Retirement Cost of Living in California

When looking for a place to retire, many people consider California a dream destination. While locations like Arizona, Arkansas, and even Florida have their advantages, California is an oasis of potential. With almost constant beautiful weather and plenty of places for outdoor fun, California seems like the best place to spend your later years. However, the one big downfall, and the reason it is a dream destination instead of one based in reality, is because of the extremely high cost of living. Here is what you need to know about the cost of living before considering retirement in California.

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Cost of Living - A 2014 cost of living annual report on the most expensive states to live saw California rank as the sixth-most expensive on the chart. The cost of living index for the state in 2014 was 128.7 with the worst discrepancy being housing, which is 175.7 in California. Grocery, utilities, transportation and health are all above average, but it is the housing costs that really make the cost of living in California so outrageous and hard to manage on a fixed retirement salary.
Home Prices - The median home in California is an outrageously high $440,700. In just the last year, the prices of homes in California went up 5.3 percent and are continuing to rise. For those seeking to rent, it isn't much better with the average rent rate at $1,995. However, this also has to be averaged out for a very large state. While homes in San Francisco run an average of $931,100, homes can be found in Fresno for $162,100, so just because homes in California are typically high, there can be reasonably priced homes found.

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Per Capita Income - However, while housing costs are so expensive, and other cost of living expenses are slightly higher than usual, the median household income is drastically larger as well. In the last reported census, the per capita income was $29,527 per year, which was only slightly above average. However, the median household income was $61,094 compared to the national average of $53,046. This helps the income levels, but when it comes to retired individuals, that doesn't help as much, unless they are working to add to their benefits.
Taxes - The tax burden in California is the sixth highest in the nation. There is a state income tax that is very high at 9.55 percent, but the terrific news for those seeking retirement in California is that the Social Security benefits are excluded from the state income tax, making it a much nicer place for those wishing to retire there. There is a sales tax of 8.25 percent, which is the highest of any state as well.