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Planning for a comfortable retirement isn’t the easiest thing to do in the United States these days, especially with the rising cost of living. Every year, everyday items – from services to goods – seem to get a little more expensive than before. This is as true for housing as it is for groceries. And while costs sometimes go down, they generally go up again at some point.

Still, it’s possible to live comfortably in retirement—even in major U.S. cities. But of course, you want to be prepared so you can afford rising costs.

GOBankingRates conducted a study to find out how the cost of living is trending in major cities across the country this year, and also spoke to a financial expert to get his take on what a comfortable retirement might look like in 10 years—and how to prepare for it.

New York City

New York is one of the largest U.S. cities, but it’s also, not surprisingly, an expensive city. The average cost of living there is nearly $95,000 annually, including everything from housing to utilities to groceries. Given the high cost of living, you’ll likely need a decent nest egg to get through retirement without major financial problems.

Assuming an average inflation rate of 2.5% and a cumulative inflation rate of 28.01%, you will need about $121,600 annually for 10 years.

San Francisco

On the West Coast, San Francisco is another major city with a particularly high cost of living. According to data, living there costs about $125,000 per year. As elsewhere, costs may be a little lower for those without a mortgage – which is good news for retirees who have paid off their mortgage.

If inflation remained at the same rate as before, you would need about $160,000 in a decade.

Los Angeles

According to RentCafe, the cost of living in Los Angeles is 50% higher than the national average—and 8% higher than the state average. Housing, utilities, groceries, healthcare, transportation, and everyday goods and services are all more expensive than in most other parts of the country.

The average U.S. household spends $61,334 per year, but in Los Angeles the average annual cost of living is about $91,000.

At the same rate of inflation, you would need about $116,000 per year to live comfortably in retirement.

Miami

Florida has long been a popular destination for retirees, but places like Miami – while still quite popular and populous – require a little more money to live comfortably. On average, the annual cost of living there is just over $74,000.

In a decade, that number could rise to about $95,000 a year.

Major US cities with lower cost of living (in 2024)

Of course, not all major U.S. cities are exorbitantly expensive. Here are the current average annual costs of living in some of these places, based on the GOBankingRates study.

• Raleigh, North Carolina: $55,455
• Minneapolis: $54,681
• Philadelphia: $51,599
• Tucson, Arizona: $48,715
• Indianapolis: $44,176
• Memphis, Tennessee: $41,039

Remember that everyone has different needs in retirement, so you may need a different amount of money to live comfortably, but it’s still helpful to have a baseline.

Forecast of living costs in 10 years

So how can you predict the cost of living in retirement ten years from now? It’s difficult, but possible.

“Predicting the exact cost of retirement in major U.S. cities a decade from now is difficult due to variables such as inflation, healthcare costs and changes in the housing market,” said Dennis Shirshikov, a finance professor at the City University of New York and director of growth at Summer. “However, we can make informed estimates based on current trends.”

To illustrate this point, he used New York, San Francisco and Los Angeles.

“In (these) cities, where the cost of living is already high, a comfortable retirement could easily require $100,000 to $150,000 a year, adjusted for inflation,” he said. That estimate takes into account factors such as health care costs, housing costs and the general cost of maintaining a certain lifestyle in retirement.

Ways to prepare for a comfortable retirement

Don’t let current or expected living costs stop you from retiring where you want. Shirshikov has outlined some ways you can start preparing for a comfortable retirement now.

• Pay more into your retirement account. It never hurts to have a little extra. “As retirement approaches, it’s important to maximize contributions to retirement accounts like 401(k)s and IRAs,” Shirshikov said. “Catch-up contributions can be especially beneficial for those over 50.”
• Diversify, diversify, diversify. Portfolio diversification is key to balancing risk and growth over time, but as you approach retirement, you may want to focus more on stability. “That might mean moving from a portfolio that’s heavily weighted toward stocks to one that includes more bonds or dividend-paying stocks that can provide a reliable source of income during retirement,” he said.
• Prepare for healthcare. This is a big expense in retirement, so set aside extra money to cover medical costs later in life. You can do this in many ways, such as through a health savings account.
• Consider moving somewhere else. If the cost of living is still a big issue, consider moving to a slightly cheaper location — either within the U.S. or abroad. “If staying in an expensive city like San Francisco or New York isn’t essential, moving to a city with a lower cost of living can significantly reduce expenses in retirement,” Shirshikov said.

Methodology: In this study, GOBankingRates analyzed large U.S. cities to determine how long $1 million will last in retirement. For this study, GOBankingRates assumes a person retires at age 65. GOBankingRates first identified the (1) 50 most populous cities by total population and (2) population ages 65 and older, as reported by the U.S. Census’ American Community Survey. GOBankingRates then analyzed each city for several factors including (3) food cost of living index, (4) healthcare cost of living index, (5) utilities cost of living index, (6) transportation cost of living index, (7) other cost of living index, all from Sperling’s BestPlaces and multiplied by the (8) national average cost of spending for persons age 65 or older as reported by the Bureau of Labor Statistics’ Consumer Expenditure Survey to determine the average cost of spending in each city. The (9) average cost of rent as of December 2023 for each city was taken from the Zillow Observed Rental Index and added to the average annual expenses to determine the total annual cost of living. Dividing the $1 million in savings by the total annual cost of living gives the years it would take to burn through $1 million in savings in each of the major U.S. cities. All data was collected and is current as of February 7, 2024.