Comparing Retirement Cost of Living in Different Locations
When baby boomers retire, many will consider relocating to lower their cost of living. I think this strategy will take on more importance because of damage caused to retirement nest eggs in 2008-2009.
Bankrate.com Cost of Living Comparison Calculator
The Bankrate.com site contains a wide variety of useful financial information, including a cost of living comparison calculator. This calculator assumes that you are moving from one metro area to another. Taking into account six broad cost of living categories and your family income, it displays cost of living dollar figures for your current and destination cities. It then calculates how much your income needs to increase or decrease to maintain the same standard of living in the destination city.
The Bankrate calculator includes relative cost of living data for some broad categories. It also displays relative costs for some specific items, such as food products and medicines. Comparisons are also made for current mortgage rates and home prices for the two cities. Overall, the data was comprehensive and easy to understand.
The biggest weakness of the Bankrate.com cost of living calculator site is that it does not take state and local taxes into account. For some comparisons, this is a serious deficiency.
Salary.com Cost of Living Wizard
The Salary.com cost of living wizard is similar to the Bankrate.com cost of living tool and probably uses the same data source. It compares salary levels to maintain the same living standard in two cities. You need to enter both a living city and a work city.
Best Places to Live – Money Magazine
Money Magazine prints a Best Places to Live issue every year and publishes that same information on the CNN/Money website. It has information in different categories for 100 different cities, including housing cost and tax data. You cannot do a side-by-side comparison of different places except for a handful of “nearby” cities and towns. This tool is useful when you want to look at data in non-financial categories in addition to cost of living.
Economic Policy Institute Family Budget Calculator
The Family Budget Calculator tool at the Economic Policy Institute is different from the other cost of living calculators because it is not focused on making direct comparisons. Instead, it estimates total monthly and annual living costs in seven broad categories, including taxes. It can do this for different family sizes. Unfortunately, all of the family choices include at least one child, which makes it less relevant to a baby boomer engaged in retirement planning.
Moving.com City Profile Report
Moving.com is a site operated by an organization of moving companies. Its City Profile Report tool uses data from the U.S. Census Bureau, Bureau of Labor Statistics, IRS, FBI, and NOAA and publishes it in many different categories for a city you select. You can also cause it to display a comparison between two cities. Unfortunately, very few of the categories are financial in nature and none include taxes.
Sperling’s Best Places
Of all of the cost of living sites I have seen or heard about, I think Sperlings Best Places is the best. It has a very easy to use interface and it appears to cover more cities than the other comparison sites. Here is a report generated by Sperlings for two cities in Tennessee:
Knoxville is10% cheaper than Nashville.
Housing is the biggest factor in the cost of living difference.
Housing is 31% cheaper in Knoxville.
A salary of $100,000 in Nashville-Davidson, Tennessee could decrease to $89,713 in Knoxville, Tennessee.
|Cost of Living Indexes||Nashville-Davidson||Knoxville|
One thing I am not certain about is whether the data includes state and local taxes.
If you want to compare state tax rates and tax burdens, you can use the Federation of Tax Administrators site.
Sperlings includes other non-financial comparison data as well.
Final Thoughts on Retirement Cost of Living Comparisons
All of the cost of living tools I found were helpful but none was perfect. Therefore, I think it is best to use data from all of the sites when making a comprehensive relocation investigation.
I will continue to look for this data and will update this list if I find anything worth considering.
If you are aware of any helpful resources in this area, please let me know in a comment and I will add it.
Update 1 2009: Try My Dream Locale for a variety of information resources on relocation and relocation destinations.
Update 2 2009: If you want to study a detailed cost of living comparison between two cities or regions – and are willing to pay $7.95 for that information – the Council for Economic and Community Research provides an online Cost of Living database this uses data from an extensive survey that it conducts.
Photo credit: Woodley Wonderworks
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