retiring in a high cost of living area

a few years ago, we decided to move from a very large and very expensive city to a much smaller place where we could also afford to buy a house. but here’s the thing: the place where we moved is still expensive by any measure, even if it’s cheaper than the place we left. and all of the things that make it expensive are the things we love about it: amazing recreational opportunities, beauty everywhere you look, great cultural activities for a small town, proximity to agriculture and great food, and proximity to big cities.

housing aside, since we’ll have the house paid off before we quit our jobs, our cost of living here is definitely higher than it would be if we moved to any number of low cost-of-living places around the u.s. we frequently see articles about great places to retire based on cost of living, and we think to ourselves, “wow, if we sold our house and moved to one of those places, we could possibly even retire now.” we have a good chunk of home equity, especially since the housing market has rebounded, and we in fact could retire today if we moved somewhere where a home would run $150,000 or less.

we think about it. we discuss it. we think some more, and discuss some more. but ultimately, we decide again and again to stay put. where we live, and the quality of life there, is super important to us. perhaps more important than anything else. we think about what we value — good weather, mountains, socially aware people, availability of fresh and healthy food, a sane pace of life — and we think it’s hard to match that in most places. add to that a few things we are not fans of — humidity, mosquitoes, narrowmindedness, isolation from big cities — and our options get fewer still. not to say that we’ll never move, but if we do, it will almost certainly be somewhere else in the west. and we don’t plan for it to be anytime soon, if ever.

of course, knowing that we’re choosing to live in a high cost of living area puts more pressure on us financially. but in most respects, it’s the same as anything else we’d plan for. we track our grocery spending (groceries are especially expensive here), and we know that we’ll likely spend $600-800 on groceries each month when we retire. we know that number is probably downright scandalous to lots of finance bloggers, but you might say that’s the cost of doing business here. and organic is important to us. so we’ve baked those numbers into our planning budget, and we’ll save up accordingly. likewise, utilities are a rip-off here. we do a lot to conserve both energy and money, but we just know that gas and water will always be pricey here because it’s a rural area (and because water should be expensive in the west — it’s an increasingly rare commodity, and we all need to pay something closer to its real value if we’re going to stop wasting it). so we plan for those too.

let’s just pretend for a moment that we were willing to move somewhere cheaper to save money. what would we spend then? we actually think we’d spend more, because we’d constantly be traveling to our beloved mountains, like we used to before we moved closer to them. better, we think, to cut out all that unnecessary travel, and put ourselves in a position to enjoy the mountains every day for free.

you could call living where we do a splurge (lord knows we’re guilty of spending on splurges), but we don’t even see it that way. we see it as a choice, like any other, about how we want to live now and in retirement, and prioritizing what’s important to us. aligning our spending with our values. choosing experiences (in this case, the ones that came with this particular place) over stuff (in this case being able to have a bigger house somewhere else or being able to take money out by moving somewhere cheaper).

what’s more important to you — retiring somewhere affordable or somewhere you think is worth the extra money? what do you plan to splurge on when you reach financial independence?

18 thoughts on “retiring in a high cost of living area

  1. It is definitely more important to my wife and I to retire in the place that we feel most comfortable. Our target city is Sedona, AZ, and it is a vacation spot for most people in Arizona and elsewhere in the country. It is not the cheapest place to live and we freely admit that to ourselves. But, it also offers million-dollar views of red rocks, yearly music and art festivals, ample hiking opportunities and very much the small town feel, especially if you live outside of the tourist area, which we most certainly will do.

    Our splurge will definitely be travel. Our plan after retirement is to enjoy Sedona for a while in a relatively inexpensive town house, then begin to rent that sucker out as a vacation rental as we pursue our travel endeavors around the U.S. and the world. Eventually we will settle down and maybe buy a home in Sedona, or by that time, we might prefer an ocean-side condo in Miami. Who knows, the sky is definitely the limit, and all this can be done far more inexpensively than most people realize.

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    1. We love your plan. If we felt a greater kinship with the desert, we could definitely see Sedona being ideal, since our plan is so similar to yours (rent out the house and travel, basically). But we’re more into the alpine environment. Of course, maybe when we’re older, we’ll move to the beach (also not cheap, at least on the west coast). :-)

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  2. I struggle with this as well. My family and friends are in the Northeast, and I think it will be hard to leave them even though I’m not a huge fan of the climate. I grew up near the ocean so I would like to stay near there, but I also hate the winter and don’t do well in 95 and humid. Basically I’m just too picky and my ideal geography doesn’t exist (California maybe but too expensive!). I’m currently living in Manhattan where everything is expensive, but then I don’t have commuting expenses or a car which definitely helps me out. Plus high COL areas pay the best. Also I have easy access to three major airports which definitely cuts down on the cost of my personal travel. I still have about 11 years until financial independence so I have plenty of time to figure it out!

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  3. I think the entire concept of FIRE is to give yourself choices – no matter what those may be. So long as you have planned for it, ANY choice can be built into your future plans. We should never let the opinions of other influence the choices that make us happy.

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  4. I think we would retire wherever makes us happy, regardless of the cost of living, as long as it’s financially compatible with our retirement plan!

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  5. Good plan! It’s your life so you need to choose what makes your soul *sing*. If that means retiring later so you can live where you love, that’s perfect. There’s always ways to make side hustles when you live in high COL places too.

    This is something I’ve thought about a lot, because I’m from a high cost of living city, and my parents, extended family, and close friends are also mostly there. I always thought I would retire there too, but having left, it has totally changed my view.

    Now I don’t see myself retiring in one place anymore. I’m a citizen of the world! I have loved ones all over the globe, and would like to slow travel to spend time with them ALL. I’m greedy that way. :)

    If I ever got sick of slow travel, then I’d settle down in the place that made the most sense. How to pick that place is beyond me right now, but I think I’ll know it when I’m there.

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  6. Thanks for following my blog. It is nice to come across a fellow early retirement traveler in a HCOL area…a fellow blog where grocery bill of $600 is not considered scandalous :-) Best of luck for your future plans!!

    That said, I have come to define home as the place where your trusted social circle is…it may be family OR close friends..but the trust factor is key. For example, one metric I use is: can I drop my kid with a family for a couple days while I am dealing with an emergency situation? I am fortunate to have many such families here in the HCOL area and vice versa too :-) So, this HCOL area is where I would like to retire…both early and real retirement.

    Our splurge plan, post early retirement, is to travel all around the world…slowly. I would like to spend at least a month in each place we visit…preferably 3 months and soak the place in. I do not anticipate spending longer than that in any place other than home….but revisit is not ruled out :-)

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    1. The $600 grocery bill may be scandalous, but we’re doing it anyway. :-) Love your approach to travel post retirement. That pretty much matches ours, too, though we could also see doing extended camper van trips (assuming we buy and convert a van, as we’d like to). Glad we’re connected now!

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  7. I have the same concerns for us too. Our current city is wonderful and time and time again I’ve come back here and said, “Yeah, you know this place just feels like home.” Too bad it’s a ridiculously expensive metro area. I’d hate to leave this place — the food, the culture, the variety of natural landscapes. I could leave the cold, that won’t be missed. But most of all, if we moved we’d lose pretty much all of our social network (family and close friends) and that’s just a devastating thought.

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    1. The truth is that high cost of living areas cost a lot for a reason — because a lot of people want to live there. Meaning they are inherently desirable. So it makes sense so many of us want to live in them! :-)

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  8. There are some benefits to living in a big city though! Sure housing is expensive, but I hardly use my car, have great access to a library, many grocery stores nearby, am close to a useful international airport, and have reasonable public transportation options. There are also a variety of high paying jobs in my field. By living in a condo, that also keeps housing expenses down somewhat as we have a smaller space and can’t fill it with furniture.

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    1. All true! We love the small town where we live now, and it has a lot of good conveniences, especially ones we can bike to. But we definitely see the appeal of the big city and occasionally miss it.

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