Key Points
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The cost of housing in California is inordinately expensive.
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The overall cost of living in California, in fact, is higher than it is anywhere else in the United States.
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Even so, adjusting how and where you live within the enormous state can still make living there in retirement a possibility.
Anyone who knows anything about the continental United States’ weather knows the state of California is beautiful all year long. On the other hand, anybody who knows anything about each state’s economy knows California can be an incredibly expensive place to live.
This raises the key question for those considering a move: What would it cost to comfortably retire in California in 2026?
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The number(s)
Everyone’s definition of comfortable is at least a little bit different, of course. But for our purposes, we’ll assume a decent middle-class lifestyle that allows you to do everything you’d reasonably want to do in retirement without going into debt. What would this cost per year?
First things first. California isn’t just expensive. It’s literally the nation’s most expensive state to live in — even more than Hawaii — costing 10.7% more than the nationwide average, according to 2024 statistics from the U.S. Bureau of Economic Analysis.
Housing accounts for much of this elevated cost. The California Legislative Analyst’s Office reports that the typical mid-tier home in the state costs an average of $775,000, nearly twice the U.S. Census Bureau’s nationwide Q1 median sales price of just over $400,000.
Taxes are steep, too. In addition to the same federal taxes you’ll owe regardless of where you live, California’s marginal income tax rate hits 6% for joint filers with taxable incomes of between $78,769 and $109,276 and jumps to 8% for the next tier of income above that. The good news is, the state doesn’t tax Social Security income. There are local taxes, however.
And for perspective, a gallon of gas in California costs an average of just over $6.00 right now, versus the national average of $4.43, according to the American Automobile Association (which you know better as AAA, or Triple-A), underscoring the higher cost of pretty much everything else in the state.
Given all of this, it comes as no surprise that calculations done by fintech platform MoneyLion and financial advisor intermediary SafeMoney.com, as well as numbers crunched by World Population Review, all agree that an annual retirement income of $100,000 is a minimum starting point for living out your golden years in the so-called Golden State.
What that means in terms of a total nest egg largely depends on how you invest in retirement. Assuming a typical starting withdrawal rate of 4% from a 50/50 (stocks/bonds) portfolio adjusted upward every year to account for inflation, however, $2 million in retirement savings is at the low end of what would comfortably get the job done for a long enough time frame.
The right adjustments make more things possible
Plenty of people retire in California with lower income and less total savings, for the record. Indeed, most people do. Living outside of a major metropolitan area like Los Angeles or San Francisco can make a world of difference in terms of affordability. SafeMoney’s analysis suggests that just living in a more mid-sized town can lower your housing costs on the order of $20,000 per year compared to a larger city.
The key to living out your dream is largely just a matter of fine-tuning your expenses and income in a way that works for you. Of course, that’s the case no matter where you decide to live out your retirement.
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