What does it take to maintain an average lifestyle in about 40% of the 384 metropolitan areas in the US?
Nationally, retirees need an average of $1.07 million in nest eggs. Meanwhile, San Francisco retirees need about $1.37 million, the highest in the nation, according to a LendingTree study.
A new LendingTree study calculates how much you’ll need to retire in each major U.S. city, based on how much retirees spend in a year and the median annual income of people ages 55 to 64. .
read: Americans think they need $1.25 million to retire. Is that enough?
After San Francisco, we round out the five places that need the biggest nest eggs to retire to: New York ($1,315,587), San Diego ($1,298,796), Honolulu ($1,288,763) and San Jose, California ($1,276,997).
Pennsylvania Subway allows you to retire the average lifestyle for less than $800,000 in just one metropolitan area, Johnstown, Pennsylvania. $779,765. Cumberland, Maryland ($802,988) and Danville, Illinois ($804,301) are next closest.
According to Jacob Chanel, senior economist at LendingTree, the cost of the subway depends on the number of people who live or want to live there, the number and type of housing, the type and type of zoning and building laws. It is determined by many factors such as industries are the most common.
For example, San Francisco’s high housing costs are often attributed to strict development regulations and scarce land. That created limited supply in cities with high demand.I should also add that the proximity to Silicon Valley and higher salaries could drive up prices. No wonder San Francisco and San Jose are expensive places to live and retire.
“Ultimately, each subway is unique and has its own quirks that can be more or less expensive,” Channel says. “This applies to metros that are ostensibly similar or even in the same state. Anyone considering retiring in a particular area should do thorough research before packing up and moving to that area. Don’t let your preconceived notions or vague ideas about dictate whether or not you choose to live there.”
San Francisco, San Diego and San Jose top the list of places that need the biggest nest egg to retire, but the other California subways aren’t far behind.In fact, 12 of the top 20 cities is in the Golden State. Los Angeles follows in sixth place, where the study found that a nest egg of $1,273,643 is required to retire and maintain an average standard of living.
“Simply put, California is a very attractive state for many people,” Channel says. “The climate is generally pleasant, there is a lot of diversity in terms of geography that can be experienced within the state (from beaches to mountains), and there are many stable (and often well-paying) jobs around it. Many people want to live there because it’s attractive, which means less housing and other resources and a higher cost of living. This high cost of living is worth it, even if you need to save as much.”
Other states with Metro in the top 20 include New York, Hawaii, Florida, District of Columbia, Colorado, and Washington. The only subway in the top 20 that is primarily landlocked is Denver, which could require a $1,243,532 nest egg to retire.
“Of course, having a high-paying job and not having a lot of debt are two things that many people don’t have, and it makes saving much easier,” Channel said. “And even if you did ‘everything right,’ there’s no guarantee you’ll get a million dollar nest egg. It’s not what you need. The most important thing is to save as much as you can and plan your lifestyle around the money you have, not the money you wish you had.”
Questions about retirement, social security, where to live or how you can afford it? Contact us at HelpMeRetire@marketwatch.com. I may use your question in a future article.