The 20 most expensive US cities for retirees

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As the golden years near, many become hyper-focused on how big a nest egg they need to retire. Not surprisingly, the size hinges largely on where that nest is needed, as the cost of housing and other living expenses vary widely by locale.

Our latest LendingTree study calculates how much people need to retire in each U.S. metro using different methods: based on the amount retirees spend in a year and on the median annual earnings of people ages 55 to 64.

We found that it takes more than $1 million to retire with an average lifestyle in nearly 40% of the 384 U.S. metros based on the former assessment, but significantly less on the latter assessment. (By significantly, we mean just one metro.)

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Key findings

  • You need more than $1 million to retire with an average lifestyle in 147 of the 384 U.S. metros. Nationally, retirees would need an average nest egg of $1,071,127. A retiree in San Francisco needs a nest egg of $1,365,870 on average — the highest total across the U.S.
  • 12 of the 20 metros that require the biggest nest eggs for retirees are in California. San Diego ($1,298,796) and San Jose ($1,276,997) join San Francisco in the top five.
  • You can retire with an average lifestyle for less than $800,000 in just one metro: Johnstown, Pa. The Pennsylvania metro slides just under that mark at $779,765. Cumberland, Md. ($802,988), and Danville, Ill. ($804,301), are closest.
  • Locals may need far less to maintain their incomes near retirement age once they collect Social Security. If you focus on the median income of near-retirement-age workers rather than average spending by retirees, residents in just one metro would require more than $1 million to retire — San Francisco. Nationwide, the average nest egg needed under this calculation is $768,742.

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20. Kahului, Hawaii

Metro Average spend: $59,927

Implied pretax need: $73,111

Average Social Security retirement income: $24,780

Income needed from additional retirement funds: $48,331

Nest egg: $1,208,274

Image Credit: ideatrendz .

19. Vallejo, California

Metro Average spend: $59,597

Implied pretax need: $72,709

Average Social Security retirement income: $24,111

Income needed from additional retirement funds: $48,598

Nest egg: $1,214,953

Image Credit: BackyardProduction / istockphoto.

18. Seattle

Metro Average spend: $61,576

Implied pretax need: $75,123

Average Social Security retirement income: $26,259

Income needed from additional retirement funds: $48,864

Nest egg: $1,221,602

Image Credit: Sean Pavone/ istockphoto.

17. Santa Cruz, California

Metro Average spend: $60,147

Implied pretax need: $73,379

Average Social Security retirement income: $24,111

Income needed from additional retirement funds:  $49,269

Nest egg: $1,231,721

Image Credit: photoquest7 / Wiki Commons.

16. San Luis Obispo, California

Metro Average spend: $60,202

Implied pretax need:  $73,446

Average Social Security retirement income: $24,111

Income needed from additional retirement funds:  $49,336

Nest egg: $1,233,398

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15. Santa Rosa, California

Metro Average spend: $60,367

Implied pretax need:  $73,648

Average Social Security retirement income:  $24,111

Income needed from additional retirement funds: $49,537

Nest egg: $1,238,429

Image Credit: Bob Corson / istockphoto.

14. Santa Maria, California

Metro Average spend: $60,477

Implied pretax need: $73,782

Average Social Security retirement income: $24,111

Income needed from additional retirement funds: $49,671

Nest egg: $1,241,783

Image Credit: JulieHewitt / iStock.

13. Denver

Metro Average spend: $58,992

Implied pretax need: $75,245

Average Social Security retirement income: $25,504

Income needed from additional retirement funds: $49,741

Nest egg: $1,243,532

Image Credit: istockphoto.

12. Washington, DC

Metro Average spend: $61,302

Implied pretax need: $74,788

Average Social Security retirement income: $24,809

Income needed from additional retirement funds: $49,979

Nest egg: $1,249,478

Image Credit: Sean Pavone.

11. Salinas, California

Metro Average spend: $60,862

Implied pretax need: $74,251

Average Social Security retirement income: $24,111

Income needed from additional retirement funds: $50,141

Nest egg: $1,253,521

Image Credit: rightdx / iStock.

10. Poughkeepsie, New York

Metro Average spend: $61,522

Implied pretax need:  $75,056

Average Social Security retirement income: $24,847

Income needed from additional retirement funds:  $50,209

Nest egg: $1,255,220

Image Credit: Elisank79 / iStock.

9. Miami

Metro Average spend:  $60,477

Implied pretax need: $73,782

Average Social Security retirement income: $23,410

Income needed from additional retirement funds: $50,372

Nest egg: $1,259,300

Image Credit: Gabriele Maltinti / istockphoto.

8. Oxnard, California

Metro Average spend: $61,247

Implied pretax need: $74,721

Average Social Security retirement income: $24,111

Income needed from additional retirement funds:  $50,610

Nest egg: $1,265,25

Image Credit: DepositPhotos.com.

7. Napa, California

Metro Average spend: $61,247

Implied pretax need: $74,721

Average Social Security retirement income: $24,111

Income needed from additional retirement funds: $50,610

Nest egg: $1,265,259

Image Credit: Latypova / iStock.

6. Los Angeles

Metro Average spend: $61,522

Implied pretax need:  $75,056

Average Social Security retirement income: $24,111

Income needed from additional retirement funds: $50,946

Nest egg: $1,273,643

Image Credit: DepositPhotos.com.

5. San Jose, California

Metro Average spend: $61,631

Implied pretax need: $75,190

Average Social Security retirement income:  $24,111

Income needed from additional retirement funds: $51,080

Nest egg: $1,276,997

Image Credit: istockphoto/GerardoBrucker.

4. Honolulu

Metro Average spend: $62,566

Implied pretax need:  $76,331

Average Social Security retirement income: $24,780

Income needed from additional retirement funds: $51,551

Nest egg: $1,288,763

Image Credit: Depositphotos.com.

3. San Diego, California

Metro Average spend: $62,346

Implied pretax need: $76,062

Average Social Security retirement income: $24,111

Income needed from additional retirement funds: $51,952

Nest egg: $1,298,796

Image Credit: DepositPhotos.com.

2. New York

Metro Average spend: $63,501

Implied pretax need: $77,471

Average Social Security retirement income: $24,847

Income needed from additional retirement funds: $52,623

Nest egg: $1,315,587

Image Credit: DepositPhotos.com.

1. San Francisco

Metro Average spend:  $64,545

Implied pretax need: $78,745

Average Social Security retirement income: $24,111

Income needed from additional retirement funds: $54,635

Nest egg: $1,365,870

Image Credit: Depositphotos.

Methodology

To calculate the amount of retirement assets required to retire in each metropolitan statistical area (MSA), LendingTree analysts performed two separate calculations.

The first took the estimated annual expenditures of retirees in each MSA and calculated the pretax amount. We then subtracted the average annualized Social Security retirement benefit for each state to determine the remaining income retirees would need, on average, to maintain that level of spending. Average Social Security benefits were calculated as the averages the Social Security Administration reported for 2021 (the latest available), plus the cost-of-living adjustments for 2022 and 2023. We then divided that amount by 4% to apply the “4% rule” to calculate the necessary assets required to meet the average spending level.

For the second, we subtracted each state’s average Social Security benefit from the estimated median earnings for full-time workers ages 55 to 64 and then applied the 4% rule.

Analysts estimated the average annual spending of retirees in the U.S.’s 384 metros by multiplying the average annual expenditures of retirees from the U.S. Bureau of Labor Statistics’ (BLS) 2021 Consumer Expenditure Survey (the latest available) by the U.S. Bureau of Economic Analysis’ (BEA) 2020 Regional Price Parity (the latest available) for each metro. This was further multiplied by the year-over-year change in the BLS’ consumer price index between October 2021 and October 2022 to more accurately show the growth in inflation.

Median annual earnings of full-time workers ages 55 to 64 were estimated by multiplying the median earnings of all full-time workers in each metro from the U.S. Census Bureau 2021 American Community Survey (the latest available) by the ratio of annualized median weekly wages of full-time workers ages 55 to 64 in the third quarter of 2022 to the annualized median weekly wages of all full-time workers in the third quarter of 2020 from the BLS.

We were conservative in our tax assessment by assuming a federal tax rate of 22%, as the target income levels in every metro fell within that bracket (and the relevant tax rate for that bracket within each state’s tax scheme), unless that state was reported as not taxing Social Security retirement income in 2022. For metros that cross state lines, we applied the rate of the first state of the metro name — where more people reside. We note that not all retirement income is taxed under income rules and that individuals and families may be eligible for additional credits and deductions.

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This article originally appeared on LendingTree.com and was syndicated by MediaFeed.org.

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