Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

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MrCheapo
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Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by MrCheapo »

Currently, I reside in northern California. We like it a lot, nice weather, friendly people etc. but want to consider retiring elsewhere.

CA Sales tax is 8%
Property tax is 1% of purchase price, capped increase. We'll move to a new house, cost about $750K so about $7,500 per year
State Income tax is https://www.nerdwallet.com/article/taxe ... -state-tax
but essentially $2,500 + 9.3% above $58K

I plan to retire in 5 years, I could retire earlier but the benefits accrued in this 5 years are too good to pass up.

I will have:
1) $7K per month pension from state university
2) Drawing on our 401k plans for everything else which we anticipate to be $5K per month.

Some quick rough calculations show, if we spend all we get, total tax burden (sans Federal) will be:

0.08*(100,000) + (Sales tax)
7500 + (Property tax)
2,500 + 8,000 (State income tax)
= about 25K per year tax burden (san Federal).

Q1: How much will I really save if I move to a low cost of living area?
Q2: What are the missing (or increased) costs you don't pay in CA but will pay in other low cost areas as a retiree.
Q3: For those of you that did move away from CA what were the downsides?
Last edited by MrCheapo on Fri Apr 23, 2021 9:28 am, edited 1 time in total.
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Sandtrap
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Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by Sandtrap »

We relocated from UHCOL Hawaii to M/LCOL Northern Arizona when "retiring" 9 years ago.

Questions: 1, 2, 3.
The savings were tremendous in all areas from home purchase to yearly expenses, etc.

Downsides were:
Cultural Diversity (International vs. . .)
Climate
White Sand Beaches
Island Lifestyle
Food Diversity
Blue Azure warm Pacific Ocean lapping softly over soft beach sand. . . . .

Displaced Hawaiian :(
j :D
Last edited by Sandtrap on Fri Apr 23, 2021 8:55 am, edited 3 times in total.
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Tingting1013
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Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by Tingting1013 »

Do you own your house now? If so you can transfer your property tax base to the new house which means you could be paying less than $7,500

Will you have a mortgage on the new house? On your CA tax return You can deduct property taxes in full and mortgage interest up to $1M in principal, lowering your CA income tax
Nebraska_Drought
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Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by Nebraska_Drought »

I think the key would be, will you be just as happy living in another place? High tax states like CA can really put a damper on things when it comes to retirement, but it is your home and you do like it (other than being HCOL). In all honesty, you could relocate to a LCOL to MCOL area and still have funds to maintain a 2nd home in an area you would like to spend time in and probably still come in lower than your CA estimates.

States like TX/FL/SD/WY that do not have any state taxes would save you several thousands of dollars each year. Housing is also much cheaper in most places compared to CA, again saving you $$'s. Some states, the property taxes are pretty high but it would be on a lower assesses property, so could be a wash or even a savings (depending on where you were)

Weather is a factor. Some hate the cold/heat/humidity (take your pick) and some want to stay in an area due to family being there. In the end, it needs to make sense for you and how you will feel a decade from making the change.

Good luck
Monsterflockster
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Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by Monsterflockster »

The downside is the daily disappointment you are no longer living in California.

Anywhere worth living is expensive. Is cashing out to live where others don’t want to (when you don’t need to) really worth it?
Last edited by Monsterflockster on Fri Apr 23, 2021 9:45 am, edited 1 time in total.
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RickBoglehead
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Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by RickBoglehead »

There are websites where you can research cost of living and taxes in states, as well as retiree benefits (i.e. income they may not tax). There are highly rated states to retire to, and low rated states to retire to.

I know someone that moved from Northern California to South Carolina. They were able to buy a much bigger and nicer house because the property in CA was worth so much more. And two boats. And do improvements. All with the proceeds from the sale.

Property taxes in the new home are very much lower. Sales tax is lower. Income tax is lower.

Cost of living is much lower because in CA the prices are crazy high on many things as compared to the rest of the country. Compare the cost of groceries, gas, and look at restaurant costs. Perhaps even utility costs.
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mrb09
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Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by mrb09 »

Only comment I have is that it is hard to generalize taxes. California gets dinged for high taxes, but it is (as you say) 9.8% above $58k for single. Oregon looks lower on the top rate, 8.75%, but it jumps there quickly after $9k income.

If you're comparing states with no income taxes, that's simple, but for states with "lower" rates you really need to use a tax table.
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Watty
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Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by Watty »

General numbers are pretty meaningless since so much depends on the details of your situation. Even in a given city the cost of living can be dramatically different if you live in an inexpensive suburb or in an expensive downtown area.

You really need to do a detailed spreadsheet where you crunch your numbers including a dummy tax return.

The taxes in a low cost of living area may be even less than you are thinking. An over 65 couple can have $20K in taxable income and $40K in Social Security and not owe any federal income tax. Where I live with a paid off house that is enough for an above average middle class lifestyle.
MrCheapo wrote: Fri Apr 23, 2021 8:37 am Q1: How much will I really save if I move to a low cost of living area?
I moved from the Bay Area to a less expensive area decades ago and one thing that was real noticeable was that in the less expensive area lots of things that involve labor and real estate were a LOT less expensive in the lower cost area. Sort of like the Big Mac Index I did a post a few years ago where I looked up the menu prices of an item a Applebees in several cities and the cost of the same item was a lot less in the lower cost of living area. You can look up things like restaurant menus online to see what something costs where you live now and where you are thinking of moving to. Some grocery stores will also have their prices online.

Lot of things like dentists and car mechanics are also less expensive in a low cost of living area since their cost of living is less too.

In addition to looking at the yearly dollar cost also consider the size of a nest egg that you will need using the 4% safe withdrawal rate guideline.

You can also look at it in terms of time. For example you might be able to able to retire ten years earlier in a lower cost of living area. That is worth a lot but it is hard to quantify.

For me one huge benefit of living in a lower cost of living area what that we moved here when my son was a teenager and he had settled down here after college. He and was easily able to afford to buy a nice house about ten minutes from us. That means that we frequently get to see him and our grandkids.
Last edited by Watty on Fri Apr 23, 2021 9:21 am, edited 1 time in total.
Ron Ronnerson
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Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by Ron Ronnerson »

Your California tax figures should reflect your personal, specific situation in order to be accurate.

For example, you would not pay sales tax on what you spend toward housing, groceries, insurance, utilities, services, travel, education, and items you buy used. These are often some of the biggest spending categories for people.

If you bought your home 30 years ago and are paying, let’s say, $2k/year for property taxes on a $1 million house (plenty of people are in this situation), you take that tax base with you when you move to another California house so long as you are over age 55. Also, Prop 13 will limit future property tax increases to 2% per year, based on the original purchase price of that home you bought 30 years ago. Your property taxes could be much higher in another state.

For income tax, take your AGI and then subtract deductions if you itemize (mortgage interest, property taxes, etc.) and apply any exemptions to determine tax liability. It could potentially decrease how much you owe in income taxes quite a bit after taking these things into consideration. My gross income is $115k and my California income taxes are $0. I’m not retired, though, and putting a bunch of money each month into retirement accounts. Still, this shows that you need to get into your personal specifics.
quantAndHold
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Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by quantAndHold »

We saved money by moving back to California (San Diego). We had a low property tax base ($4k now), and California income tax is progressive enough that we don’t pay much state income tax. Some years we pay zero. Keep in mind it’s not just taxes and housing cost. It’s the cost of heating and air conditioning, homeowners insurance, trips back and forth to visit family or get out of the bad weather. We were living in WA when I retired, which has no state income tax, but all the other taxes were high enough that it was cheaper to live in CA. CA has the most progressive tax system of all the states, and WA the least. When I was working and making money, WA was great. Retirement favors CA.

The main thing that we could have done by moving somewhere else would be to free up the $1m+ equity in our home by selling it and moving someplace with cheaper housing. But we like where we are, and don’t particularly need the money. Sometimes it’s about more than the money.
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Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by Ron Ronnerson »

mrb09 wrote: Fri Apr 23, 2021 9:15 am Only comment I have is that it is hard to generalize taxes. California gets dinged for high taxes, but it is (as you say) 9.8% above $58k for single. Oregon looks lower on the top rate, 8.75%, but it jumps there quickly after $9k income.

If you're comparing states with no income taxes, that's simple, but for states with "lower" rates you really need to use a tax table.

Those states sometimes have other taxes which are higher. For example, Texas has no income tax but property taxes could be around 2%. Sure, property values tend to be less there, maybe even a lot less, but due to Prop 13 and Prop 19 in California, someone living in a $1M house in California could find themselves paying half as much in property taxes compared to someone living in a $250k house in Texas. So the overall tax liability (including everything) could be about the same or even higher in another state.

I think the best approach is to be holistic. Look at each and every form of tax and add it all up. Personally, I like to include the non-financial taxes as well. Harsh climate can be taxing and being away from family and friends makes the heart pay. Look at everything, and then decide with the whole picture in view.
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MrCheapo
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Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by MrCheapo »

quantAndHold wrote: Fri Apr 23, 2021 9:25 am We saved money by moving back to California (San Diego). We had a low property tax base ($4k now), and California income tax is progressive enough that we don’t pay much state income tax. Some years we pay zero. Keep in mind it’s not just taxes and housing cost. It’s the cost of heating and air conditioning, homeowners insurance, trips back and forth to visit family or get out of the bad weather. We were living in WA when I retired, which has no state income tax, but all the other taxes were high enough that it was cheaper to live in CA. CA has the most progressive tax system of all the states, and WA the least. When I was working and making money, WA was great. Retirement favors CA.

The main thing that we could have done by moving somewhere else would be to free up the $1m+ equity in our home by selling it and moving someplace with cheaper housing. But we like where we are, and don’t particularly need the money. Sometimes it’s about more than the money.
That's a very interesting counter-example.

I agree CA is very progressive, but since all of my retirement money will come from pensions and 401k's it will be taxable by CA and it will be a fair chunk of change because I'll be "earning" $144K a year. I'm guessing you retired on your Social Security payments so its not taxable hence CA is tax-friendly to you (but not me)?
Last edited by MrCheapo on Fri Apr 23, 2021 9:50 am, edited 1 time in total.
shell921
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Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by shell921 »

https://www.nerdwallet.com/cost-of-livi ... urprise-az

I live in San Diego. I grew up in La Jolla but now live 22 miles north east of LJ. I put my income in as $70,000 and to maintain my standard of living in Surprise Arizona I'd only need
$45, 478. Would I move there? I doubt it. A neighbor moved there a few years ago and he loves it. I would never move someplace without going there on an extended vacation to see if I like it.
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MrCheapo
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Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by MrCheapo »

RickBoglehead wrote: Fri Apr 23, 2021 9:09 am There are websites where you can research cost of living and taxes in states, as well as retiree benefits (i.e. income they may not tax). There are highly rated states to retire to, and low rated states to retire to.
Can you suggest one? I googled and couldn't find one. What I'm really looking for his a website where I enter my sources of retirement income (401k, Pension, SS) and it gives me a total tax burden per state (including state, income and property tax).

Now there is lots of sites giving very high level guidance, but I wanted to do research specifically for my situation.
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Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by Californiastate »

My brother moved away to Nevada when he retired to avoid California income tax. All of his children, grandchildren and great grandchildren still lived in California. He was constantly going back and forth to see them. Eventually he just moved back. It wasn't saving him any money.
quantAndHold
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Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by quantAndHold »

MrCheapo wrote: Fri Apr 23, 2021 9:42 am
quantAndHold wrote: Fri Apr 23, 2021 9:25 am We saved money by moving back to California (San Diego). We had a low property tax base ($4k now), and California income tax is progressive enough that we don’t pay much state income tax. Some years we pay zero. Keep in mind it’s not just taxes and housing cost. It’s the cost of heating and air conditioning, homeowners insurance, trips back and forth to visit family or get out of the bad weather. We were living in WA when I retired, which has no state income tax, but all the other taxes were high enough that it was cheaper to live in CA. CA has the most progressive tax system of all the states, and WA the least. When I was working and making money, WA was great. Retirement favors CA.

The main thing that we could have done by moving somewhere else would be to free up the $1m+ equity in our home by selling it and moving someplace with cheaper housing. But we like where we are, and don’t particularly need the money. Sometimes it’s about more than the money.
That's a very interesting counter-example.

I agree CA is very progressive, but since all of my retirement money will come from pensions and 401k's it will be taxable by CA and it will be a fair chunk of change. I'm guessing you retired on your Social Security payments so its not taxable hence CA is tax-friendly to you (but not me)?
We are retired on Social Security plus 401k/IRÁ, so we have some leeway about when we recognize income, but for several years I took $80k Roth conversions (AGI was $130k), and our state tax was in the $2k range. Remember that exemptions and deductions reduce the taxable amount quite a bit.

You really need to figure out how much things cost for you personally. For one thing, like someone above said, run the state taxes based on your expected income and deductions, and see where you really stand. One thing I realized in doing this exercise for myself is that all of this stuff is very personal, and can’t be easily generalized. If I were doing this again, I would pick four or five places that I actually wanted to live, then make a spreadsheet and figure out how much I would be paying for housing cost (including insurance and utilities), income tax, property tax, and healthcare, and see what the differences are for the totals.

Another issue in California’s favor for me that probably won’t affect you is that I’m still too young for Medicare so I’m on an ACA plan, and California has some of the cheapest ACA premiums in the country.
Yes, I’m really that pedantic.
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Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by Ron Ronnerson »

quantAndHold wrote: Fri Apr 23, 2021 9:56 am
Another issue in California’s favor for me that probably won’t affect you is that I’m still too young for Medicare so I’m on an ACA plan, and California has some of the cheapest ACA premiums in the country.
This is another great example of looking at all the pieces. We are currently paying about $50/month for a Kaiser gold plan on the Covered California exchange for a family of three people. The premium tax credit covers the rest of the cost.

Also, low electricity bills for much of the year are nice as opening the window is all it takes to get the temperature right.

It is important to factor it all and not just rely on some rule-of-thumb or tax chart.
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Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by SuzBanyan »

Won’t you pay CA tax on the pension from CA State University no matter what state you live in?
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Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by surfstar »

MrCheapo wrote: Fri Apr 23, 2021 9:42 am
quantAndHold wrote: Fri Apr 23, 2021 9:25 am We saved money by moving back to California (San Diego). We had a low property tax base ($4k now), and California income tax is progressive enough that we don’t pay much state income tax. Some years we pay zero. Keep in mind it’s not just taxes and housing cost. It’s the cost of heating and air conditioning, homeowners insurance, trips back and forth to visit family or get out of the bad weather. We were living in WA when I retired, which has no state income tax, but all the other taxes were high enough that it was cheaper to live in CA. CA has the most progressive tax system of all the states, and WA the least. When I was working and making money, WA was great. Retirement favors CA.

The main thing that we could have done by moving somewhere else would be to free up the $1m+ equity in our home by selling it and moving someplace with cheaper housing. But we like where we are, and don’t particularly need the money. Sometimes it’s about more than the money.
That's a very interesting counter-example.

I agree CA is very progressive, but since all of my retirement money will come from pensions and 401k's it will be taxable by CA and it will be a fair chunk of change because I'll be "earning" $144K a year. I'm guessing you retired on your Social Security payments so its not taxable hence CA is tax-friendly to you (but not me)?
You can obviously afford to stay with that level of retirement income.
I'd look at it more like: 1) retire earlier to a LCOL area or 2) work longer to stay where we'd prefer to live

The net cost doesn't seem that much higher here - as mentioned, utility bills can be hundreds a month in other places. We don't have A/C and barely run the furnace - only in the mornings and only for a few months a year.

If you want to access equity later in retirement years, you can look into a HECM.
I currently don't see compelling reasons to retire elsewhere and we live in a VHCOL - its costly for a reason! We love to travel too, so a relocated "home base" should save us some money, but its hard to quantify accurately. It also seems likely that anywhere we'd want to move to would also be above average COL.

The great thing it - with your income you have options. Travel. Move. Whatever sounds better - do that! :sharebeer
investingfan
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Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by investingfan »

Please listen to Ron and quant.

You are NOT paying +$2,500 + 9.3% above 58K!

Q1: Not much (just create some dummy returns and you will see). But your new house will be much bigger than your house in California.
Q2: This depends on where you move to. If you move to a freezing cold/humid place, home maintenance/repairs will be a lot higher than CA.
Q3: Downsides: more homeless but this doesn't bother me since I don't live anywhere near them.
Last edited by investingfan on Fri Apr 23, 2021 11:06 am, edited 1 time in total.
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Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by sailaway »

Californiastate wrote: Fri Apr 23, 2021 9:50 am My brother moved away to Nevada when he retired to avoid California income tax. All of his children, grandchildren and great grandchildren still lived in California. He was constantly going back and forth to see them. Eventually he just moved back. It wasn't saving him any money.
This was actually my first thought: where is family and do you like them? People keep telling us that visiting family isn't a vacation, so evidently we like our family more than most?

My utilities in coastal Southern California are very low. We only turn the HVAC on to filter the air if there is smoke from a fire in the area, not to change the temperature of the house. I believe cost of living calculators look at the difference in energy pricing, but not usage. Check to see if the calculator you use notes which method they use and if you can find the difference in average usage.

As for housing being bigger outside of California, that has not been our experience, unless you want it to be bigger. That it is, if you move to a lower COL area, you can get more house for your money if that is what you want, but there may well be more stock of smaller homes. California has smaller McMansions than other places, but we have struggled to find small housing. You have to go to a 1920s/30s neighborhood to find small SFH (ie, <1500sq ft). So much so that every time someone has tried to point us to something small they have came across, it is inevitably bigger than what we have.
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Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by goingup »

quantAndHold wrote: Fri Apr 23, 2021 9:25 am We saved money by moving back to California (San Diego). We had a low property tax base ($4k now), and California income tax is progressive enough that we don’t pay much state income tax. Some years we pay zero. Keep in mind it’s not just taxes and housing cost. It’s the cost of heating and air conditioning, homeowners insurance, trips back and forth to visit family or get out of the bad weather. We were living in WA when I retired, which has no state income tax, but all the other taxes were high enough that it was cheaper to live in CA. CA has the most progressive tax system of all the states, and WA the least. When I was working and making money, WA was great. Retirement favors CA.

The main thing that we could have done by moving somewhere else would be to free up the $1m+ equity in our home by selling it and moving someplace with cheaper housing. But we like where we are, and don’t particularly need the money. Sometimes it’s about more than the money.
We did the same. Moved back to CA from WA last year into a home we owned and had rented out for 15 years. While WA state has no income tax, which was a boon while working, the property tax was much higher than our Prop 13 rate of $2,500. The ACA health care subsidy is quite good here. The weather is amazing. Food, utilities, etc are similar to WA state.

I don't think we'll leave CA, but if we did we'd likely go to either AZ or NV, but that might not be a good fit socially.
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Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by tibbitts »

SuzBanyan wrote: Fri Apr 23, 2021 10:20 am Won’t you pay CA tax on the pension from CA State University no matter what state you live in?
I could be wrong but don't believe that's possible: you should be taxed based on your state of residence at the time you receive each payment.
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Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by SuzBanyan »

tibbitts wrote: Fri Apr 23, 2021 10:59 am
SuzBanyan wrote: Fri Apr 23, 2021 10:20 am Won’t you pay CA tax on the pension from CA State University no matter what state you live in?
I could be wrong but don't believe that's possible: you should be taxed based on your state of residence at the time you receive each payment.
You are right and I’m wrong (by several decades).
On Jan. 10, 1996, P.L. 104-95 took effect. This federal law prohibits any state from taxing pension income of non-residents, even if the pension was earned within the state. Before the passage of this law, California, New York and several other states maintained a source tax on pension earned within the state.
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Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by neverpanic »

MrCheapo wrote: Fri Apr 23, 2021 8:37 am Currently, I reside in northern California. We like it a lot, nice weather, friendly people etc. but want to consider retiring elsewhere.

1) $7K per month pension from state university
Do the exercise, run the necessary calculations, then stay put.

1) You like where you're at.
2) Where you're at is home.
3) You can comfortably afford where you are.

IMHO, people with no state pension guarantee are the best candidates for moving away in retirement.
I am not a financial professional or guru. I'm a schmuck who got lucky 10 times. Such is the life of the trader.
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Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by RickBoglehead »

MrCheapo wrote: Fri Apr 23, 2021 9:45 am
RickBoglehead wrote: Fri Apr 23, 2021 9:09 am There are websites where you can research cost of living and taxes in states, as well as retiree benefits (i.e. income they may not tax). There are highly rated states to retire to, and low rated states to retire to.
Can you suggest one? I googled and couldn't find one. What I'm really looking for his a website where I enter my sources of retirement income (401k, Pension, SS) and it gives me a total tax burden per state (including state, income and property tax).

Now there is lots of sites giving very high level guidance, but I wanted to do research specifically for my situation.
What you're asking for I have not found. I don't believe it exists. Sites I have used:

https://smartasset.com/retirement/retirement-taxes

https://www.kiplinger.com/kiplinger-too ... /index.php

You won't get the property tax because it's too specific to location, i.e. cities and counties have their own taxes. Further, some places have personal property taxes that can get quite large, for example South Carolina taxes your cars, boats, RVs, etc. each year. Not registration, taxes. Quite sizeable.

However, look at the total tax picture. If I moved south, I would likely pay less in property tax, and personal property tax, for a bigger house worth 25 - 50% more, by thousands of dollars even with several vehicles and boats.
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Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by expo62 »

MrCheapo wrote: Fri Apr 23, 2021 9:45 am
RickBoglehead wrote: Fri Apr 23, 2021 9:09 am There are websites where you can research cost of living and taxes in states, as well as retiree benefits (i.e. income they may not tax). There are highly rated states to retire to, and low rated states to retire to.
Can you suggest one? I googled and couldn't find one. What I'm really looking for his a website where I enter my sources of retirement income (401k, Pension, SS) and it gives me a total tax burden per state (including state, income and property tax).

Now there is lots of sites giving very high level guidance, but I wanted to do research specifically for my situation.
The old Sperling website is pretty thorough;

https://www.bestplaces.net/compare-cities/

It allows you to compare cities on over a dozen categories and 100s of items. The most popular comparisons are: Population, Cost of Living, Average Rent, Crime Rate, Tax Rates, Air Quality, Religion, Local Economy, Climate, and Weather.

It is not customizable in terms of your specific financial situation, but its still pretty useful.
Last edited by expo62 on Fri Apr 23, 2021 2:09 pm, edited 1 time in total.
Nebraska_Drought
Posts: 107
Joined: Fri Nov 13, 2020 11:19 am
Location: Lincoln, NE

Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by Nebraska_Drought »

My parents recently went through this exercise as they were looking, but not committed to moving. One thing they looked at was the financial standing of some states vs other. There are states out there where the govt finances are a total mess, one could say on the verge of being bankrupt. At some point in time, the piper will need to be paid on all these subsidies being provided on borrowed money. No one can say exactly when, but it could very well happen. I won't call any particular states out that they quickly checked off their own personal list due to this fact, but there were 4-7 that it was one of the reasons they did check them off as a "no" for moving. This may be unreasonable but it may not be, just another thing to consider. Demographic shifts are something one can look at to see how some states are "bleeding" residents while others are quickly taking them in. That can be a tell-tale sign.
Firemenot
Posts: 585
Joined: Wed Apr 01, 2020 8:48 pm

Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by Firemenot »

Nebraska_Drought wrote: Fri Apr 23, 2021 12:53 pm My parents recently went through this exercise as they were looking, but not committed to moving. One thing they looked at was the financial standing of some states vs other. There are states out there where the govt finances are a total mess, one could say on the verge of being bankrupt. At some point in time, the piper will need to be paid on all these subsidies being provided on borrowed money. No one can say exactly when, but it could very well happen. I won't call any particular states out that they quickly checked off their own personal list due to this fact, but there were 4-7 that it was one of the reasons they did check them off as a "no" for moving. This may be unreasonable but it may not be, just another thing to consider. Demographic shifts are something one can look at to see how some states are "bleeding" residents while others are quickly taking them in. That can be a tell-tale sign.
Maybe. But probably equally likely there’d just be a federal bailout. I don’t know any of that would be actionable. And some of the states that look like they have good finances may not in 20 years. Not stuff I’m personally going to worry about.
Nebraska_Drought
Posts: 107
Joined: Fri Nov 13, 2020 11:19 am
Location: Lincoln, NE

Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by Nebraska_Drought »

Firemenot wrote: Fri Apr 23, 2021 1:00 pm
Nebraska_Drought wrote: Fri Apr 23, 2021 12:53 pm My parents recently went through this exercise as they were looking, but not committed to moving. One thing they looked at was the financial standing of some states vs other. There are states out there where the govt finances are a total mess, one could say on the verge of being bankrupt. At some point in time, the piper will need to be paid on all these subsidies being provided on borrowed money. No one can say exactly when, but it could very well happen. I won't call any particular states out that they quickly checked off their own personal list due to this fact, but there were 4-7 that it was one of the reasons they did check them off as a "no" for moving. This may be unreasonable but it may not be, just another thing to consider. Demographic shifts are something one can look at to see how some states are "bleeding" residents while others are quickly taking them in. That can be a tell-tale sign.
Maybe. But probably equally likely there’d just be a federal bailout. I don’t know any of that would be actionable. And some of the states that look like they have good finances may not in 20 years. Not stuff I’m personally going to worry about.
you are right, it is not a static target and places that look good in that aspect now could not be the same in 20 or more years. I do agree with you on that aspect of it. As far as a bankrupt state getting a federal bailout? That can be discussed, but not a given. States that are fiscally responsible are not going to want to reward those states that are not. Even at our federal level, the limitless credit card they use now can't go on forever. Eventually all the previous bills will need to be accounted for somehow/someway.
SrGrumpy
Posts: 1477
Joined: Wed Aug 05, 2015 3:21 pm

Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by SrGrumpy »

Firemenot wrote: Fri Apr 23, 2021 1:00 pm
Nebraska_Drought wrote: Fri Apr 23, 2021 12:53 pm My parents recently went through this exercise as they were looking, but not committed to moving. One thing they looked at was the financial standing of some states vs other. There are states out there where the govt finances are a total mess, one could say on the verge of being bankrupt. At some point in time, the piper will need to be paid on all these subsidies being provided on borrowed money. No one can say exactly when, but it could very well happen. I won't call any particular states out that they quickly checked off their own personal list due to this fact, but there were 4-7 that it was one of the reasons they did check them off as a "no" for moving. This may be unreasonable but it may not be, just another thing to consider. Demographic shifts are something one can look at to see how some states are "bleeding" residents while others are quickly taking them in. That can be a tell-tale sign.
Maybe. But probably equally likely there’d just be a federal bailout. I don’t know any of that would be actionable. And some of the states that look like they have good finances may not in 20 years. Not stuff I’m personally going to worry about.
Exactly. Life's too short. Maybe do due diligence on (very) small cities. You wake up one day and read the fire service has been canceled. Oops.
SuzBanyan
Posts: 523
Joined: Thu Jun 02, 2016 11:20 am

Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by SuzBanyan »

neverpanic wrote: Fri Apr 23, 2021 11:07 am
MrCheapo wrote: Fri Apr 23, 2021 8:37 am Currently, I reside in northern California. We like it a lot, nice weather, friendly people etc. but want to consider retiring elsewhere.

1) $7K per month pension from state university
Do the exercise, run the necessary calculations, then stay put.

1) You like where you're at.
2) Where you're at is home.
3) You can comfortably afford where you are.

IMHO, people with no state pension guarantee are the best candidates for moving away in retirement.
For California specifically, which does not tax social security, moving away in retirement may make more sense if you were a public employee who will get a pension (taxed by CA as ordinary income) and no social security. With the max social security benefit for a person turning 70 in 2021 at $3895, a couple who both earned the max could have more than $90,000 a year in CA state tax-free income.
LittleMaggieMae
Posts: 765
Joined: Mon Aug 12, 2019 9:06 pm

Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by LittleMaggieMae »

I think you need to be careful when moving and trying to maximize how much money you be able to spend.

You need to look at how much more it costs to repair your house/car (or what add on things/maintenance ) you will need to pay for every year. You need to look at the cost of entertainment or the things you will be doing daily.

It might also help to look over your spending and take some guesstimates of how much you are paying for services and fun where you currently live and then see if you can get some guesstimates for the costs of those things where you want to move to.

I've got relatives who moved to Florida to escape the 'high taxes' and all they complain about is how much everything they want to do or have or eat costs. I suspect they have the same yearly total 'expenses' rather than less expenses.

ADDED: also you might want to see how the different ways states tax the different types of retirement incomes (pension and SS, etc). They aren't all the same and you may need to find the best State for YOUR retirement income streams.
Last edited by LittleMaggieMae on Fri Apr 23, 2021 1:48 pm, edited 1 time in total.
FireSekr
Posts: 1129
Joined: Tue Apr 02, 2013 9:54 am

Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by FireSekr »

Nebraska_Drought wrote: Fri Apr 23, 2021 1:17 pm
Firemenot wrote: Fri Apr 23, 2021 1:00 pm
Nebraska_Drought wrote: Fri Apr 23, 2021 12:53 pm My parents recently went through this exercise as they were looking, but not committed to moving. One thing they looked at was the financial standing of some states vs other. There are states out there where the govt finances are a total mess, one could say on the verge of being bankrupt. At some point in time, the piper will need to be paid on all these subsidies being provided on borrowed money. No one can say exactly when, but it could very well happen. I won't call any particular states out that they quickly checked off their own personal list due to this fact, but there were 4-7 that it was one of the reasons they did check them off as a "no" for moving. This may be unreasonable but it may not be, just another thing to consider. Demographic shifts are something one can look at to see how some states are "bleeding" residents while others are quickly taking them in. That can be a tell-tale sign.
Maybe. But probably equally likely there’d just be a federal bailout. I don’t know any of that would be actionable. And some of the states that look like they have good finances may not in 20 years. Not stuff I’m personally going to worry about.
you are right, it is not a static target and places that look good in that aspect now could not be the same in 20 or more years. I do agree with you on that aspect of it. As far as a bankrupt state getting a federal bailout? That can be discussed, but not a given. States that are fiscally responsible are not going to want to reward those states that are not. Even at our federal level, the limitless credit card they use now can't go on forever. Eventually all the previous bills will need to be accounted for somehow/someway.
I recently left California and I too considered the financial state of the locations I was considering.

I eliminated states that managed their budgets like California, as moving to a locale that spends more than it makes or has outsized obligations inevitably would impact me one way or another. Either the taxes would go up at some point, or quality of services would decline, or worse, both of those things would happen as they have in California. After experiencing the horrendous infrastructure and poorly managed services in California, I decided that I did not want to overpay to live in an area that delivered sub-par services in exchange for high taxes.

While a state or local government's financial standing can obviously change, that does take time, and services tend to degrade slowly as that happens. So if I find that my new state/city begins to decline, I would expect to have a few years at least before it became intolerable for me and I would relocate somewhere else if it got bad enough.

I dont think this should be the only thing considered when deciding where to live, but it seemed obvious to me that I should consider the health of the state because it would directly impact my finances and quality of life. There's only so long a state or local government can be on life support before something gives.
PinotGris
Posts: 768
Joined: Tue Feb 14, 2012 9:38 pm

Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by PinotGris »

MrCheapo wrote: Fri Apr 23, 2021 8:37 am Currently, I reside in northern California. We like it a lot, nice weather, friendly people etc. but want to consider retiring elsewhere.

CA Sales tax is 8%
Property tax is 1% of purchase price, capped increase. We'll move to a new house, cost about $750K so about $7,500 per year
State Income tax is https://www.nerdwallet.com/article/taxe ... -state-tax
but essentially $2,500 + 9.3% above $58K

I plan to retire in 5 years, I could retire earlier but the benefits accrued in this 5 years are too good to pass up.

I will have:
1) $7K per month pension from state university
2) Drawing on our 401k plans for everything else which we anticipate to be $5K per month.

Some quick rough calculations show, if we spend all we get, total tax burden (sans Federal) will be:

0.08*(100,000) + (Sales tax)
7500 + (Property tax)
2,500 + 8,000 (State income tax)
= about 25K per year tax burden (san Federal).

Q1: How much will I really save if I move to a low cost of living area?
Q2: What are the missing (or increased) costs you don't pay in CA but will pay in other low cost areas as a retiree.
Q3: For those of you that did move away from CA what were the downsides?
Northern CA, you love it. Don't move just for taxes. Have you figured out what your expenses will be after you retire? Do you need to RMD? I guess you will not have SS. How about Medicare. We live in MA and we love it where we are and would not move to save on taxes. Quality of life matters too.
manatee2005
Posts: 1771
Joined: Wed Dec 18, 2019 9:17 pm

Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by manatee2005 »

MrCheapo wrote: Fri Apr 23, 2021 8:37 am Currently, I reside in northern California. We like it a lot, nice weather, friendly people etc. but want to consider retiring elsewhere.

CA Sales tax is 8%
Property tax is 1% of purchase price, capped increase. We'll move to a new house, cost about $750K so about $7,500 per year
State Income tax is https://www.nerdwallet.com/article/taxe ... -state-tax
but essentially $2,500 + 9.3% above $58K

I plan to retire in 5 years, I could retire earlier but the benefits accrued in this 5 years are too good to pass up.

I will have:
1) $7K per month pension from state university
2) Drawing on our 401k plans for everything else which we anticipate to be $5K per month.

Some quick rough calculations show, if we spend all we get, total tax burden (sans Federal) will be:

0.08*(100,000) + (Sales tax)
7500 + (Property tax)
2,500 + 8,000 (State income tax)
= about 25K per year tax burden (san Federal).

Q1: How much will I really save if I move to a low cost of living area?
Q2: What are the missing (or increased) costs you don't pay in CA but will pay in other low cost areas as a retiree.
Q3: For those of you that did move away from CA what were the downsides?
I did a lot of road trips across the US, and I have to tell when I am so happy when I drive back into California and see California plates. I would love to live elsewhere because of the things you say, cost, state budget, etc, but if you go anywhere else, the weather sucks, the food is not as good, and there's not as much to do outdoors.
Base of all these reasons I decided to stay put.
vested1
Posts: 2474
Joined: Wed Jan 04, 2012 4:20 pm

Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by vested1 »

Sorry in advance for the long and location specific comment.

My wife and I retired in CA after living there for 66 years, spending our first 3 years in retirement in CA, still with a 98k mortgage. We had problems with our next door neighbor there (barking dogs) for the last 15 years of our 25 years in that home, which even the police couldn't rectify. The problem with selling and buying in the same general area in CA is that it is not possible to upgrade without adding multiple 100k's from another source. We loved CA, especially on the Monterey Peninsula, but for housing, if you sell and want to upgrade you better have deep pockets.

I believe I am the member referred to earlier who moved from CA to SC. The upgrade in housing was unbelievable for the price, and the setting at our new lake house is wonderful. A comparable home on a lake in CA would cost several millions more, even in a remote location. We went from a 3x2 1372 sq ft 50 year old home on .1 acres to a 5x3 3077 sq ft 24 year old home on a lake with a covered dock on 1.6 acres and had 6 figures left over, even after paying off the mortgage in CA, and buying with cash from the sale in CA.

That being said, all aspects of such a drastic relocation need to be taken into consideration. Our total property taxes went up over 2k because of the yearly taxation of vehicles, boats, and motors on those boats. Our state taxes were modest in CA but were nearly non-existent for 2020 in SC. SS is not taxed and there is a 30k exemption of retirement income for those over 65 in SC (15k per couple). In Georgia SS is not taxed and 130K (65k per couple) of retirement income is exempted for those over 65. A lifetime fishing license for all waters for a senior in SC is $8 (my pet peeve in CA at $60 a year). Sales tax is capped at $500 in SC, so buying big ticket items here is a lot cheaper. Insurance of any kind is more expensive in SC as compared to CA. Gas right now is about $1.50 less in SC than in CA.

I could go on and on, but I can't stress enough that money isn't everything, far from it. At minimum, I would suggest renting in a new location for at least 6 months before you commit. Don't take sites like Kiplinger's as gospel. Read threads from people who live there on citydata.com and even take those with a grain of salt.

Other than housing costs I would say from my perspective that the pluses in CA are too numerous to list, including access to culture, a diverse populous, and fine dining, as well as unmatched beauty. Did I mention perfect weather, at least where we lived? It is normal to keep your politics and personal situation private in CA.

Positives in SC include friendlier people, far less traffic, and cheaper gas. For negatives and not being political, voting can be a challenge for everyone, regardless of ethnicity. Everyone talks politics, with no concern that you might not share their views. This includes workmen who come to the house. Access to healthcare in SC can be more limited unless you live near an urban area.

The biggest concern is the weather. The first and last thing everyone does here is to check the weather report. If you mention the weather forecast in passing the one you are talking to already knows it. In 1.5 years here we have been through 4 tornado warnings, not watches, which are far more frequent. Some storms seem biblical, where 5 inches of rain in 24 hours with driving winds is not uncommon.

For added expenses, other than those previously mentioned in SC I would list home energy costs, and pest control as being the highest.

It may be because we are in a more rural location, but getting contracted work at your home completed here makes "Island Time" a wishful dream. COVID has also affected that somewhat, or at least that's the most common excuse I hear. I signed a contract in early December for a new floor in the basement and a new master bath shower. So far all that's been accomplished is making the basement unliveable since March 1st when the existing laminate was removed. My neighbor has a different contractor and has had no master shower for 2 months past the promised date.

Don't get me wrong, I love where we live now too, but some of the things I've experienced make saving money on housing seem less important. Maybe finding a pen pal in your new location that shares your sensibilities would be helpful.
trueblueky
Posts: 2088
Joined: Tue May 27, 2014 3:50 pm

Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by trueblueky »

I think Ashland, Oregon, is a possibility. Close to California. No sales tax. College town. Outstanding Shakespeare festival, if that matters. With a city (not just a state), you can obtain finer detail on cost of living in retirement.
dboeger1
Posts: 579
Joined: Fri Jan 13, 2017 7:32 pm

Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by dboeger1 »

One thing to keep in mind is that it is possible to cultivate a low spending pattern in CA, even though most things are more expensive. The big example that comes to mind is groceries. While it's not like you can't find good grocery options outside of CA, I'm actually quite shocked when I visit family outside of CA because grocery options are often quite a bit more limited and expensive. Part of that is the rise of Walmart which favors higher-margin packaged and processed foods over a variety of fresh produce, but even if you go to a proper grocery store, the good ones can be quite expensive throughout much of the country. CA has expensive options too, but I think you'd be hard-pressed to find better groceries at lower prices almost anywhere, and there's so much variety. If someone owned a paid off home with minimal property tax increases due to Prop 13 and the bulk of their spending was on groceries, I suspect they would have a hard time living on less elsewhere (although that could be offset by proceeds from a home sale).

Transportation and parks are also big areas where CA wins for efficiency. When I was a bachelor, I never appreciated CA's many parks and trails, and kind of just assumed the Midwest where I have family had better nature because where I live is so densely populated. After getting married though, my wife forced me to start going to all these nearby parks and trails, and now I realize in many ways, they're better than the boring open fields of the Midwest with uneventful little towns sprinkled throughout. It's a different kind of nature for sure, but CA really does have a lot of beautiful places that are well taken care of and managed, and there's everything from mountains and rivers to fields and forests. And while things like gas and insurance are quite expensive, again, it comes down to individual needs. Someone who can live in a city and only needs a few Uber rides per week and bikes the rest of the time can probably get away with spending very little on transportation. In many parts of the country, there's just no alternative to driving many miles for anything outside the home.

I don't think CA is ever going to actually be cheap, but there are cheaper ways to live here than others, and not every place offers the same options. I used to think I would work in CA for a few years before moving to the Midwest and living in a McMansion, and there are certainly advantages to that, but the more time passes, the less I really want to live in a place where I have to drive more than 10 miles to the nearest grocery store or hospital.
FireSekr
Posts: 1129
Joined: Tue Apr 02, 2013 9:54 am

Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by FireSekr »

manatee2005 wrote: Fri Apr 23, 2021 2:02 pm
MrCheapo wrote: Fri Apr 23, 2021 8:37 am Currently, I reside in northern California. We like it a lot, nice weather, friendly people etc. but want to consider retiring elsewhere.

CA Sales tax is 8%
Property tax is 1% of purchase price, capped increase. We'll move to a new house, cost about $750K so about $7,500 per year
State Income tax is https://www.nerdwallet.com/article/taxe ... -state-tax
but essentially $2,500 + 9.3% above $58K

I plan to retire in 5 years, I could retire earlier but the benefits accrued in this 5 years are too good to pass up.

I will have:
1) $7K per month pension from state university
2) Drawing on our 401k plans for everything else which we anticipate to be $5K per month.

Some quick rough calculations show, if we spend all we get, total tax burden (sans Federal) will be:

0.08*(100,000) + (Sales tax)
7500 + (Property tax)
2,500 + 8,000 (State income tax)
= about 25K per year tax burden (san Federal).

Q1: How much will I really save if I move to a low cost of living area?
Q2: What are the missing (or increased) costs you don't pay in CA but will pay in other low cost areas as a retiree.
Q3: For those of you that did move away from CA what were the downsides?
I did a lot of road trips across the US, and I have to tell when I am so happy when I drive back into California and see California plates. I would love to live elsewhere because of the things you say, cost, state budget, etc, but if you go anywhere else, the weather sucks, the food is not as good, and there's not as much to do outdoors.
Base of all these reasons I decided to stay put.
You know, I thought I felt that way too, but I moved from SoCal to a place where I can get food that is just as good if not better at lower prices, I have easier access to a larger variety of outdoor activities (except ocean related things) and the weather is almost as nice (it does get cold in terms of temperature where I am, but we get just as many days of sun as California, certainly more than NorCal, and when the sun is out, it doesn't feel anywhere near as cold as it is).

The thing that most surprises me is the food situation...I used to go out to eat quite often on my expense account, so I am used to some of the higher regarded restaurants in LA. I was afraid that leaving CA there would be lack of variety and worse quality. While I'm sure that is the case in many areas, it certainly is not where I am now...even though I am far from an ocean, we have several sushi places that are much better than your above average California place, and at lower cost. We have amazing Thai, Vietnamese, American, Chinese, Vegan, bread, pastries etc. Strangely the only cuisine I haven't found any decent places is Italian. I'm sure there are some good Italian places around here, but I just haven't found any that I like yet.

We live in a large country and there are many surprising things about it. Its easy to fall into the trap of assuming the food or the activities outside of California or New York are lacking. But I've lived in many places, and I have absolutely no regrets about leaving California, and while I appreciated many of the things you mention there, I do not miss any of them as I get them where I am now.
SrGrumpy
Posts: 1477
Joined: Wed Aug 05, 2015 3:21 pm

Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by SrGrumpy »

dboeger1 wrote: Fri Apr 23, 2021 4:07 pm One thing to keep in mind is that it is possible to cultivate a low spending pattern in CA, even though most things are more expensive. The big example that comes to mind is groceries.
You raise some good points. We probably don't appreciate that groceries are tax-free here, but taxed in other states. As with you, it was my wife who opened my eyes to California parks and hiking. For years I lived across the road from one of the most popular hiking urban trails in Los Angeles - but never knew of its existence. When people ask about the expense of living in California, I simply point that we have 40 million people and we're all multi-millionaires so it's not an issue.

P.S. I wouldn't move anywhere that's more than half an hour's drive from a Trader Joe's, which would rules out much of the country.
Last edited by SrGrumpy on Fri Apr 23, 2021 6:02 pm, edited 1 time in total.
calwatch
Posts: 187
Joined: Wed Oct 02, 2013 1:48 am

Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by calwatch »

trueblueky wrote: Fri Apr 23, 2021 3:42 pm I think Ashland, Oregon, is a possibility. Close to California. No sales tax. College town. Outstanding Shakespeare festival, if that matters. With a city (not just a state), you can obtain finer detail on cost of living in retirement.
I had a Cal State professor who was teaching an occasional quarter or two a year in semi-retirement while retiring up in Oregon. The income tax rate for middle income people is much higher than California, though. I also have a coworker who bought a house in Houston some time ago and is deferring as much income as possible in California, expecting to spend it down in Texas.

Certainly, the freshness and variety of food in California is something that is going to be hard pressed to find in many other states. Not to say there aren't farmers markets and street food elsewhere but they are much less common year round and in the numbers you see in even second and third tier urban areas like Bakersfield or Palm Springs. You can find low cost produce and meat at many ethnic markets, that don't necessarily exist in other states. Public transit is not as good as much of the developed world but is substantially better than most of the US. Most populated places have at least a bus that runs every hour so you aren't completely SOL when your car breaks down, or when you can't drive. Outdoors and weather have been explained elsewhere as has Prop 13 and Prop 19, but seniors with a household income less than $45,000 can also postpone property taxes indefinitely, with no asset limit, and many school parcel taxes as well as LA County's stormwater tax have senior exemptions. Services are are not subject to sales tax. And while gas might cost more at least you'll never have to worry about your car rusting.
manatee2005
Posts: 1771
Joined: Wed Dec 18, 2019 9:17 pm

Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by manatee2005 »

FireSekr wrote: Fri Apr 23, 2021 4:12 pm
manatee2005 wrote: Fri Apr 23, 2021 2:02 pm
MrCheapo wrote: Fri Apr 23, 2021 8:37 am Currently, I reside in northern California. We like it a lot, nice weather, friendly people etc. but want to consider retiring elsewhere.

CA Sales tax is 8%
Property tax is 1% of purchase price, capped increase. We'll move to a new house, cost about $750K so about $7,500 per year
State Income tax is https://www.nerdwallet.com/article/taxe ... -state-tax
but essentially $2,500 + 9.3% above $58K

I plan to retire in 5 years, I could retire earlier but the benefits accrued in this 5 years are too good to pass up.

I will have:
1) $7K per month pension from state university
2) Drawing on our 401k plans for everything else which we anticipate to be $5K per month.

Some quick rough calculations show, if we spend all we get, total tax burden (sans Federal) will be:

0.08*(100,000) + (Sales tax)
7500 + (Property tax)
2,500 + 8,000 (State income tax)
= about 25K per year tax burden (san Federal).

Q1: How much will I really save if I move to a low cost of living area?
Q2: What are the missing (or increased) costs you don't pay in CA but will pay in other low cost areas as a retiree.
Q3: For those of you that did move away from CA what were the downsides?
I did a lot of road trips across the US, and I have to tell when I am so happy when I drive back into California and see California plates. I would love to live elsewhere because of the things you say, cost, state budget, etc, but if you go anywhere else, the weather sucks, the food is not as good, and there's not as much to do outdoors.
Base of all these reasons I decided to stay put.
You know, I thought I felt that way too, but I moved from SoCal to a place where I can get food that is just as good if not better at lower prices, I have easier access to a larger variety of outdoor activities (except ocean related things) and the weather is almost as nice (it does get cold in terms of temperature where I am, but we get just as many days of sun as California, certainly more than NorCal, and when the sun is out, it doesn't feel anywhere near as cold as it is).

The thing that most surprises me is the food situation...I used to go out to eat quite often on my expense account, so I am used to some of the higher regarded restaurants in LA. I was afraid that leaving CA there would be lack of variety and worse quality. While I'm sure that is the case in many areas, it certainly is not where I am now...even though I am far from an ocean, we have several sushi places that are much better than your above average California place, and at lower cost. We have amazing Thai, Vietnamese, American, Chinese, Vegan, bread, pastries etc. Strangely the only cuisine I haven't found any decent places is Italian. I'm sure there are some good Italian places around here, but I just haven't found any that I like yet.

We live in a large country and there are many surprising things about it. Its easy to fall into the trap of assuming the food or the activities outside of California or New York are lacking. But I've lived in many places, and I have absolutely no regrets about leaving California, and while I appreciated many of the things you mention there, I do not miss any of them as I get them where I am now.

Let me guess, Scottsdale? That was the best place I've seen out of all of them. If I'm wrong, can you give us a general area of where you are?
Starfish
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Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by Starfish »

Monsterflockster wrote: Fri Apr 23, 2021 9:06 am The downside is the daily disappointment you are no longer living in California.

Anywhere worth living is expensive. Is cashing out to live where others don’t want to (when you don’t need to) really worth it?
A large part of cost of living has nothing to do with "worth living" but mostly with incomes and jobs. Why would a retired person stick around in places like Sunnyvale, Santa Clara or Cupertino or most parts of San Jose? It's definitely not "worth living" there if not tied to a job.
manatee2005 wrote: Fri Apr 23, 2021 5:33 pm Let me guess, Scottsdale? That was the best place I've seen out of all of them. If I'm wrong, can you give us a general area of where you are?
Any place that kills you in about 6h if you get lost outside is not on my list :)
Last edited by Starfish on Fri Apr 23, 2021 6:12 pm, edited 3 times in total.
Tingting1013
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Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by Tingting1013 »

Starfish wrote: Fri Apr 23, 2021 6:07 pm
Monsterflockster wrote: Fri Apr 23, 2021 9:06 am The downside is the daily disappointment you are no longer living in California.

Anywhere worth living is expensive. Is cashing out to live where others don’t want to (when you don’t need to) really worth it?
A large part of cost of living has nothing to do with "worth living" but mostly with incomes and jobs. Why a retired person would around in places like Sunnyvale, Santa Clara or Cupertino or most parts of San Jose? It's definitely not "worth living" there if not tied to a job.
I agree with you. All of those retirees should relocate down to the Central Coast - Monterey through Santa Barbara
stan1
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Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by stan1 »

MrCheapo wrote: Fri Apr 23, 2021 8:37 am Currently, I reside in northern California. We like it a lot, nice weather, friendly people etc. but want to consider retiring elsewhere.
Reno, Carson City, and St. George UT come to mind, but visit those and other places throughout the year.

It seems like you have ample income to stay in California unless you have exceptional expenses that you are going to carry into retirement. Enjoy.
FireSekr
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Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by FireSekr »

manatee2005 wrote: Fri Apr 23, 2021 5:33 pm
FireSekr wrote: Fri Apr 23, 2021 4:12 pm
manatee2005 wrote: Fri Apr 23, 2021 2:02 pm
MrCheapo wrote: Fri Apr 23, 2021 8:37 am Currently, I reside in northern California. We like it a lot, nice weather, friendly people etc. but want to consider retiring elsewhere.

CA Sales tax is 8%
Property tax is 1% of purchase price, capped increase. We'll move to a new house, cost about $750K so about $7,500 per year
State Income tax is https://www.nerdwallet.com/article/taxe ... -state-tax
but essentially $2,500 + 9.3% above $58K

I plan to retire in 5 years, I could retire earlier but the benefits accrued in this 5 years are too good to pass up.

I will have:
1) $7K per month pension from state university
2) Drawing on our 401k plans for everything else which we anticipate to be $5K per month.

Some quick rough calculations show, if we spend all we get, total tax burden (sans Federal) will be:

0.08*(100,000) + (Sales tax)
7500 + (Property tax)
2,500 + 8,000 (State income tax)
= about 25K per year tax burden (san Federal).

Q1: How much will I really save if I move to a low cost of living area?
Q2: What are the missing (or increased) costs you don't pay in CA but will pay in other low cost areas as a retiree.
Q3: For those of you that did move away from CA what were the downsides?
I did a lot of road trips across the US, and I have to tell when I am so happy when I drive back into California and see California plates. I would love to live elsewhere because of the things you say, cost, state budget, etc, but if you go anywhere else, the weather sucks, the food is not as good, and there's not as much to do outdoors.
Base of all these reasons I decided to stay put.
You know, I thought I felt that way too, but I moved from SoCal to a place where I can get food that is just as good if not better at lower prices, I have easier access to a larger variety of outdoor activities (except ocean related things) and the weather is almost as nice (it does get cold in terms of temperature where I am, but we get just as many days of sun as California, certainly more than NorCal, and when the sun is out, it doesn't feel anywhere near as cold as it is).

The thing that most surprises me is the food situation...I used to go out to eat quite often on my expense account, so I am used to some of the higher regarded restaurants in LA. I was afraid that leaving CA there would be lack of variety and worse quality. While I'm sure that is the case in many areas, it certainly is not where I am now...even though I am far from an ocean, we have several sushi places that are much better than your above average California place, and at lower cost. We have amazing Thai, Vietnamese, American, Chinese, Vegan, bread, pastries etc. Strangely the only cuisine I haven't found any decent places is Italian. I'm sure there are some good Italian places around here, but I just haven't found any that I like yet.

We live in a large country and there are many surprising things about it. Its easy to fall into the trap of assuming the food or the activities outside of California or New York are lacking. But I've lived in many places, and I have absolutely no regrets about leaving California, and while I appreciated many of the things you mention there, I do not miss any of them as I get them where I am now.

Let me guess, Scottsdale? That was the best place I've seen out of all of them. If I'm wrong, can you give us a general area of where you are?
I’ve never been to Scottsdale but I’ve heard great things.

I’m in the Boulder, CO area. Between Boulder, Denver, and Ft. Collins I never have trouble finding good food.

During the winter it gets cold, averages around 30 where I am but when the sun hits, even if it’s in the 30s, you can go outside without a jacket because the sun is strong and we’re 5k ft above sea level.

Another nice thing about that is I never have to shovel snow because I’ve got an East facing driveway. When the sun comes up it melts very fast. I’m told that a south facing driveway would be even better for that purpose.

The spring/summer/fall is really nice here. Never really gets above 80 degrees and being a dry heat, opening the windows and maybe turning on a fan is sufficient, I hardly need to run the AC.

As for food, there are a few sushi places that fly in fish from Japan a few times a week. They’re expensive for the area, but cheap compared to similar places in California. I did not expect to be able to find good sushi or good Asian food around here at all, but as I mentioned, I’ve found many outstanding places.

One of the downsides is that things are more spread out here, but even if you need to drive a longer distance it takes less time since traffic isn’t bad.

Another downside is that the housing stock overall is not as nice as California or New York. That’s not to say you can’t find nice places, but i looked at many houses and generally find the construction to be more builder grade and the houses have less character. Even when you get into 7 figure homes here, the interiors aren’t that impressive; they are simply larger versions of the cheaper homes in the area, not necessarily higher quality. This bothers me to a degree, but it’s not a big deal because the housing is so much cheaper here that I bought something with a layout that I love, and changing the finishes to be a bit more upscale doesn’t cost all that much. Labor out here to do home renovations is much cheaper, although materials seem about the same.
Firemenot
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Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by Firemenot »

Tingting1013 wrote: Fri Apr 23, 2021 6:10 pm
Starfish wrote: Fri Apr 23, 2021 6:07 pm
Monsterflockster wrote: Fri Apr 23, 2021 9:06 am The downside is the daily disappointment you are no longer living in California.

Anywhere worth living is expensive. Is cashing out to live where others don’t want to (when you don’t need to) really worth it?
A large part of cost of living has nothing to do with "worth living" but mostly with incomes and jobs. Why a retired person would around in places like Sunnyvale, Santa Clara or Cupertino or most parts of San Jose? It's definitely not "worth living" there if not tied to a job.
I agree with you. All of those retirees should relocate down to the Central Coast - Monterey through Santa Barbara
Interestingly there’s been a massive surge of Bay Area people onto the Monterey Penninsula during Covid. Home prices seem to be equalizing with Bay Area.
Jayhawker
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Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by Jayhawker »

FireSekr wrote: Fri Apr 23, 2021 1:47 pm I recently left California and I too considered the financial state of the locations I was considering.
What resources/indexes did you use to determine the financials of states/localities you considered? I have started thinking about this as well but don't really know where to start.
randomguy
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Re: Moving Away from California - How Much Do You Save Retiring To a Low Cost Area?

Post by randomguy »

Starfish wrote: Fri Apr 23, 2021 6:07 pm
Monsterflockster wrote: Fri Apr 23, 2021 9:06 am The downside is the daily disappointment you are no longer living in California.

Anywhere worth living is expensive. Is cashing out to live where others don’t want to (when you don’t need to) really worth it?
A large part of cost of living has nothing to do with "worth living" but mostly with incomes and jobs. Why would a retired person stick around in places like Sunnyvale, Santa Clara or Cupertino or most parts of San Jose? It's definitely not "worth living" there if not tied to a job.
Why move from a place you have lived for 30 years and friends, family, and tons of social connection? Are a few bucks worth that much to you?

People have vastly different experience with moving. My parents live in a retirement community and about 20% of the people move in and leave with in a year. The change from where they have been living (most come from a large city about 50 miles away) is just too much and they miss their old home. The idea of having a bigger cheaper house isn't enough to overcome the loss of their social circle. Conversations with people who have retire to places in Florida and Arizona show similar trends. Money is factor in picking place to retire but hopefully it isn't the dominate one. Maybe you are a person who would enjoy moving to a new area. Maybe you are one who would hate it. Hopefully you know that before you make this choice.

To answer this specific question of how much you would save, you would have to look at your budget and make guesses how things will change. A 25k trip to Europe is going to cost about 25k if you live in SF or Tuscon (yes airfare will be different but your hotels and the life will be the same). Your 80k Tesla will still be 80k. Your house expense might be 25k instead of 50k (including imputed rent). And so on. Depending on how you live you might find relatively big changes or pretty small ones.
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