Retiring Early? How Far $1 Million Will Go on the West Coast

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The dream for many retirement savers is to accumulate $1 million. But $1 million in one part of the United States can be a significantly different amount of money in other locations.

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For those looking to retire early, choosing an affordable place to live is a great way to stretch a retirement nest egg. But which regions of the country meet this standard?

GOBankingRates reviewed data from the Bureau of Labor Statistics and the Department of Housing and Urban Development to determine how long $1 million would last on the West Coast, defined as California, Oregon, Washington, Arizona and Nevada. These latter two states obviously aren’t explicitly on the “West Coast,” but this is the region they were assigned for purposes of the study.

Here are the results of the study, along with ways you can make your retirement money last no matter where you live.  

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How Long Will $1 Million Last on the West Coast?

The average cost of living for the West Coast was based on the aggregated data from the five states listed above. The study shows that the average overall cost of living on the West Coast is 17% above the national average, at $60,984. Based on that figure alone, and overlooking any potential investment gains that may be earned on that money, $1 million will last just 16.58 years on average on the West Coast. 

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But as the five states in this study are quite disparate in terms of their expenses, picking and choosing your state of residence on “the West Coast” could greatly affect how long your money will last.

If you want to live in California, for example, your money will last just 13.83 years, as the annual cost of living is $72,320 on average. Even within the California average, there’s a wide range of places to live, from the expensive city of San Francisco to many low-cost inland and rural towns.

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On the other side of the coin is Nevada, where the average annual cost of living is just $53,132. That will stretch your $1 million in retirement savings out to 18.82 years, or 36% longer than if you lived in California.

These figures indicate that the West Coast isn’t a great option for early retirees looking to make their retirement funds last. With $1 million lasting less than 20 years in every state in the West Coast region, those retiring at 30, 40 or even 50 likely won’t have enough to last through an early retirement.

Is the West Coast a Good Place To Stretch $1 Million in Retirement Savings?

Even though the difference between living in California and Nevada can be high, most places in the West are still relatively expensive to live when compared with the rest of the country. Your money would stretch a lot further in many Southern and Midwestern locations than on the West Coast, for example.

Since income might be fixed or limited in retirement, lowering your expenses is one of the best ways to make your money stretch. 

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How Can You Make Your Retirement Money Last Longer?

Whether you’re planning to move to the West Coast or any other region of the United States, there are steps you can take to help your retirement money last longer. Here are some of the best choices. 

Invest Prudently

Perhaps the best way to give your retirement money extra life is to invest it prudently. Since $1 million won’t last even 20 years anywhere on the West Coast, you’ll have to generate some investment gains if you plan to retire there.

If you are retiring early, your money might have to last 30 years or more, so you’ll need to figure out a way to prudently grow your money. Consult with a financial advisor to create a portfolio that can provide long-term growth without taking on too much risk to your principal. 

Downsize

Most retirees don’t need to live in large homes, yet many find themselves in that situation. Whether they had families that have left or just had a high income and enjoyed living in a large house, there’s no need for most to continue with big residences.

Downsizing can result in significant savings on your rental or mortgage payments. If your home is already paid off, you can use some of that equity for savings, investments or living expenses. 

Relocate — Even Within the West Coast

As shown above, even though “the West Coast” consists of just five states for the purposes of this study, there is a wide variation in the cost of living among them. If you’re looking to retire in Los Angeles or San Francisco — or even Seattle or San Diego — you should expect to spend much more than settling down in Ely, Nevada, for example. 

Get a Roommate

Retirees don’t generally dream of living with roommates; but, if you want to live on the West Coast — or stretch your retirement money anywhere — getting a roommate can cut your expenses by as much as 50%. 

Pick Up a Side Gig

Work is another thing that most retirees seek to avoid, but just a little additional income can stretch your nest egg quite a long way. Many retirees actually end up enjoying working part-time or on a side gig as a way to remain social and keep their minds active.

Methodology: GOBankingRates determined the number of years and months that $1 million will last during retirement by multiplying the annual expenditures for someone 65 and older, sourced from the Bureau of Labor Statistics’ 2021 Consumer Expenditure Survey, by each state’s overall cost of living index, sourced from the Missouri Economic Research and Information Center’s Q3 cost-of-living indices. Annual costs were further broken down by multiplying more specific annual expenditure figures from the CES by MERIC’s grocery cost of living, housing cost of living, utilities cost of living, transportation cost of living and healthcare cost of living indices. GOBankingRates then isolated West Coast (California, Oregon, Washington, Nevada and Arizona) data and averaged the five states to give a West Coast average. All data was compiled and is up to date as of Nov. 14, 2022.

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About the Author

After earning a B.A. in English with a Specialization in Business from UCLA, John Csiszar worked in the financial services industry as a registered representative for 18 years. Along the way, Csiszar earned both Certified Financial Planner and Registered Investment Adviser designations, in addition to being licensed as a life agent, while working for both a major Wall Street wirehouse and for his own investment advisory firm. During his time as an advisor, Csiszar managed over $100 million in client assets while providing individualized investment plans for hundreds of clients.
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