The state where you reside has an incredible impact on your lifetime expenses. The total tax burden on residents varies greatly between the states. But that is only a part of the cost-of-living equation. Housing, food, and even the price of gasoline, has prompted many people to move to a cheaper location. Of course, most people are tethered to their extended family or current job, but you may want to make the evaluation anyway. The cost of living between different states is so large it can make the difference between retiring early and never being able to retire.
GoBankingRates performs an annual study for retirees that are over age 65 and indexed the states for cost of living. In general, the Southeast, the band from Texas to Georgia is cheaper to live than the Northeast or Farwest states. Here are the top 5 most expensive states in which to live; along with the average annual expense:
- Hawaii $83,887
- California $60,887
- Alaska $58,733
- New York $58,264
- Massachusetts $57,795
The cheapest 5 states for retirees are:
- Mississippi $37,984
- Arkansas $39,260
- Oklahoma $39,820
- Michigan $39,974
- Tennessee $40,084
Although some cities (like New York City and San Francisco) have salary inflation to help compensate for their high cost of living, most areas do not. As a result, the money available for saving and investing is consumed by high rent and food costs. It is a lifestyle decision for you to make, but be aware that if you have financial goals, they will be delayed and impaired in high-cost of living areas.