California has emerged as the epicenter of high-cost retirement living, with recent analyses listing five of its cities as the most expensive retirement towns in the United States.
Saratoga, Rancho Palos Verdes, Walnut Creek, Cerritos and Palm Springs topped the charts for annual living costs for retirees, according to a new report from GOBankingRates.
While other states like Florida, Massachusetts and Arizona have towns high on the list, California’s dominance is evident, with Florida contributing the highest number of expensive retirement towns overall.
Why It Matters
The cost of retirement is a top concern for millions of Americans. With the median retirement savings at just $87,000, a far cry from the $1.26 million Americans now say they need to retire comfortably according to Northwestern Mutual, understanding where living costs are highest is critical for financial planning.
Housing, health care and everyday expenses in these high-cost towns far outpace national averages, potentially putting comfortable retirement out of reach for many. Rising costs can also drain even well-prepared nest eggs faster than anticipated, emphasizing the need for careful decision-making regarding location and lifestyle in retirement.
What To Know
Data published by GOBankingRates placed Saratoga, California, at the top of the list, with the average home value exceeding $4.1 million and an annual cost of living for retirees of $282,625.
Rancho Palos Verdes came in second, costing $144,381 per year to maintain a homeowner’s retirement lifestyle. Walnut Creek ($115,206), Cerritos ($91,644) and Palm Springs ($86,550) followed closely, with each city requiring average home values near or above $1 million.
“California’s reputation for being expensive isn’t new, and to be honest, some of it’s well-earned,” Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek. “Yes, it’s cost-prohibitive for a lot of retirees, but California also offers high-performing health care, great weather and an active, outdoor lifestyle that helps people stay healthier longer.”
The top 10 most expensive retirement towns in the U.S.:
- Saratoga, California
- Rancho Palos Verdes, California
- Walnut Creek, California
- Cerritos, California
- Palm Springs, California
- Scottsdale, Arizona
- La Quinta, California
- Gloucester, Massachusetts
- Palm Beach Gardens, Florida
- Barnstable Town, Massachusetts
The analysis included essential expenses, like groceries, health care, housing and utilities, to determine the true cost for retirees.
Experts say more retirees moving outside of California could have long-standing implications for housing markets and costs of living.
“People who can’t afford to retire in California are likely to look elsewhere—places with lower costs—which can end up driving up prices in those new regions,” Thompson said. “As demand rises, so do housing prices, living expenses and possibly property taxes.”
While California claimed the top five spots, expensive retirement towns also appeared in Arizona (Scottsdale), Massachusetts (Gloucester, Barnstable Town) and Florida (Palm Beach Gardens).
The annual living cost for homeowners in Scottsdale was $81,525, while in Palm Beach Gardens it was $70,601. Massachusetts’ Gloucester and Barnstable Town posted annual costs of $71,334 and $68,453, respectively.
Florida may not claim the single most expensive spot, but it houses nearly half of the 30 priciest retirement destinations, with 14 towns in the top 30. Notable towns include Aventura, Sarasota and Bonita Springs, many with yearly costs for retirees topping $60,000.
Separate data from The Motley Fool highlighted large urban areas such as New York City (cost of living index: 229.9), Honolulu (184.6), and San Jose, California (183.7) as the most expensive overall for retirees, though these were not specifically retiree-majority towns. High home prices, along with premiums for health care and services, continue to keep these cities out of reach for most.
“The larger lesson is that location‑specific planning matters more than ever. That wider funding gap forces households either to save far more, work longer, or relocate,” Lily Vittayarukskul, the CEO and co-founder of the long-term care predictor platform Waterlily, told Newsweek.
“States with chronic housing shortages will see a bifurcated retiree population: affluent owners who can age in place and moderate‑income households who exit for affordability, shifting local labor markets and health care demand in the process.”
The GOBankingRates study screened for U.S. cities with populations over 25,000 and at least 25 percent aged 65 or older. Costs analyzed included home value, mortgage and rent, as well as indices for essentials like groceries, health care and utilities.
“If you value affordability, the biggest winner on this list is likely Texas, which is a growing retirement destination and didn’t have a single city make the top 20,” Rudri Patel, senior retirement expert and writer at GOBankingRates, told Newsweek.
What People Are Saying
Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek: “Retirement costs are driven by a few key things: the cost of living, local taxes, and access to health care and hospitals. The more access people have to high-quality health care, the more demand you tend to see, not just for services, but for housing, which pushes up property values and taxes. That’s why some areas are flat-out more expensive to retire in than others.”
Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: “It’s not much of a surprise to see some California cities on the list, as the state offers one of the most expensive costs of living for residents. What is surprising to some current or future retirees is cities from other warm-weather states like Florida and Arizona being so dominant on the list, and that speaks of the elevated costs that have come to these locations in recent years.
“From increasing housing costs to higher health care expenses, these cities in states that were traditionally favored by retirees as being more affordable are now very costly and are worth some reconsidering whether those are the best fit for their budgets.”
Rudri Patel, senior retirement expert and writer at GOBankingRates, told Newsweek: “This analysis challenges the long-standing perception that Florida and Arizona are the most affordable retirement destinations in the U.S. As these states grow in popularity, many of their top retirement towns are experiencing sharp increases in the cost of living. For retirees, that means it’s not enough to consider state-level affordability—it’s essential to evaluate the specific costs in popular retirement communities before making a move.”
What Happens Next
The increasing cost of retirement is expected to remain a key concern for current and future retirees, particularly as inflation and housing prices continue to rise in premier destinations.
Financial planning experts recommend that potential retirees reexamine their budgets, assess cost-of-living projections and consider alternative retirement locales if affordability is an issue.
However, a massive migration of retirees out of places like California and Florida could have ripple effects, Thompson said.
“As more retirees chase affordability in those other states, the pressure on local hospitals and health care infrastructure will increase. That increased demand can lead to higher health care costs in the long run, especially in areas that weren’t built to handle a large influx of retirees,” Thompson said. “So really, no region is immune. It’s a ripple effect, and it starts with access to care.”
The post These Are the Most Expensive Retirement Towns in America appeared first on Newsweek.
