Retiring with $1 million dollars in the bank can be the perfect financial setting for retirees looking to relax, travel, spend time with family and scale down their standard of living by moving to cheaper digs. And if they have money at hand, scaling up to the expensive dream house might be the plan at mind. But younger generations with retirement in their sights might find that $1 million over the next few decades won’t go very far as real estate costs and inflation rates continue to grow, making today’s up-and-coming housing markets tomorrow’s most expensive places to live.
Whether you plan on buying a house in retirement this year or in 20 years, it helps to know where housing prices will be in the future. Click through to see how much house $1 million gets in these 10 selected states if housing prices increased at a consistent growth pace.
- In 2015: $1 million will get you 3,828 sq. ft.
- In 2024: $1 million will get you 1,503 sq. ft.
- In 2033: $1 million will get you 590 sq. ft.
- In 2042: $1 million will get you 232 sq. ft.
From Silicon Valley to Hollywood and down to San Diego, the Golden State has more than its share of millionaire residents — more than 45,000 actually, as reported by Forbes. You might want to be a millionaire if you plan to retire in California, since $1 million buys only about a third of the square footage today than it did in the past.
But retirees in the next 20 to 25 years or so won’t get much in the way of space for their money if housing prices continue at the same growth pace. If the housing prices in California paced with inflation, however, $1 million would get you 3,030 square feet in 2024, 2,399 square feet in 2033 and 1,899 square feet in 2042 — a huge difference from 232 square feet!
- In 2015: $1 million will get you 5,090 sq. ft.
- In 2024: $1 million will get you 2,288 sq. ft.
- In 2033: $1 million will get you 1,029 sq. ft.
- In 2042: $1 million will get you 462 sq. ft.
The colonial splendor of Martha’s Vineyard or Cape Cod is a retirement paradise, and the cost of living reflects that. MarketWatch reported last year that the cost of living in Nantucket, Mass., is 138 percent higher than the U.S. average, and beachfront properties start in the millions of dollars.
The current price per square foot in Massachusetts is roughly $196. In 2004, you’d have gotten twice the amount for your $1 million: 11,323 square feet at $88 per square foot. And even if housing prices paced with inflation instead, retirees would still have less throughout the years: 4,029 square feet in 2024, 3,189 square feet in 2033 and 2,525 square feet in 2042.
- In 2015: $1 million will get you 5,868 sq. ft.
- In 2024: $1 million will get you 2,791 sq. ft.
- In 2033: $1 million will get you 1,328 sq. ft.
- In 2042: $1 million will get you 632 sq. ft.
According to Zillow, the median home value in Colorado is $274,000, so plunking down $1 million can take you far in Denver, Boulder or perhaps Colorado Springs. In this state, 5,868 square feet can be about the size of a five-to-six-bedroom home.
But a continued home value climb will give home buyers less square footage in years to come. If you’re looking into buying a house after retirement, today’s $1 million will get buyers only 632 total square feet in 2042 based on the current growth pace or a more desirable 2,910 square feet if Colorado housing prices paced with inflation.
- In 2015: $1 million will get you 6,129 sq. ft.
- In 2024: $1 million will get you 3,162 sq. ft.
- In 2033: $1 million will get you 1,631 sq. ft.
- In 2042: $1 million will get you 842 sq. ft.
Compared with its neighbor California to the south, Oregon’s home buyers can buy close to twice the square footage for $1 million in 2015. At these rates, it’s no wonder why the Pacific Northwest state is such a popular destination for young people, especially in Portland — a cultural and artistic hub that seems to be growing faster than it can keep up with.
Still, it might be best to move to Oregon now while home prices remain relatively affordable. In upcoming years, the same influx of youthful transplants in 2015 won’t get as much bang for their buck if they’re set to retire in the 2030s or 2040s. If housing prices in Oregon paced with inflation, however, $1 million would get retirees 3,840 square feet in 2033 and 3,040 square feet in 2042.
- In 2015: $1 million will get you 8,741 sq. ft.
- In 2024: $1 million will get you 4,653 sq. ft.
- In 2033: $1 million will get you 2,477 sq. ft.
- In 2042: $1 million will get you 1,319 sq. ft.
The average cost per square foot in Pennsylvania nearly doubled from the end of 2004 until today, from $60 to $114. But, it’s still cheaper than living in other states in the U.S. Sperling’s Best Places gave the state a cost of living index of 97, indicating that cost of living in Pennsylvania is cheaper than the U.S. average.
Though the gap between cost and square footage is still projected to widen, Pennsylvania looks to retain some of its affordability in decades to come for retirees considering a move there. Based on the pace of inflation, $1 million could afford retirees 6,919 square feet, 5,477 square feet and 4,335 square feet in 2024, 2033 and 2042, respectively.
6. South Carolina
- In 2015: $1 million will get you 9,992 sq. ft.
- In 2024: $1 million will get you 5,467 sq. ft.
- In 2033: $1 million will get you 2,991 sq. ft.
- In 2042: $1 million will get you 1,636 sq. ft.
Golf courses, famous Myrtle Beach and other attractions are turning South Carolina’s tourist appeal into something more residential and appealing for retirees. In 2015, a retiree can expect to pay around $100 per square foot when buying a home in this state where average sales prices rose 4.2 percent last year, according to the South Carolina Realtors.
Those retiring within the next decade might want to make a move to the Southern state before home prices increase beyond what’s affordable. By 2024, $1 million will afford home buyers 7,909 square feet if South Carolina housing prices paced with inflation.
- In 2015: $1 million will get you 6,539 sq. ft.
- In 2024: $1 million will get you 3,663 sq. ft.
- In 2033: $1 million will get you 2,052 sq. ft.
- In 2042: $1 million will get you 1,150 sq. ft.
If you’re considering buying a retirement home in New England, it’s cheaper to buy one in Connecticut than in Massachusetts. Historically, it’s been the case for a while. From 1996 to 2004, $1 million could buy a luxurious mansion of 11,672 square feet. Today, however, that floor space has been cut nearly in half with an increase in cost per square foot.
But if Connecticut housing prices increase with the pace of inflation, retirees can expect home values to decrease more moderately than in some other states. By 2042, it’s projected that $1 million will get retirees 3,243 square footage, based on inflation instead of the growth pace of housing prices in Connecticut.
8. North Carolina
- In 2015: $1 million will get you 9,598 sq. ft.
- In 2024: $1 million will get you 5,923 sq. ft.
- In 2033: $1 million will get you 3,655 sq. ft.
- In 2042: $1 million will get you 2,256 sq. ft.
In terms of how many square feet $1 million can get you today, North Carolina is about on par with its sibling South Carolina (9,992 square feet). But, North Carolina housing prices had a slower growth pace than South Carolina, making North Carolina the more affordable state of the two to retire in by 2042.
That’s not true, however, if housing prices increase with the pace of inflation: $1 million will only get retirees 4,760 square feet in North Carolina compared with 4,956 square feet in South Carolina in 2042.
- In 2015: $1 million will get you 9,958 sq. ft.
- In 2024: $1 million will get you 6,310 sq. ft.
- In 2033: $1 million will get you 3,998 sq. ft.
- In 2042: $1 million will get you 2,534 sq. ft.
New retirees torn between buying a house in South Carolina and Kentucky have good reason to be — both states demand about $100 per square foot of a home purchase. For a buyer with $1 million to invest in a Kentucky home, this affordability has been dwindling for some time. In the nine-year period up to 2004, $1 million would afford new residents more than 15,000 square feet. Zillow notes that Kentucky home prices have increased 1 percent since 2014, and they’re expected to increase by 3 percent in 2016.
If home prices do continue to rise, retirees in the coming years and decades will need more than $1 million to comfortably retire in a house with an appreciable amount of square feet. It’s a different story if Kentucky home prices paced with inflation, however; $1 million will get retirees 7,882 square feet in 2024, 6,240 square feet in 2033 and 4,939 square feet in 2042.
- In 2015: $1 million will get you 9,840 sq. ft.
- In 2024: $1 million will get you 7,370 sq. ft.
- In 2033: $1 million will get you 5,519 sq. ft.
- In 2042: $1 million will get you 4,133 sq. ft.
Michigan is seeing a renaissance in home ownership. According to the Detroit Free Press, several areas in the state are becoming real estate hot spots, experiencing huge increases in home sales between 2009 and 2014. Those approaching retirement might want to tap into this emerging housing market quickly if housing prices continue at the current growth pace. Even if Michigan housing prices pace with inflation instead, retirees should expect $1 million to get them 7,790 square feet in 2024, 6,166 square feet in 2033 and 4,881 square feet in 2042.
Methodology: GOBankingRates.com used historical housing price data from Zillow to find the rate of price increases in the states included in this slideshow. States were selected for inclusion to be representative of differing rates of growth in housing prices, as well as different regions. Rates of home cost increases were calculated by comparing the state’s average prices per square foot from 1996-2004 to the average prices in 2005-2015. GOBankingRates then projected the square footage $1 million would buy in these states based on two models: if housing prices continued to pace with the increase of the past nine years, or if they paced with the cumulative inflation rate of 26.3 percent over the same period, sourced from Census Bureau data.
Please note photos of homes might or might not be actual $1 million homes in the states mentioned in this article. The photos are for illustrative purposes only.