mattgash/getty images/istockphoto
Commitment to our readers
The GOBankingRates editorial team is committed to providing you with unbiased reviews and information. We use data-driven methods to evaluate financial products and services – our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our review methodology for products and services.
20 years
Helping you become richer
trusted by
millions of readers
California is often the destination people dream about, but when it comes to retirement, the Golden State isn’t always a golden choice, unless you’re made of gold. For many retirees, especially those living on fixed incomes, California’s high costs of living and complex tax landscape can make it difficult to enjoy a comfortable retirement.
In many parts of California, the cost of living, tax burden and health care expenses are among the highest in the country, creating long-term challenges for seniors trying to save their money. Unless you’re entering retirement with ample resources, here are eight reasons you may want to think twice before retiring in California.
1. House prices are high
To say that home prices are high in California is probably an understatement. For example, the average home value in the US is approximately $429,189, while in California, the average home value is $765,036.
Housing is unaffordable for most people, let alone retirees with limited incomes. Unless you’re lucky enough to buy a home in the Golden State and have built up equity or paid it off completely, you may want to look elsewhere for a lower-priced place to retire. Even if you’re not buying but renting, it doesn’t look much better until 2026, as the average rent in California is around $2,600 to $2,850 per month.
2. Gas is expensive
Gas is another commodity that has a high price in California. According to AAA, the national average gas price is about $4.06, yet California’s is $5.89.
Gas prices can hinder a retiree’s ability to travel. So, if travel is something you’re looking forward to during your golden years, California may not be the ideal destination for you.
3. Natural disasters can and do occur
Another reality facing Californians is a wide range of natural disasters. From earthquakes to wildfires, these disasters can destroy communities. In addition to the potential risk of loss associated with these disasters, you will also face high costs in insurance.
Earthquake coverage is typically an additional cost because most homeowner policies do not cover losses related to seismic activity. Homeowners in wildfire-prone areas may also have to pay higher premiums due to the higher potential for damage related to these common disasters.
4. Taxes will eat into your nest egg
According to TurboTax, California has the highest income tax at 13.3%. The state also doesn’t offer much relief for retirees, unlike its East Coast competitors. The Balance notes that the state sales tax rate was also the highest in the country at 7.25%.
5. Cost of living may not be affordable
When it comes down to it, the cost of living in California can be too expensive for many retirees. It’s a combination of all those factors that makes the Golden State a little less attractive to people who no longer have enough income. The biggest contributors to these exorbitant prices are housing and transportation costs.
6. It’s crowded here
If you’re looking for a more peaceful existence after leaving the 9 to 5, California is not the place for you. Most areas of the state are indeed very crowded. Although there are still some cities that are not burdened with too many people, many cities are filled wall to wall with residents.
The closer you get to the coast, the more people you will encounter. This is what makes land such a commodity in the state. If traffic and congestion are your worst nightmares, you might want to look towards a state that offers its residents a little more land and a lot less people.
7. Public transportation is limited
Not only is the price of gas well above the national average, but access to public transportation is also limited. California offers some of the most beautiful scenery in the country, but if you’re a senior who doesn’t drive or doesn’t drive, you won’t have many options for getting to beautiful areas. Although some cities have taken steps toward more robust transit systems for seniors, many have nothing in place for retirees.
8. Weather may be adverse
Arguably, the weather off the California coast is some of the best in the country. The near-perfect year-round climate is enough to make anyone look beyond the high cost of living, but the sun doesn’t always shine. As you move inland, where housing is cheaper, the climate can become more extreme, even hostile.
Kaitlyn Moorehead Contributed to the reporting of this article.