Should you retire in California?

When you think about moving for retirement, you might naturally think of Florida or Arizona. Expand your thinking, though, because there are many other states to consider, such as California.

Why California? Well, it’s a huge state with a lot to offer, no matter what your interests are. It boasts plenty of natural beauty and outdoor recreation, and its large and small cities offer plenty of cultural offerings such as theater, museums, concerts, festivals, and more.

It’s hard to generalize about the state’s climate because it varies by region, but many parts of California have fairly moderate weather, usually not too hot or cold. If you want to avoid the piles of snow or the unrelenting sweltering heat, you can.

Image source: Getty Images.

Like any place, though, California isn’t perfect. Again, a lot depends on where you live in California, but its major cities have traffic congestion and a higher-than-average cost of living. According to RentCafe.com, the cost of living in California is 38% higher than the national average, largely due to housing costs, which are nearly double the national average.

Food and clothing are only about 10% higher, but utilities are about 24% higher. However, it all varies by city. On average, the cost of living is 50% higher than the national average in Los Angeles and 71% higher in San Francisco. Some places, like Palm Springs, are only 20% higher. Droughts, earthquakes and wildfires are also a concern for many Californians.

Taxes are an important consideration for retirees, and California doesn’t have a high rate of it. Yes, it is among the 41 states that do not tax Social Security benefits. But it taxes 401(k) and IRA withdrawals along with retirement income. And depending on your income, your state income tax rate, ranging from 1% to 12.3%, could be high.

Retirement health care is another big concern, and California fares well here, ranking fourth in the nation for health care for seniors by MedicareGuide.com.

As you plan for retirement, consider California if you’re thinking of moving. Weigh the pros and cons and see what you think.