Should You Retire in California?

When you think of relocating 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 your interests. It boasts a lot of natural beauty and outdoor recreational activities and its big and small cities provide plenty of cultural offerings, such as theater, museums, concerts, festivals, and more.

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

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Like any place, though, California isn't perfect. Again, much depends on where in California you live, but its major cities feature 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, in large part 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. This all varies by city, though. On average, the cost of living is 50% higher than the national average in Los Angeles, and 71% higher in San Francisco. Some spots, such as Palm Springs, are only 20% higher. Droughts, earthquakes, and wildfires are a concern for many Californians, too.

Taxes are an important consideration for retirees, and California doesn't rate highly on that front. Yes, it's among the 41 states that don't tax Social Security benefits . But it does tax 401(k) and IRA withdrawals, along with pension income. And depending on your income, the state income tax rate, ranging from 1% to 12.3%, might be high.

Healthcare in retirement is another big concern, and California rates well here, ranking fourth in the nation for elderly healthcare by MedicareGuide.com.

As you plan for retirement , give California some consideration if you're thinking of relocating. Weigh the pros and cons and see what you think.

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