Retirement 2024: These Are the 6 Worst Places To Retire in California
California has a lot to offer, especially for those who already have family in the area or who are looking for year-round sunshine. But there are several issues with retiring in the state, not least of which is the cost of living.
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The state has the highest marginal income tax rate in the country, though this might be less of a concern for those retiring on a lower, fixed income. Certain types of income, like Social Security, are also exempt from the state’s income tax.
And then there’s housing prices. According to Zillow, the average home in the state costs $783,666. On the other hand, property taxes are capped at a certain point, which could make housing a little more affordable.
While there are plenty of considerations to make when choosing where to live, certain Californian cities are best avoided. Here are the worst locations to retire in California, according to real estate and retirement experts.
Oakland
A major port city on the West Coast, Oakland is one of the worst places to retire, according to Mike Roberts, mortgage broker, loan originator and co-founded of City Creek Mortgage. This is largely due to the overall high cost of living, which affects everything from housing prices to healthcare.
“Picture trying to stretch a fixed income in a place where every dollar seems to disappear faster than you can say ‘retirement,'” Roberts said. “It’s difficult.”
The average home costs $803,291 in Oakland, which is nearly twice as high as the national average and higher than the typical housing prices in California. But you’ll also need to account for things like homeowners insurance, maintenance and property taxes.
“California as a whole presents challenges for retirees,” said Roberts. “For instance, property taxes here are pretty steep, which can put a strain on your budget, especially if you’re on a fixed income.”
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Santa Ana
According to Roberts, Santa Ana is another city to avoid retiring in California. Similar to Oakland, the cost of living is particularly high in this area. Not to mention, the hefty property taxes can make homeownership more expensive than it’s worth.
Considering the average home costs $815,047 in Santa Ana — up 10.5% over the past year — it might not be feasible for retirees on a budget to buy a home there.
Anaheim
Located about 26 miles from Los Angeles, Anaheim is home to Disneyland and a whole host of other attractions for retirees to experience. But it’s also expensive to live there, which is a big reason why Roberts suggested against retiring there.
According to RentCafe, the cost of living in Anaheim is 9% higher than the state average. It’s also 51% higher than the national average. Utilities are slightly less expensive in Anaheim than in the rest of the country, but housing, food, transportation and everyday goods and services are higher.
“Healthcare costs are another big consideration since they’re more than a tad bit higher than in other states, which can eat into your savings faster than you’d like,” said Roberts.
San Francisco
San Francisco may be a little cheaper than places like New York City, but it’s still one of the most expensive cities to live in the United States. According to Kiplinger, in fact, it’s the fourth most expensive city in the country.
The cost of living in the city is nearly 70% above the national average, while the median home value is $1,343,700. The cost of rent, utilities, transportation, healthcare and groceries are all also much higher than the national average.
When costs are so high, there’s also the other concern of social isolation.
“Perhaps the most concerning [issue] I’d warn retirees about is the issue of social isolation,” said Roberts.
“Retiring in a pricey area can often mean feeling disconnected from your community because you’re pinching pennies instead of enjoying your golden years. It’s not how you’d like to live out the rest of your life especially when you have more time on your hands for community involvement and quality time.”
Los Angeles
Los Angeles is a fast-paced city with lots of opportunities, but it’s also expensive. The housing market is volatile and income taxes are high — up to 13%. There’s also the crime rate to consider.
“Not only is Los Angeles an extremely expensive city with a fast-paced life, [but] it has been seen as a very dangerous city in the last few years,” said Nick Hedberg, a realtor and contractor with As-Is Home Buyer. “Although the crime rate has decreased, the stigma and fear are prevalent.”
On Kiplinger’s list, Los Angeles is also the eighth most expensive city to live in the country. The overall cost of living is 47.3% higher than the national average and the median housing price is nearly a million dollars. The unemployment rate — which might not be a direct concern for retirees — is also higher than the U.S. average at roughly 5%.
San Diego
“Anywhere with a high cost of living — which is to say, anywhere near a major coastal city, including San Francisco, Los Angeles and to a lesser extent San Diego, is a tough place to retire,” said Martin Orefice, a realtor and the CEO of Rent To Own Labs.
“Unless you already own your home debt-free in these areas, you’ll almost definitely be ‘upsizing’ rather than downsizing in retirement, at least in terms of housing costs.”
The typical home value in San Diego has risen by nearly 11% over the past year and now hovers at just above $1 million. This combined with the overall high cost of living can make the area unaffordable for retirees — even if the more laid-back lifestyle and beach setting are appealing.
Key Considerations When Choosing California for Retirement
California isn’t necessarily a bad place to retire. Everyone’s financial situation, goals, and needs are different, so what might not work for someone could work for you. That said, it’s important to consider the big picture when choosing one of these Californian cities for retirement.
“California is an especially tough state in terms of homeowners insurance. Between earthquakes, wildfires, droughts and floods, many insurance companies don’t even offer policies in the state anymore, and this is going to get worse before it gets better,” warned Orefice.
And then there’s the volatility — both in terms of housing prices and the overall cost of living.
“The real estate market’s volatility in California adds another layer of complexity,” said Scott Beloian, a broker and owner of Westcoe Realtors.
“Our internal studies… have shown that while some areas like the Inland Empire offer relatively affordable living options, the rapid appreciation of home values and the high cost of living in nearby major cities like Los Angeles can make budgeting for retirement unpredictable.”
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This article originally appeared on GOBankingRates.com: Retirement 2024: These Are the 6 Worst Places To Retire in California
