California is known for its fabulous weather, great cultural events, and world-class cities. However, the high cost of living in the state makes it the least affordable state for retirees according to Bankrate’s Best States to Retire study. While California has many positive aspects, affordability remains a significant concern for retirees looking to spend their golden years in the Golden State.
Despite ranking well in categories like health care, weather, and overall well-being, California’s affordability score dragged it down to the 47th spot overall for retirees. Affordability, which accounted for 40 percent of the retirement score, includes factors like property taxes, sales tax, homeowner’s insurance premiums, and the cost of living index.
For many Americans, the lack of retirement funds is a major source of financial insecurity. In Bankrate’s 2023 financial freedom survey, 41 percent of respondents cited insufficient retirement savings as a key reason for their financial concerns.
While California may be appealing for those with financial security, states like Delaware offer relative affordability along with other positive attributes, making them more attractive for retirement.
Reasons for California’s Low Retirement Ranking
California’s ranking as the worst state for retirees is largely due to its affordability score in Bankrate’s study. The state’s overall retirement ranking was based on several factors with different weightings:
- Affordability (40 percent): California ranked 50th in this category, considering property taxes, sales tax, homeowner’s insurance premiums, and the cost of living index.
- Well-being (25 percent): California ranked 15th, based on factors like the number of older adults per capita, community well-being index, diversity index, and arts and recreation establishments per capita.
- Quality/cost of health care (20 percent): California ranked 6th, considering health care costs, establishments, and system performance.
- Weather (10 percent): California ranked 12th, factoring in natural disasters and average temperature.
- Crime (5 percent): California ranked 46th, based on crime rates per state.
Due to the heavy weight on affordability, high-cost states like California tend to rank poorly in retirement studies. As a result, California landed at the bottom of the list for overall retirement affordability.
Best and Worst States to Retire in 2024
| Top 5 | Bottom 5 |
|---|---|
| 1. Delaware | 50. Alaska |
| 2. West Virginia | 49. New York |
| 3. Georgia | 48. Washington |
| 4. South Carolina | 47. California |
| 5. Missouri | 46. North Dakota |
California’s Affordability Challenges
California struggles in the affordability category, particularly in the cost-of-living index, where it ranked 48th. Property taxes and sales tax also placed the state at 45th and 43rd, respectively. The average annual tax on a home in California was $6,833 in 2023, according to ATTOM Data Solutions.
However, California performed relatively better in homeowner’s insurance costs, ranking 18th with an average annual premium of $1,453 in June 2024.
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Crime Rates in California
California also struggles in terms of crime rates, ranking 46th overall. While this category had a lower impact on the rankings (5 percent), California’s position was still concerning.
Crime rates were divided into violent crime and property crime subcategories, with California ranking 45th for violent crime and 42nd for property crime.
After considering these factors, California ended up at 46th place overall for crime in the rankings.
Positive Aspects of California
Despite its challenges in affordability and crime, California excels in other areas that contribute to quality of life, such as health care, well-being, and weather.
Strength in Health Care
California’s health care quality and affordability earned it a sixth-place ranking in the U.S. Factors like health care costs per capita, number of health care establishments, and state health system performance contributed to this ranking.
California spent an average of $10,299 per capita on health care in 2020, ranking 22nd nationally. The state also had 325 health care facilities per 100,000 residents, placing it at 11th in this category.
In terms of state health system performance, California ranked 13th, indicating a well-functioning health care system.
Weather Favorability
California’s pleasant weather contributed to its 12th-place ranking in this category. With an average annual temperature of 59.3 degrees Fahrenheit, California offers a comfortable climate for retirees.
While the state faces natural disaster risks like earthquakes, its overall weather ranking remains favorable.
High Well-Being Scores
California scored well in the well-being category, ranking 15th overall. Factors like community well-being, diversity, and arts and recreation establishments per capita contributed to this positive score.
Despite its challenges, California remains a desirable location for retirees due to its strong health care system, pleasant weather, and vibrant culture. However, prospective retirees should carefully consider the state’s affordability and crime rates before making a decision.