If you’ve saved $1 million for retirement, you should be set, right?
Even to high net worth individuals, $1 million may seem like a lot of money, but $1 million isn’t what it used to be. Neither is retirement.
To determine how much you’ll actually need to live on in retirement, it’s important to determine how long your retirement could be (as people live longer, retirements are lasting longer), how you plan to spend your retirement years and where you plan to spend them. Cost of living considerations are key to accurate retirement planning. How much you need to live a comfortable retirement in New York City is likely much different than what you’d need to enjoy that same lifestyle in San Antonio, Texas. Even the cost of living in different areas of the same state can fluctuate significantly.
It’s also important that your funds are managed well. Again, your retirement could stretch 20, 30 even 40 years. Will your retirement funds survive inflation or are you on track to outlive your retirement funds?
As more and more retirees decide to spend their Golden Years in Texas, the team at PAX Financial Group, headquartered in San Antonio, Texas, is routinely asked 2 common questions:
- Is San Antonio, Texas a good place to retire?
- Is it expensive to live in San Antonio, Texas?
In this article, we’ll discuss both.
Retiring in Texas? Schedule a no-obligation conversation with the team at PAX Financial Group to see how we can help.
Where you live can make a huge difference in how much money you need. For example, according to data, the median home cost in New York, New York is $654,300, while in San Antonio, Texas, it’s $220,300! In Boerne, Texas, the cost is $442,800. And that’s just the cost of housing. When you add the cost of utilities, transportation, healthcare, etc., the difference gets even wider.
Housing is likely to take the biggest bite out of your retirement savings, followed closely by healthcare and long-term care expenses. Even if you’ve planned to pay off your mortgage by the time you retire, there’s a good chance you’ll still have housing costs. How? We talk with a lot of pre-retirees who believe that owning their home free and clear means their housing expenses in retirement will be $0, but that’s not the case. As long as you own your home (as opposed to renting), you’ll be required to pay property taxes on the assessed value of your home and there will inevitably be repairs at some point during your retirement. You may also be on the hook for HOA costs, development fees or Mello-Roos.
The cost of utilities is yet another example of how your geography can affect your bottom line in retirement. Utility costs, another significant annual expense you can’t really avoid in retirement, can be lower or higher depending on where you live, or plan to live. “Utility costs” in this case include electric, gas, water and sewer.
Similar to real estate, expenses can vary from state to state and even region to region.
You may also be able to reduce your utility costs by moving to a smaller or more efficient home.
Another element to consider when deciding where to retire is taxes – not all states are created equal! Some are more tax-friendly than others. Remember, you don’t stop paying taxes just because you stop earning a paycheck. Depending on the type of retirement plan you’ve been contributing to, you may owe income taxes on the earnings or the entire balance. In addition to planning for those taxes, it’s also important to be strategic about how and when you make withdrawals (which is when you’ll pay income tax on Traditional 401(k) and IRA withdrawals).
The good news if retiring in Texas is there is no income tax! Texas doesn’t tax any retirement income, including Social Security, pension funds and retirement account withdrawals. However, you’ll still be subject to federal income taxes.
If you’re a military veteran, you likely know that you’re eligible for special benefits and programs, but you may not have realized that these benefits are not the same state to state. Texas ranks highly in this category, with Veteran’s Administration healthcare centers, the Veterans Land Board program, tuition benefits, and several veteran retirement facilities to name just a few. San Antonio, Texas also offers tax exemptions for disabled veterans.
How You Manage Your Money Matters
Other factors that can have an impact on how long your money will last in retirement will include your lifestyle and other living expenses, how long you live, how accurately you calculated your needs, how closely you stick to your budget and how your overall retirement plan is structured, among other things.
- Are you contributing to a Traditional retirement account or a Roth account?
- Will you be eligible for Medicare when you retire?
- When will you start receiving your Social Security benefits?
- Does your investment portfolio put you at risk in retirement?
- Are you overly concentrated in your portfolio?
At PAX Financial Group, we can help you set up a plan specific to where and how you plan to spend retirement.
Based in San Antonio, Texas, PAX Financial Group understands the ins and outs of retiring in Texas, and more specifically, retiring in San Antonio, Texas. Locally owned and independent, our financial advisors offer holistic financial assessments, investment management and insurance all in one place. Stop stressing about whether San Antonio, Texas is a good place to retire or if it is expensive to live in San Antonio Texas. Schedule a no-obligation conversation with our team.
This material is provided by PAX Financial Group, LLC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The information herein has been derived from sources believed to be accurate. Please note: Investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results.