The cost of living in some states can drain your retirement savings fast.
Retiring early sounds like a dream, but if you choose the wrong place to settle down, your savings might not stretch as far as you’d hoped. Some states are notorious for their high costs, whether it’s expensive housing, outrageous taxes, or inflated everyday expenses. Even if you’ve carefully planned your retirement, the wrong location could force you back into the workforce sooner than expected.
Many retirees focus on warm weather and lifestyle perks without considering the financial side of things. But in some states, everything from groceries to healthcare comes with a premium price tag. Moving to one of these overpriced places could mean spending thousands more each year compared to a more budget-friendly alternative. Before packing your bags, make sure you’re not setting yourself up for financial strain. Here are the most overpriced states that could wreck your early retirement plans.
1. California’s high housing prices make it a retirement budget killer.
California might offer beautiful beaches, perfect weather, and endless entertainment, but it comes at a steep price. Housing costs are some of the highest in the country, with the median home price well above the national average, according to Builder. Even renting isn’t a bargain—monthly rates in cities like Los Angeles and San Francisco can rival mortgage payments in other states.
Beyond housing, the cost of living in California is inflated across the board. Groceries, gas, healthcare, and even dining out can take a serious chunk out of your retirement savings. And if that wasn’t enough, the state also has one of the highest income tax rates in the U.S., meaning your retirement funds won’t go nearly as far here as they would elsewhere.
2. Hawaii’s paradise lifestyle comes with sky-high expenses.
Hawaii might be the ultimate retirement fantasy, but the reality is far more expensive than most retirees expect. Since nearly everything is imported, groceries, gas, and even basic household goods can cost double what they would on the mainland.
Housing is another major issue. Whether you plan to buy or rent, expect to pay a premium just to have a roof over your head. The average home price is among the highest in the country, and rental rates aren’t much better, as reported by Scott Startsman at Hi Estates. While the weather and scenery are unbeatable, the financial strain can quickly turn paradise into a budgeting nightmare.
3. New York’s high taxes and expensive lifestyle make it tough for retirees.
New York might be a dream destination for culture lovers, but the financial reality is much less appealing. The cost of living is significantly higher than the national average, and if you plan to settle in New York City, be prepared for some of the steepest housing costs in the country, as stated by Greg Daugherty at Investopedia.
Even outside the city, expenses remain high. New York has one of the highest state income taxes, and property taxes can be brutal for homeowners. Everyday costs like groceries, transportation, and dining out add up quickly, making it one of the least affordable states for retirees hoping to live on a fixed income.
4. Massachusetts isn’t friendly for retirees on a budget.
Massachusetts offers a rich history, top-tier healthcare, and beautiful coastal towns, but it’s also one of the most expensive places to retire. Housing costs are high, and even modest homes come with hefty price tags. Renters won’t find much relief either, as rental prices continue to climb each year.
Taxes are another issue. While Social Security benefits aren’t taxed, most other retirement income is, and the cost of property taxes can be overwhelming. If you want to enjoy New England charm without draining your savings, you might want to consider a more affordable alternative.
5. Connecticut’s property taxes and living costs are a major burden.
Connecticut’s picturesque small towns and proximity to major cities make it appealing, but the financial downsides are hard to ignore. Housing prices are steep, and property taxes are among the highest in the nation, making homeownership an expensive commitment.
The cost of living is also high, with everyday expenses like groceries and healthcare costing more than in many other states. On top of that, Connecticut taxes most retirement income, which can make it even harder to stretch your savings. If financial security is a priority, this may not be the best state for early retirement.
6. Maryland’s high cost of living offsets its retirement perks.
Maryland offers a great location near Washington, D.C., and plenty of scenic beauty, but affordability isn’t one of its strong points. Housing costs are significantly higher than in neighboring states, and property taxes aren’t exactly friendly for retirees.
Daily living expenses like groceries, transportation, and healthcare can add up quickly. While Maryland does offer some tax breaks for retirees, they aren’t enough to make up for the overall high cost of living. If you’re looking to make your retirement savings last, there are more budget-friendly options.
7. New Jersey’s property taxes are some of the highest in the country.
New Jersey might have beaches, charming small towns, and proximity to major cities, but it also has one of the highest property tax rates in the nation. Homeowners often find themselves paying thousands per year in taxes alone, which can make it tough for retirees on a fixed income.
Beyond housing costs, New Jersey’s cost of living remains high. Food, healthcare, and everyday expenses can eat away at your retirement budget quickly. While it offers plenty of amenities, the financial burden makes it a tough choice for those looking to retire early without financial stress.
8. Rhode Island’s small size doesn’t mean small expenses.
Rhode Island might be the smallest state, but its cost of living is anything but small. Housing prices have risen steadily, and property taxes remain high. Renting isn’t always a bargain either, especially in popular coastal areas.
Everyday expenses also add up, with utilities, groceries, and healthcare all costing more than the national average. While it offers a beautiful New England lifestyle, Rhode Island’s affordability problems make it less than ideal for retirees watching their budgets.
9. Vermont’s charm comes with a hefty price tag.
Vermont’s picturesque landscapes and peaceful atmosphere attract retirees, but living there comes at a cost. Housing is expensive, and property taxes can take a big bite out of a fixed income.
Vermont also has high healthcare costs, which can be a concern as you age. While the slower pace of life and scenic surroundings are appealing, the financial downsides make it a challenging place to retire early without a significant nest egg.
10. Washington state’s lack of income tax doesn’t make up for high costs.
Washington might not have an income tax, but that doesn’t mean it’s cheap. Housing costs in cities like Seattle are among the highest in the country, and even smaller towns have seen prices climb.
Beyond housing, the overall cost of living remains high. Groceries, gas, and healthcare are all more expensive than in many other states. Without a carefully planned budget, retiring early here could mean spending much more than expected.
11. Oregon’s rising costs are making it harder for retirees.
Oregon used to be considered an affordable option, but in recent years, the cost of living has surged. Housing prices have skyrocketed, and everyday expenses continue to rise.
Oregon also has a state income tax that includes retirement income, making it a less-than-ideal choice for stretching your savings. While the state offers natural beauty and outdoor recreation, it’s becoming an increasingly expensive place to retire comfortably.