If you are at the full retirement age and had to make a choice between retiring in California or Florida this year, do you know which state would give you the greatest bang for your retirement buck?
See: 5 Places To Retire That Are Similar To Florida But Way Cheaper
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Even if you think you know the answer, you might be surprised by certain retirement considerations that may make it more appealing to retire in Florida or California in 2024. GOBankingRates spoke with two financial experts to find out which state retirees are most likely to save the most money this year.
Cost of Living
Not surprisingly, Florida is a much less pricey option of the two states when it comes to overall cost-of-living expenses.
According to calculations on MyLifeElsewhere.com, where you can compare your cost-of-living expenses to those of another state or country, the cost of living in California in 2024 is 17.2% more expensive than it is in Florida. A series of charts on the site notes the specific differences.
Retiring in California means retirees may expect the following cost-of-living increases in their overall budgets:
- Paying 8.2% more for restaurants
- Paying 3.6% more for groceries
- Paying 22.6% more for transportation (In California, one gallon of gas is 42.2% more expensive than it is in Florida.)
- Paying 17.8% more for housing
- Paying 23.8% more for entertainment and sports (However, there is less sticker shock involved when reviewing this table because many expenses mentioned may not pertain to retirees, especially those committed to good health and fitness.)
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Affordable Housing
Californians, according to the chart featured on MyLifeElsewhere, pay 17.8% more in housing than Floridians.
The greatest expense differences, however, are in renting. It costs 24.6% more to rent a one-bedroom apartment outside a city center in California than it does in Florida. Similarly, renting a one-bedroom apartment in a downtown area in California would cost 23% more than it would in Florida.
Let’s say you don’t plan to rent in retirement, and you own a home. If you find this is the case, JP Geisbauer CFP and founder of Centerpoint Financial Management, said it’s cheaper than you might think to retire in California.
“Proposition 13 limits property tax increases to 2% a year, making the costs of owning a home in California fairly predictable,” said Geisbauer.
Taxes
When it comes to Social Security taxes, retirees are in luck. According to the California Tax Service Center, the state of California doesn’t tax Social Security income. This includes survivor’s benefits and disability benefits. Meanwhile, Florida does not tax Social Security income because the state has no state income tax.
However, the state of California does have state tax and Heather Courtney Quinn, ChFC and financial advisor at Northwestern Mutual, said people in California pay 13.3% in the highest tax bracket.
“Given that both states have pretty favorable weather, Florida wins if you are concerned about taxes,” said Quinn.
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This article originally appeared on GOBankingRates.com: Florida Retirees vs. California Retirees: Who Will Save More Money in 2024?
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
