand where your Social Security check will truly go the distance. Not all states are created equal when it comes to the cost of living, and some could turn your golden years into a budget-tightening challenge.
The Council for Community & Economic Research diligently tracks the cost of living index, a measure that considers the expenses of healthcare, utilities, groceries, transportation, and housing. With the national average benchmarked at 100, anything above that signals a pricier existence. For those relying solely on Social Security income, these numbers become particularly important.
Based on their data, we’ve compiled a list of states where your retirement nest egg, specifically your Social Security benefits, might feel the most strain.
The Top 15 States Where Retirement on Social Security Alone Could Be Tough:
15. New Hampshire
- Cost of Living: 109.2
- Tax Social Security: No
While New Hampshire doesn’t tax Social Security, its overall cost of living is notably higher than the national average, primarily driven by some of the nation’s steepest utility costs. Housing and transportation expenses also exceed the national benchmark.
14. Oregon
- Cost of Living: 111.8
- Tax Social Security: No
Oregon presents a challenge for retirees due to its significantly high transportation and housing costs, which rank among the most expensive nationwide. On a brighter note, utility costs in the state fall below the national average.
13. Rhode Island
- Cost of Living: 113.4
- Tax Social Security: Yes
Housing is a substantial factor in Rhode Island, with a median home sale price of $526,500. For retirees living on Social Security, the fact that the state also taxes these benefits adds another layer of financial consideration.
12. Vermont
- Cost of Living: 113.7
- Tax Social Security: Yes
Vermont’s high cost of living is exacerbated by its position as one of the most expensive states for groceries, housing, utilities, and healthcare. These combined factors could make stretching a Social Security check particularly difficult, though couples with incomes below $65,000 and individuals below $50,000 are exempt from state income taxes on their Social Security benefits.
11. Washington
- Cost of Living: 113.9
- Tax Social Security: No
Despite no state income tax or Social Security tax, Washington’s overall cost of living remains high, particularly for housing and groceries. Above-average healthcare costs also present a concern for retirees on a fixed income, potentially outweighing the tax benefits.
10. Connecticut
- Cost of Living: 114.1
- Tax Social Security: Yes
Retirees in Connecticut need to be aware that their Social Security benefits will be taxed if they exceed a specific income threshold. The state also grapples with some of the highest utility costs, further contributing to a challenging cost of living for those on a fixed income.
9. Maine
- Cost of Living: 114.2
- Tax Social Security: No
With a cost of living index of 114.2, Maine’s expenses are driven largely by above-average transportation and housing costs, which are significant components of the Council for Community & Economic Research’s index.
8. New Jersey
- Cost of Living: 114.6
- Tax Social Security: No
While New Jersey taxes most income types, it offers some relief for retirees by not taxing Social Security benefits. Additionally, individuals aged 62 or older or those with disabilities may exclude up to $100,000 in other retirement income, such as pensions or IRA withdrawals, provided their total income falls below a certain limit.
7. Maryland
- Cost of Living: 118.9
- Tax Social Security: No
Maryland’s cost of living is significantly impacted by its high housing expenses. The median home sale price in November was $435,300, reflecting a slight increase from the previous year.
6. New York
- Cost of Living: 126.6
- Tax Social Security: No
New York’s housing costs are among the fifth highest in the nation, a major drain on Social Security income. The state also ranks in the top 10 for the most expensive groceries in the United States.
5. Alaska
- Cost of Living: 127.7
- Tax Social Security: No
While Alaska offers breathtaking landscapes, its cost of living could significantly impact Social Security recipients. The state holds the unfortunate distinction of having the highest healthcare costs, a critical expense for an aging population.
4. District of Columbia
- Cost of Living: 135.2
- Tax Social Security: No
The nation’s capital is a notoriously expensive place to live, with housing being a primary concern for retirees. Washington, D.C. ranks as one of the most expensive areas in the housing cost of living index, with a median home sale price of $700,000 in November, far exceeding the national median.
3. California
- Cost of Living: 136.7
- Tax Social Security: No
California’s high cost of living is well-known, and housing stands out as a significant burden for retirees relying solely on Social Security benefits.
2. Massachusetts
- Cost of Living: 150.8
- Tax Social Security: No
Living in Massachusetts demands a substantial portion of a Social Security check for housing, with the state ranking second overall for these costs. Furthermore, it’s among the top five for utility expenses. The combination of long, cold winters requiring more heat and increasing healthcare costs could put a severe strain on retirement finances.
1. Hawaii
- Cost of Living: 179.7
- Tax Social Security: No
While Hawaii doesn’t tax Social Security, this offers little comfort when considering it has the highest cost of living in the nation. The state’s housing costs are unparalleled, with a median home sale price of $741,600 in November, dwarfing the national median.
The Bottom Line for Your Golden Years
For those approaching or already in retirement, understanding the true cost of living in your desired location is paramount. If your plan is to subsist solely on Social Security income, a realistic and disciplined budget is essential.
You might also need to explore avenues for supplementary income during retirement. Another strategic move could be delaying the start of your Social Security benefits until age 70 to maximize your monthly payout for the rest of your life.
Regardless of your financial standing, there are always opportunities to enhance your financial health. Consider exploring side hustles to boost your income, or work with a financial professional to craft a robust retirement plan.
Don’t forget to leverage senior benefits, discounts, and proactively seek out the best deals on essentials like car insurance to save hundreds. Conversely, be vigilant in avoiding common money-wasting traps that can silently erode your savings.
Read More About This Story:
- 15 States To Avoid if You Want To Live Just on Social Security (financebuzz.com)