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Does Your State Just Cost Too Much to Retire In?

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If you live in Hawaii, California, or New York, your state is costing you a lot of money. According to the Tax Foundation, in those states respectively, $100 will only buy you 84%, 86% and 87% of what you can get in an average cost of living state. Meanwhile, if you live in Mississippi, Arkansas, or Alabama, your dollar will last you much longer, with a buying power of 117%, 116% and 115% of average in those states respectively. If you’re retired and living on a fixed income, the boost in purchasing power could make a major difference in your standard of living.

Analysts from the Tax Foundation write:

For example, South Dakota is a low-price state. There, $100 will buy you goods that would cost $113.38 in a state at the national average price level. In other words, South Dakotans are, for the purposes of day-to-day living, 13 percent richer than their incomes suggest.

The states where $100 is worth the most are Mississippi ($116.69), Arkansas ($115.61), Alabama ($115.34), West Virginia ($114.94), and Kentucky ($113.77). In contrast, $100 is effectively worth the least in Hawaii ($84.39), the District of Columbia ($85.54), New York ($86.36), California ($87.11), and New Jersey ($88.57). See the table at the bottom of this post for a ranking of all 50 states.

Regional price differences are strikingly large; real purchasing power is 35 percent greater in Mississippi than it is in New York. In other words, by this measure, if you have $50,000 in after-tax income in Mississippi, you would need after-tax earnings of $67,500 in New York just to afford the same overall standard of living.

The analysis is based on BEA research. You can see in the BEA chart below the full ranking of cost-of-living among the American states.

Is your state near the top, or bottom when it comes to cost-of-living? Where you live in retirement can make a major difference in how far your money will go. If you are preparing to retire, be sure to read my series on Choosing Where to Retire, and take a good look at where you’ll be happiest.

Originally posted on Your Survival Guy. 

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E.J. Smith

Editor-in-Chief
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@youngresearch.com.