How Much Does It Cost To Retire in Hawaii?

An Oahu beach house.
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Many retirees dream of retiring in Hawaii. The temperate climate and relaxing atmosphere of the islands may be the lifestyle reset retirees are seeking after decades of hard work. 

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 much it costs to retire in Hawaii.

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 165.7. 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 $800,200. Each aspect of living in Hawaii, ranging from groceries at 150.7 to housing at 250.9.

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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 $1,490 a month while a one-bedroom is priced at $1,640 a month. This compares to the average U.S. studio ($1,080) and one-bedroom ($1,180).

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 $22.05 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. 

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. 

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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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