Home to scenic coasts, wooded trails, sprawling parks, active cities, and small towns, California is a dream retirement destination for many. But scenic views and pleasant weather aren’t all the Golden State has to offer. While the state is known for its high marginal tax rates, stable property taxes, no taxes on Social Security benefits, and no capital gains tax after one spouse dies, taxes are lower for some retirees than in other states. California is also home to a wide array of active adult 55+ communities with a range of amenities and low-maintenance living. So how much does it cost to retire in California?
When planning to retire in California, it’s essential to ensure your retirement savings will provide you with the lifestyle you expect. Our guide outlines the basic expenses of living in a California 55+ community and offers a cost breakdown to help you determine how much money you’ll need to enjoy retirement in California.
How Much Money Do You Need to Retire in California?
The cost of living in California can vary widely depending on your spending habits, your location, the home you choose, and other variables. By learning about the average costs of living and general necessities, you can better determine the budget you’ll need. The average cost of living in an age-restricted community ranges from $1,500 to $4,000 per month. Costs cover your mortgage, homeowners’ association (HOA) fees, onsite amenities, security services, and other community expenses. However, it doesn’t include necessities like groceries, utilities, and taxes.
The basic cost of living in California will require most homeowners to spend an average of $5,800 to reside in one of California’s best 55+ communities. If you choose a more luxurious home and lifestyle, you’ll likely need a budget of $9,000 or more each month. When planning your budget, remember to account for transportation, entertainment, and recreation.
Here’s the breakdown to help you answer the question “How much does it cost to retire in California?”
Mortgage
The cost of purchasing a home in a 55+ community in California will vary depending on the location you choose and the home you choose. The following monthly mortgages are calculated using a 30-year fixed-rate mortgage with 7% interest and a 20% down payment.
- $285,000 two-bed, two-bath condo in Sun City (Menifee): $1,516 monthly
- $464,900 two-bed, two-bath condo in Ocenana (Oceanside): $2,469.60 monthly
- $695,500 two-bed, two-bath condo in Rossmoor (Walnut Creek): $3,699 monthly
- $985,000 three-bed, three-bath single-family residence in Oakmont Village (Santa Rosa): $5,242.58 monthly
- $1,899,000 three-bed, two-bath condo in Laguna Woods Village (Laguna Woods): $10,107.28 monthly
HOA Fees
HOA fees are a guaranteed cost in any planned community. The fees may be collected monthly, quarterly, or in some cases, annually. The price tag varies widely as well as the services provided. HOA costs are not directly relevant to the cost of the home, making them unpredictable. When choosing a community, it’s essential to learn what services are covered by your HOA fee and how often they’re collected.
Here are some examples of the varied rates of HOA fees in different California 55+ communities.
- A $719,000 single-family residence built in 1973 in Oakmont Village has a $125 HOA fee.
- A $ $425,000 two-bed, two-bath single-family residence built in 1997 in Sun Lakes Country Club has a $365 HOA fee.
- A $1,899,000 three-bed, two-bath condo built in 1980 in Laguna Woods Village has a $816 HOA fee.
- A $269,000 one-bed, one-bath condo built in 1964 in Leisure World Seal Beach has a $506 HOA fee.
Amenities
Active retirement communities in California offer a wide range of amenities to provide an active and enjoyable lifestyle. These offerings can range widely depending on the community you choose. Some communities feature golf courses, equestrian centers, and various clubs, while others have more modest offerings like a community pool and lounge. While some amenities are included in mortgage or HOA costs, others might require a membership fee or other costs.
Home Insurance
The average cost of home insurance in California is $1,250 a year or about $104 per month. It’s notably less than the national average of $1,915 per year. Homeowners with recent claims will pay an average of 11% more, and home insurance is higher in some cities than in others. For example, the average cost of homeowners insurance in Los Angeles is $1,485 per year.
Many companies offer discounts for homeowners who have made efforts to reduce the risk of wildfires on their property. However, you may need add-on policies for earthquake and flooding coverage, and some insurers may not provide coverage in high-risk wildfire areas.
Utilities
It can be easy to overlook all the smaller monthly bills. Yet, the cost of various utilities can quickly add up.
Utility costs in California typically include:
- Electricity: $124 monthly
- Gas: $63 monthly
- Cable and Internet: $117 monthly
- Water: $76 monthly
Homeowners can expect to pay around $380 monthly for the utilities listed here. However, this doesn’t account for the cost of your phone plan.
Groceries
According to the California Department of Food and Agriculture, over a third of the country’s vegetables and three-fourths of the country’s fruits and nuts are grown in California. The average household in California spends about $1,200 a month or nearly $300 a week on groceries. This is just over the national average of $270 per week. However, a household with one person spends about $176.81, and a two-person household in California spends $222.67 per week. So, you could expect to spend around $890 per month in a two-person household.
Taxes
The median effective real estate tax rate in California is 0.78%, placing the median cost of property taxes for homeowners at $5,304 annually for a $679,000 home. While the median percentage rate is lower than in many other states, property values in California are higher than in many locations, leading homeowners to pay more. The exact amount of taxes you’ll pay will depend on factors like your home’s age and value.
Finding Your Ideal 55+ Community in California
Planning for retirement is a unique experience for every individual. It requires creating a strategy that will allow you to enjoy the retirement lifestyle you desire without financial stress. Depending on the lifestyle and amenities you seek, retirement in California is an achievable goal for many.
Finding the right 55+ community can help you maximize your budget while finding the lifestyle you’ve been dreaming of. If you’re looking for the right location to retire in California, the real estate experts at 55places.com can help. Get in touch with us today to learn more about how we can help you find your optimal 55+ community.
