Better and Worse

America’s Most (And Least) Affordable Cities for Retirement

Retiring on a shoestring? Or do you just want to live and/or own Self-Directed Real Estate IRA properties in areas where your dollar can make the biggest dent? Personal Finance website Wallethub has a new study that identifies the most affordable and most expensive markets for retirees in the United States.

The most expensive markets for retirees and Self-Directed Real Estate IRA investors won’t surprise many people:

  1. San Francisco, California
  2. New York, New York
  3. Pearl City, Hawaii,
  4. Honolulu, Hawaii,
  5. San Jose, California
  6. Fremont, California
  7. Washington, D.C.,
  8. Oakland, California
  9. Seattle, Washington
  10. Boston, Massachusetts

Pearl City and Honolulu are adjacent to each other, anyway, and are essentially the same market. San Francisco, San Jose, Fremont and Oakland are all in the pricey Bay Area of Northern California, and along with Seattle have seen real estate prices inflated by oodles of technology money.

Wallethub’s findings roughly parallel ours in our exclusive city guides for Self-Directed Real Estate IRA investors.

Investors here have made money in the past – these markets did not get expensive by failing to appreciate! But Self-Directed Real Estate IRA owners should be very cautious in these markets, and look closely at cap rates and other factors, because price appreciation in these markets is slowing compared to recent years and in some areas, prices are actually beginning to decline. Rents may not cover costs, and cash-flow properties are nearly impossible to come by in these cities.

Wallethub’s list of most affordable cities, on the other hand, is more interesting. The site’s editors did not merely consider house prices or prices per square foot. Instead, Wallethub took a variety of cost-of-living factors into account, including state and local taxes and the tax treatment of retirement income. The costs of medical care was also a significant factor in their criteria.

Wallethub’s 10 most affordable cities in retirement include many cities here in the South and Southeast:

  • Laredo, Texas,
  • Cheyenne, Wyoming
  • Brownsville, Texas
  • Montgomery, Alabama
  • Fort Smith, Arkansas,
  • El Paso, Texas
  • Memphis, Tennessee
  • Gulfport, Mississippi
  • Orlando, Florida
  • Tampa, Florida
  • Petersburg, Florida
  • San Antonio, Texas

Of these, San Antonio strikes us as a particularly appealing combination of affordability and quality of life. The Home of the Alamo has a wealth of recreational and cultural activities to enjoy, which not only makes retirement more enjoyable, but it’s also great for supporting rental prices, as well.

Further, San Antonio is known for its great music scene, Tex-Mex cuisine, and the beautiful Riverwalk area. Major employers like USAA, Joint Base San Antonio, H-E-B.

Orlando, likewise, is anchored by major employers Disney and Universal Studios, who are not going anywhere any time soon. Orlando has a lasting advantage as a travel and tourism destination, along with affordable prices – especially in the outer suburbs.

Both Memphis and Knoxville have secure economies thanks to geography: Memphis is a major inland shipping and rail hub with lasting advantages in industry, manufacturing and transportation, while Knoxville holds a key position as a gateway city between the heartland and agricultural regions of the interior to the West and the great cities on the Atlantic to the East.

And Memphis recently made Wallethub’s list of great cities where you can retire on an annual income of $40,000 or less.

More and more planners are projecting that a nest egg of less than $1 million won’t go very far in the more expensive markets and are steering cost-conscious clients to more affordable markets – especially when it comes to real estate.

One key advantage that these lesser-known real estate markets have: You can still find cash-flow properties: Investment homes where rental income will typically cover mortgage payments, taxes, insurance and other costs of carrying the property. Concentrate on getting a good price to begin with, from a motivated seller, that still leaves you as the new landlord with an acceptable cap rate.

In addition to house price affordability and health care costs, Wallethub’s affordability criteria also included total adjusted cost of living (triple-weighted), taxpayer friendliness, friendliness toward retired taxpayers, estate taxes, cost of in-home services and average cost of adult day care services.

You can read the full Wallethub survey here.

Interested in learning more about Self-Directed IRAs?  Contact American IRA, LLC at 866-7500-IRA (472) for a free consultation.  Download our free guides or visit us online at