Stretch your Social Security check.
Personal finance site WalletHub released data on Wednesday showing the cities and towns in America that were the most — and least — expensive for retirees. Laredo, Texas, came in as the least expensive urban area for retirees, with an index of 76, compared with 100.
“Aside from having the lowest cost of living, Laredo is in Texas, which “doesn’t tax Social Security or pensions, and does not have an inheritance or estate tax,” WalletHub analyst Jill Gonzalez tells MarketWatch. “This lack of taxation is an advantage for those looking to retire anywhere in the state, as their fixed income can stretch that much further.” She adds that “Laredo also has the lowest annual cost of in-home services, and one of the lowest annual costs of adult day health care.”
Memphis and Knoxville, Tennessee, rounded out the top three least expensive places to retire. (MarketWatch recently named Memphis one of its four great American cities where you can retire on $40,000 or less.)
10 least expensive cities for retirees:
1. Laredo, Texas
2. Memphis, Tenn.
3. Knoxville, Tenn.
4. Huntington, W. Va.
5. Fort Smith, Ark.
6. San Antonio, Texas
7. Amarillo, Texas
8. Oklahoma City, Okla.
9. Toledo, Ohio
10. Jackson, Miss.
To measure this, they used cost of living index data from the Council for Community and Economic Research on 270 urban areas, which measures the costs of groceries, housing, utilities, transportation, health care, and miscellaneous goods and services — and then adjusted that data to increase the weight of health care expenses, as these are increasingly important in retirement.
(One expense retirees tend to vastly underestimate in retirement is health care. Fidelity estimates that “an average retired couple age 65 in 2019 may need approximately $285,000 saved (after tax) to cover health care expenses in retirement.”)
Meanwhile, San Francisco and New York topped the list of the most expensive places for retirees, according to WalletHub’s analysis — largely driven by high housing costs.
10 most expensive cities for retirees:
1. San Francisco, Calif.
2. New York, N.Y.
3. Pearl City, Hawaii
4. Honolulu, Hawaii
5. San Jose, Calif.
6. Fremont, Calif.
7. Washington, D.C.
8. Oakland, Calif.
9. Seattle, Wash.
10. Boston, Mass.
Wherever you retire, one thing is clear: There is no “magic” number on how much you will need to live comfortably in retirement, as MarketWatch recently reported — and it may be more than you’d think.
“For many people, $1 million isn’t enough to live off in retirement,” Mitchell C. Hockenbury, a certified financial planner at 1440 Financial Partners, explained to MarketWatch in the story. “With people living longer with the advances of medical care and the higher costs of living, a million dollars just doesn’t go as far as it used to.”