Many baby boomers who haven't saved enough to retire well are contemplating delaying retirement. But if working into your 70s isn't possible (or appealing), moving to a place with a much lower cost of living can help stretch your retirement savings and finance a better quality of life.
A retirement income of $40,000 per year certainly won't go very far in Honolulu or Miami, but there are plenty of other places where it can fund a comfortable retirement lifestyle. If you're willing to relocate to a place with a low cost of living and affordable housing, this modest retirement income could give you access to interesting activities and top-notch medical care.
[In Pictures: Best Places to Retire for Under $40,000.]
Producing a retirement income of $40,000 is a realistic goal for many retired couples, even those without a traditional pension. The average monthly Social Security benefit for a retired worker was about $1,230 at the beginning of 2012. For a married couple each receiving the average amount, that's a retirement income of just under $30,000 per year. Add to that a modest nest egg of $250,000, and that could bring your retirement income to around $40,000 per year, depending on how the money is invested, your drawndown strategy, and the inflation rate.
To find places where retirees can live well on less than $40,000 per year, U.S. News analyzed recently released 2011 Census Bureau data. We screened for places with the lowest housing costs for people age 60 and older, including mortgage payments for people who had one, other housing costs for people who have paid off their mortgage, and the typical rent for renters, as well as the proportion of their budget retirees spend on housing costs. Then, among the places where people age 60 and older spend the least on housing, we picked cities with the best amenities seniors will need, including major medical facilities, services for seniors, colleges, and cultural and outdoor activities.
Here are 10 great places to retire on less than $40,000 per year in 2013:
The low cost of living in Albuquerque is well-known to students at the University of New Mexico and people drawn to the community by the Kirtland Air Force Base and national laboratories. Retirees also benefit from Albuquerque's many amenities and low housing prices. The median housing cost for people age 60 and older was $1,150 monthly for those with a mortgage, $358 for homeowners without a mortgage, and $657 for renters. There are also plenty of low-cost ways to get around town, even if you can't or no longer want to drive. People age 62 and older can ride the bus for just 35 cents, and there are also more than 400 miles of bike paths and trails.
The host city of the Masters Tournament is best known for its golf courses. This city on the Savannah River is also home to the Medical College of Georgia, Augusta State University, and a wide variety of art galleries and museums. Housing costs for residents age 60 and older are a median of just $626 for renters, $1,064 for homeowners with a mortgage, and $353 for seniors who have paid off their homes. Augusta public transit costs 60 cents per ride for people 65 and older.
South Carolina's state capital city offers the amenities of big-city life, but with a low cost of living and plenty of arts and outdoor activities. Monthly housing costs range from a median of $1,107 per month for homeowners age 60 and older who have a mortgage to $712 monthly for renters. Retirees who have paid off their mortgages pay a median of just $350 monthly for other housing costs. Bus fares for people age 65 and older are 75 cents. And South Carolina residents age 60 and older who are not working full time can qualify for free tuition to the University of South Carolina.
Your retirement budget will stretch much further in Mississippi's state capital than in many other places. Homeowners age 60 and older paid a median of $1,053 per month in housing costs, which dropped to $329 if they had paid off their mortgage. Renters age 60 and older paid a median of $624 per month in 2011. The city is known for its music, especially gospel and blues, and also has a zoo, ballet, planetarium, and opera. "Here, you can get season tickets to the theater and the Broadway shows, and you can get them for a whole lot cheaper than other places," says Ivy Alley, a retired museum curator who lives in downtown Jackson and volunteers at the Mississippi Museum of Art. "There are lecture series and museums that are very low-cost things to do."