The cost of living in American cities has skyrocketed so much that retirees now need more than $3 million to be considered "wealthy" in them, according to a new study from GoBankingRates.
In this study, a team of researchers first calculated the minimum savings needed to retire for 20, 25 and 30 years in America's 50 largest cities.
They analyzed each city's annual cost of living and subtracted the annual Social Security income (as sourced from the Social Security Administration's Monthly Statistical Snapshot as of May 2024).
Then, to find the savings needed to be "rich", the study took the minimum savings needed in each city and doubled those amounts. We ranked each city based on the smallest to largest amounts needed to be considered rich for 25 years of retirement.
The study found:
- It takes more than $3,000,000 to be considered wealthy in 10 cities. The top three cities where you'll need the most savings to be rich are all in California: San Francisco (~$6,000,000), San Jose (~$5.5M) and Oakland (~$4.5M).
- It takes significantly less savings to be wealthy in New York than it does in San Francisco. You'll need roughly $3.8M to retire rich in New York, which is substantially less than the $5.95M needed in San Francisco.
- Austin is more expensive than many people realize. Austin was the 11th most expensive city on our list, ranking right next to Boston. In Austin, you'll need more than $2.5M to be considered rich for 25 years of retirement.
According to the data, the financial requirements for retirees looking to enjoy a rich lifestyle are particularly steep in cities such as San Francisco, San Jose, and New York City.
For instance, in San Francisco, the savings needed for a 20-year retirement amount to a staggering $4,757,745. Extending this to a 25-year retirement pushes the savings requirement to $5,947,182, and for a 30-year retirement, retirees would need an eye-watering $7,143,762. The annual cost of living after Social Security in San Francisco is $118,944, reflecting the high cost of living in this iconic city.
Similarly, San Jose demands equally substantial savings, with $4,422,401 needed for a 20-year retirement, rising to $6,640,241 for 30 years. The annual living cost post-Social Security here is $110,560, emphasizing the financial burden retirees face in the heart of Silicon Valley.
New York City, another major metropolitan area, requires retirees to save $3,069,460 for 20 years of retirement, increasing to $4,608,798 for 30 years. The annual cost of living after factoring in Social Security stands at $76,736, making it one of the most expensive cities to retire in. This trend is mirrored in other high-cost cities like Los Angeles and Oakland, where retirees need upwards of $2.8 million and $3.6 million respectively for a 20-year retirement, and the costs only escalate with longer retirement periods.
The study and data on all 50 states can be read in its entirety here.
