How Much Does It Cost To Retire in Hawaii?

Skyline of Honolulu, Hawaii and the surrounding area including the hotels and buildings on Waikiki Beach.
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Many retirees dream of retiring in a state like Hawaii. The temperate climate and relaxing atmosphere of the islands may be the lifestyle reset retirees are seeking after decades of hard work. 

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While retiring in Hawaii is generally quite expensive, for some retirees the move offers the opportunity to save money. According to Matthew Rowlings, founder of Time Value Millionaire, you can use two different ways to determine how much it costs to retire in Hawaii. Here’s how to figure out how much it might cost you to retire in Hawaii along with more benefits from the state.

Retiring in Hawaii Using the Cost of Living Index Method

Retirees may use the Cost of Living Index interactive tool provided by The Council for Community and Economic Research to make accurate and reliable cost of living comparisons between their current area and any participating cities across the United States. 

Hawaii, according to Sperling’s Best Places, has a cost of living index of 170. The U.S. average is 100 and any amount below 100 indicates a cheaper area. An index above 100 means it is more expensive. The median home cost in Hawaii is $732,000. Each aspect of living in Hawaii, ranging from groceries at 150 to housing at 268, has a high index. The only exception is healthcare with an index of 94. 

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Those who plan to rent in their retirement years should also anticipate paying a higher rent than most of the United States. Rent for a Hawaii studio currently averages at $1,457 a month while a one-bedroom is priced at $1,609 a month. This compares to the average U.S. studio ($949) and one-bedroom ($1,048).

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Retiring in Hawaii Using the Living Wage Method

The Living Wage Method determines the living wage based on location and family composition. This calculator estimates the cost of living in your community or region based on typical expenses. 

Let’s use the example of Honolulu County statistics. The living wage for an adult with no children would be $22.69 an hour. Two working adults without children would need to earn $16.61 each. You can use this calculator to compare how much it would cost to live on different Hawaiian islands and in a variety of living situations before determining how much you might need to withdraw from your retirement nest accordingly. 

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Benefits of Hawaii Retirement

Retiring in Hawaii, if the cost of living index hasn’t scared you off, does have its share of advantages afforded to residents. The state has one of the lowest property tax rates averaging at 0.28%, according to CNBC. 

Qualifying employer-funded pension plans are also exempt from state income tax. This means if you receive a pension from the federal government or military, this income isn’t taxable in Hawaii. Similarly, retirees with private pensions funded by their employer aren’t subject to Hawaii state tax.

This being said, Hawaii does have one of the highest state income tax rates in the country at 11%. However, some seniors are able to make living in Hawaii work for them in spite of the high cost of living and tax disadvantages. Consider renting out a part of your home or working in a side hustle like ride-share driving for additional passive income. This gives visitors the chance to vacation in Hawaii in your home and allows retirees to drive individuals around the islands and take them where they need to be.

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About the Author

Heather Taylor is a senior finance writer for GOBankingRates. She is also the head writer and brand mascot enthusiast for PopIcon, Advertising Week’s blog dedicated to brand mascots. She has been published on HelloGiggles, Business Insider, The Story Exchange, Brit + Co, Thrive Global, and more media outlets. 

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