How Moving States Can Help Close Your Retirement Income Gap
- Rich Arzaga
- Jan 23
- 2 min read
Updated: 6 days ago
by Rich Arzaga, CFP®, CCIM, The Real Estate Whisperer® Financial Planning
Moving out of their current state often comes up during the financial planning process. Motivations vary, including proximity to family and grandchildren, finding a politically friendly environment, seeking lower state taxes, or simply reducing expenses in retirement.
Focusing on lowering living expenses, several tools can estimate the cost-of-living differences between a client’s current and target cities. These tools are particularly valuable in retirement cash flow and financial planning.
The chart above serves as a helpful starting point for exploring these differences. For example, when I moved from California to Colorado, the estimated living wage dropped from $188,000 to $113,000. Upon closer planning, my estimated savings ranged from 28–30%, even after accounting for unique expenses like snow tires and warmer clothing—minor, infrequent costs.
Key Considerations for This Chart:
Assumption of a Family of Four: Costs will likely drop once dependents leave the household. So, these numbers are overstated.
State Taxes Included: With fewer dependents, marginal tax rates may decrease in higher-tax states, reducing cost differences. Again, you may actually experience lower costs than the chart reflects.
Population Movement Trends: States with lower living costs, including taxes, tend to experience net population gains (e.g., New York to Florida or California to Texas). Not a surprise that people have thought about moving out of state as a cost-reduction strategy.
Retirement Anxiety: The fear of outliving retirement savings often prompts discussions about relocating. AARP surveys reveal that 80% of couples reaching age 65 may struggle to maintain their current standard of living. Moving to a more affordable state is a practical strategy for addressing retirement shortfalls.
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