CALIFORNIA – A GoBankingRates study published last month says Californians need $90,399 annually to live comfortably in retirement.
According to Statista, the annual inflation rate in the United States has increased from 3.2 percent in 2011 to 8.3 percent in 2022. This means that the purchasing power of the U.S. dollar has weakened in recent years.
Inflation poses a challenge for retirement planning – it can reduce the real value of retirement savings.
Calculating retirement income
GoBankingRates calculated the average retirement income needed to live comfortably in each state. They looked at five factors – an individual’s spending on groceries, healthcare, housing, utilities and transportation.
The annual retirement income needed to cover these living expenses was calculated, with an additional 20% to account for the “comfortable” aspect of retirement.
The report ranked California the third highest — $90,399 is needed to live comfortably. They calculated the total expenditures at $72,320 with an $18,080 buffer.
The District of Columbia ranked the highest with $99,980 needed to live comfortably in retirement. Mississippi came in the least expensive at $55,074.
Cheaper to retire elsewhere?
Tax advisor Cunningham Legal says that although there may be places besides California where it would be cheaper to retire, there are different factors to consider.
“For starters, if you have established a lifestyle and community in California, you can think of that as an investment you would have to duplicate elsewhere. Staying in California allows you to leverage that investment without making a new investment in a new state,” said Attorney James L. Cunningham Jr.
He also suggests quality of life, easily accessible goods or services and diversity makes California an ideal place to retire.
To view the full list of state rankings visit: https://www.gobankingrates.com/retirement/planning/comfortable-retirement-cost-state/