cost of living

How to Retire With Less Than $1 Million in Savings

Aja McClanahan — Fri, 09 Mar 2018 09:00:07 +0000

The sad truth is that many Americans are vastly underprepared when it comes to retirement savings. A 2016 GoBankingRates survey revealed that 33 percent of Americans have nothing saved for retirement at all. In total, 56 percent have less than $10,000 saved.

How much money does it actually take to retire comfortably? It seems like one million dollars is the magic number many people think of — and today, with people continuing to live longer, some think that magic number should be closer to $2 million. But is it really necessary? Could some people could get by in retirement on less?

For some, a smaller retirement income could actually support a reasonable lifestyle provided inflation and health care costs don’t get out of hand. For others, it might be a financial struggle.

That being said, let's explore all the different ways you could live a happy retirement even if you don’t amass a million-dollar nest egg.

Work part-time

If your nest egg won’t stretch far enough for all of your financial needs, a part-time job could help immensely. Not only can the extra income come in handy, but a few hours of work per week can have a positive effect on retirees' mental health, as well as their sense of purpose and social life.

You can choose to work in the same field as you always have or launch a second career, maybe in a field you've always been curious about. Turning a hobby into a business could also be profitable, provided it doesn't require a large financial investment to get off the ground. If you already have the skills and materials needed to get started, it can be a cost-effective and rewarding option to bring in extra income. (See also: 5 Questions Retirees Should Ask Before Starting a Small Business)

Wait to take Social Security

If you can live comfortably on your savings early in your retirement, most people should hold off on taking Social Security benefits for as long as they can. The Social Security Administration reports that if you delay receiving retirement benefits until after your full retirement age, your monthly benefit continues to increase. If you can wait until you’re 70 (the maximum age for waiting) you can get 132 percent of your expected payout. Unless your physical health or family history makes you think you will die before your late 70s, it usually makes sense to wait.

This strategy requires patience and frugality, and it may not work for retirees who need their benefits earlier to get by. Before taking this option, make sure you’ve got the financial means to wait, and that you have no other options for bringing in an alternative source of income. (See also: 6 Smart Ways to Boost Your Social Security Payout Before Retirement)

Reduce your housing costs

Housing is one of the largest expenses you’ll incur in life. If you can decrease this expense, you could live on a lot less in retirement. One way of doing this is to move into a smaller home or apartment. This could help you eliminate or drastically lower your mortgage payment, as well as minimize other housing costs like utilities, maintenance, and property taxes.

Another option is moving in with friends or family, if they are willing and able to take you in. Sharing a home is becoming increasingly common due to the rising costs of living for not only retirees, but for everyone else. If you don't have friends or family you could bunk with, you could try to find a roommate that could help foot your housing bill. (See also: 6 Ways You Can Cut Costs Right Before You Retire)

Invest in a health savings account (HSA)

A health savings account is available to those who have a high deductible health care plan. You contribute pretax dollars into your HSA, and can use those same pretax dollars to cover qualified health care expenses — everything from hearing aids, to X-rays, to bandages.

The best part about this plan is that it can become a helpful part of your retirement savings when you turn 65. At this point, your HSA basically becomes a traditional IRA. You can withdraw the funds for anything — health care related or not — to help supplement your retirement income. Funds withdrawn for qualified medical expenses will continue to be tax-free, while nonmedical withdrawals will be taxed as ordinary income. (See also: How an HSA Could Help Your Retirement)

Consider relocating to a low-cost country

The number of American expats abroad is very surprising. The U.S. Department of State estimates that as many as 9 million citizens live overseas. There's a reason so many Americans are choosing to live out their golden years abroad; moving to a country with a lower cost of living means that their retirement dollars are stretching a lot further.

In lower cost of living countries, you will see steep savings on housing, food, and even health care. Many people can also afford inexpensive help from locals to assist in tasks like cooking, cleaning, and running errands.

What’s more is that many of these countries have beachfront properties and communities that are affordable even for the non-millionaire retiree. Though you may be leaving friends and family behind, the good news is that they may be more likely to visit you if there’s a beach involved. (See also: 4 Affordable Retirement Spots With World-Class Health Care)

Invest in cash producing assets

If you don’t have one million dollars in cash, you might be able to make up the balance with other assets like real estate, stocks, or a small business. All of these assets have the potential to add another stream of income for you in retirement.

Real estate can be an excellent source of cash flow if you are able to charge rents that exceed expenses for your property. If you own dividend-yielding stocks, the income from dividend payouts can also boost your bottom line. Finally, if you have an interest in a business that is profitable, you could retire on less than $1 million with a moderate amount of monthly net income. (See also: 7 Reasons to Invest in Stocks Past Age 50)

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This article is from Aja McClanahan of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Ways to Handle Big City Rents

Aja McClanahan — Thu, 01 Mar 2018 09:30:06 +0000

If you can't resist the lure of big city living, but hate the impact it would have on your pocketbook, you might be wondering if there's any way you can actually afford such a move. In some ways, living in the city can be worth the costs — the convenience, the night life, and plentiful job prospects are just a few perks of living in a bustling metropolis.

While you don't want to overextend yourself, there may be a way to make your big city dreams come true. Here are some tips that can help you handle big city rents.

1. Don't look at apartments outside your budget

This sounds obvious, but it can be easy to get carried away when you see the "perfect" place. Different landlords and management companies will have varying requirements around income and credit, but it's important to avoid busting your budget despite their thresholds. Before you even begin touring apartments, consider the financials first. Figure out a comfortable amount of rent that would fit your budget. Limit your search to places that stay within that dollar amount. (See also: Here's How Much Life in the Big City Will Cost You)

2. Keep it compact

If you really want to save on high rents, you'll probably have to consider a much smaller place than you would living in a suburb. Maybe you really wanted a two or three-bedroom apartment to accommodate your home office and occasional overnight visitors, but it causes the rent to skyrocket. Making some concessions on your "must-haves" could save you a lot of money living in the big city.

3. Look for a sublet

Someone else's inconvenience could be very convenient for you. At times, people need to move before their lease is up and there's not much they can do about it. Rather than break the lease and incur the associated fees, they choose to sublease their place for slightly less than market value.

If you can find someone who needs to unload their rental via subletting, it could easily save you a few hundred bucks a month. There are a few legal nuances that could make this arrangement complicated, so make sure you know your rights and clear the subletting agreement with the landlord before agreeing to anything. (See also: 10 Best Tools for Finding an Apartment on the Cheap)

4. Consider up and coming neighborhoods

You might want to be at the epicenter of the local club scene or famous block of hipster dive bars. The only problem is that these trendy places could cost a fortune in rents. Would you be open to living somewhere that isn't quite yet at the center of all the action?

Think about places that are safe but still on the verge of becoming a preferred neighborhood. Rents in these trendy urban outposts can be surprisingly low. The bonus here is that you could get a great place with lower expenses and beat out neighbors who'll discover the area at higher rent prices later down the line.

5. Get a roommate

If you've found a big-city apartment, but can't seem to make ends meet, it might be time to get a roommate. The good news is this should be pretty easy to do, especially in a city. There are tons of apps, services, and websites where you can start your roommate search full-force. Some popular ones include Craigslist, Facebook, Silvernest (for baby boomers and empty nesters), and Roomster. (See also: Avoid These 7 Things When Living With Roommates)

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This article is from Aja McClanahan of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

6 European Cities Where Retirement Is Actually Affordable

Holly Johnson — Wed, 28 Feb 2018 09:31:05 +0000

These days, more and more Americans are looking to retire overseas. The reasons for retiring abroad are plenty: adventure, lower cost of living, higher standard of living, and better weather, to name a few. But lists of the most affordable places to retire overseas are often dominated by Latin American and Asian countries.

What if you've had your heart set on moving to Europe, though? While a luxury French villa or a vineyard in Tuscany may be out of reach for many people, there are still history-steeped places in Europe where you can experience old-world charm on a limited budget. Here are some of the cheapest cities you can settle down in across various European countries. (See also: How to Choose the Perfect Country to Retire in)

1. Budapest, Hungary

Budapest has long been known for its spire-topped skyline, cultural flair, and thermal baths. The city is an easy place to explore or just relax and do nothing, with plenty to see and do, but a laid-back vibe that's perfect for retirement.

Budapest is also known for its affordability, with the cost of living running similar to some medium-priced cities in the U.S., according to the cost-tracking website Expatisan. Rent for a 900-square-foot furnished apartment ranges from $675 to about $1,000 per month. Utilities should cost around $117, and internet around $15. Dinner for two at a neighborhood pub will run you around $22, and a three-course Italian meal for two with wine will set you back $43. (See also: 13 Financial Steps to Take Before Retiring Abroad)

2. Prague, Czech Republic

Prague is another European city whose cultural profile has become well-known. Tourists flock to this interesting hub for its fairy tale architecture, cobblestone streets, outdoor cafes, and world famous beer. The picturesque Vltava River, spanned by more than 30 bridges, forms the soul of the city, with gardens, public squares, and castles rounding out the romantic cityscape.

But Prague has more going for it than its stunning views and cheap, free-flowing beer. The city has also remained affordable despite its popularity, making it a smart stop for expat retirees.

According to Expatisan, the average cost to rent a furnished 900-square-foot apartment in Prague is only $888 for an average place, or $1,260 per month in the most expensive areas. A liter of milk costs less than $1, two pounds of tomatoes will set you back around $2, and a beer in the supermarket costs only 88 cents.

Heck, a bottle of red table wine only costs around $7. If that doesn't bode well for an affordable retirement, we don't know what does. (See also: How to Get the Most Out of Your Overseas Retirement)

3. Algarve, Portugal

Tourists flock to the Algarve region of Portugal for its scenic ocean cliffs, famous beaches, and many museums. The region is also brimming with historical sites, including old town centers, medieval fortresses, castles, and ancient forts.

Living in Algarve is surprisingly affordable, and that's despite the region's proximity to the water. According to cost of living website Numbeo, rent for a one-bedroom apartment in the city center could cost as little as $346, while a three-bedroom apartment in a central location costs an average of $614 per month. Basic utilities (heat, air conditioning, electricity) will add another $87 to your housing costs, on average, they note.

Food can also be insanely affordable. A pound of bananas may only cost 54 cents, for example, while a three-course dinner for two in a midrange restaurant may cost as little as $36. (See also: Avoid These 5 Mistakes When Retiring Abroad)

4. Pescara, Italy

Pescara, Italy is ideally located along the country's eastern coast, a few hours from Rome and Naples. Here, you can enjoy a slow Italian lifestyle with some of Italy's most gorgeous waterfronts, and all within a day's reach of some of the world's most important historical sites.

You can also save a bundle in the process. Rent in Pescara is surprisingly affordable, with a furnished, 900-square-foot apartment in one of the city's most expensive areas costing just $936, on average, according to Expatistan. Rent in a "normal" area, not necessarily considered to be an expat neighborhood, could cost as little as $679. Add $130 for utilities to the bill and your total housing costs could easily stay below $1,000 per month year-round.

Eating out in Pescara can be expensive, but buying your own staples will save you money. Two pounds of potatoes cost about $1.65, bread for two people for a day runs $1.25, and a bottle of table wine will set you back about $7. (See also: What You Need to Semi-Retire Abroad Right Now)

5. Bucharest, Romania

Bucharest is a great destination if your goal is learning about history, including communism and its role in Romania. Attractions include a long list of gorgeous historical buildings and monuments, a communism-themed walking tour, a Holocaust memorial, and even a Romanian kitsch museum.

If you're looking for an affordable place to retire, put Bucharest on your list. A 900-square-foot furnished apartment in the expensive parts of Bucharest will only set you back $723, while an apartment in more middle-class areas could cost as little as $451 per month. Average utility bills only cost around $100 as well, making your overall housing costs affordable.

Food can also be downright cheap. A three-course Italian meal for two, including wine, in an expat area costs around $43, a loaf of bread is around 62 cents, and a pound of potatoes is around 30 cents. (See also: Don't Let These Expenses Spoil Your Retirement Abroad)

6. Pula, Croatia

If you're looking to retire somewhere off the beaten path, Croatia should be on your radar. The seaside city of Pula is of interest specifically due to its low cost of living and amazing history. The harbor town is dotted with well-preserved Roman ruins, including an intact amphitheater and its own Temple of Augustus. Museums here house ancient artifacts, as well as contemporary art.

Pula is considered one of the most affordable spots in Europe, with a 900-square-foot furnished apartment in an expat area costing about $580 per month and a similar flat in an average area running $445. Utilities add another $120 per month on average, but a monthly transportation pass costs just $35.

You can have a great time dining out in retirement, too, in Pula. A basic dinner for two at a neighborhood pub runs $23, and a beer just $2.50.

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This article is from Holly Johnson of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

7 Questions to Ask Before Moving Out of State

Kat Tretina — Fri, 23 Feb 2018 09:30:09 +0000

Growing up in Pennsylvania, I learned to dread the winter months. The cold and snow would leave me feeling depressed and miserable. I dreamed of moving somewhere warmer, but I was afraid of the high cost.

After months of waffling back and forth and saving every dime I could, I finally took the plunge and moved to Florida. And while it was expensive and scary, I've never regretted it.

Whether you're contemplating a job offer in another state or simply want a change of scenery, relocating is a big decision. Before deciding one way or another to move hundreds or even thousands of miles away like I did, ask yourself these questions.

1. What is the cost of living?

If you're reviewing a job offer or looking for a new job in another state, make sure you keep in mind the cost of living. Even if you earn a higher salary in your new state, you could still end up in worse financial shape than before if living in the area is too expensive.

Depending on your intended location, you could need thousands more dollars to maintain the lifestyle to which you're accustomed. The cost of everything from housing to groceries can significantly add to your expenses.

Use a cost of living calculator to figure out how much you'd need to earn to afford living in your new city. Say you lived in York County, Pennsylvania and earned $50,000 per year. If you wanted to move to San Diego, where housing costs 160 percent more, you'd need to earn at least $73,673 to keep your same standard of living. (See also: Here's How Much Life in the Big City Will Cost You)

2. Who will care for family members?

If you have elderly or disabled family members, coming up with a plan for their care should be part of your relocation decision. If you cannot be there with them, you'll have to find a way to provide for them otherwise. Depending solely on outside care or nursing home facilities can be cost-prohibitive for your relative; a recent study by Lincoln Financial Group found that a private room in a nursing home costs an average $102,911 per year.

If that cost is beyond your family's budget, and they were depending on you to some extent for help with daily life, moving to a new state may not be practical or financially wise.

3. How will you adjust to the climate?

Although some moves can be beneficial in terms of climate (hello, beaches!), some people struggle adjusting to new weather conditions. If you're from a state with four seasons, moving to a warmer place can be hard. You might find that you miss the snow and changing seasons. If you move from a sunny place to somewhere with long, gloomy winters or regular rain, it can be a strain on your mental health.

If at all possible, spend some time in town during the state's poorest weather season to see how you cope. You might find that you can handle the cold better than you expected, or you might discover you hate it and want to stay put.

4. How much will is cost to move?

You know moving is expensive, but until you see the real numbers, it's hard to get an idea of how much it really will hurt your budget. According to the American Moving and Storage Association, it costs an average $5,360 to move to a new state.

If you have to break a lease or struggle to sell your home, you might need to spend thousands more to make the move possible. (See also: Avoid These 6 Common Mistakes When Moving Across the Country)

5. Is there a state income tax?

If you're in a state like Florida or Texas, which do not have a state income tax, moving to a place that does can come as a big shock. The raise you carefully negotiated at a new job might be negated by the increased taxes taken out of your paycheck.

6. What college savings programs are available?

If you have children, saving for their education is likely a major priority for you. And with current four-year tuition costs reaching an average $9,650 for in-state schools and $33,480 for private schools, that's a smart decision. However, where you live can impact your college savings.

All states offer at least some form of a 529 plan, such as a prepaid tuition or a college savings program. However, some states only offer one type, which can limit your child's educational options.

In addition, some states offer tax benefits for contributing to a 529 plan, while others do not. Switching to a new state could result in losing those benefits, reducing how much you can save each year. (See also: The 9 Best State 529 College Savings Plans)

7. Will you feel isolated?

Beyond financial and logistical issues, moving can be emotionally exhausting and difficult to navigate. If you grew up in one area and became attached to the neighborhood, moving to a place you don't know, without friends or family, can be lonely and isolating. You might find that even the best job is not worth the move without your loved ones.

However, other people thrive on the unknown and the sense of adventure that comes from entering a new place and meeting new people. Only you can know what works for your situation. By asking yourself these questions and preparing for a move ahead of time, you can ensure you make the best decision for you and your family.

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This article is from Kat Tretina of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

4 Countries Where You Can Live on $1,000 a Month

Nick Wharton — Thu, 22 Feb 2018 09:30:09 +0000

There are many reasons why you might be thinking about taking the plunge, uprooting your life, and moving abroad. Perhaps you're looking to find an exotic retirement paradise where you can make the most of no longer having to spend so much of your time going to work. It could be that you're moving for work or education reasons. Or maybe you're just looking for a new and exciting experience in an unfamiliar country. (See also: 9 Ways Expats Can Maintain Their Credit Scores)

Regardless of your reasons, cost will probably be a central factor in where you decide to end up. Your choice of destination could mean the difference between living in luxury and scraping pennies together to make ends meet. If you're on the lookout for somewhere cheap to call home, here are four countries where you can live for $1,000 per month.

All costs are based on information gathered from Numbeo, the world's largest database of user contributed data about cities and countries worldwide.

Mexico

There are many reasons that Mexico is one of the most popular destinations for Americans to move to. It's nearby and convenient to travel to, the weather in much of the country is temperate year-round, and the cuisine is so delicious it's been exported all over the globe. Mexico is also extremely diverse, with its mixture of vast cities, popular beach resorts, and rural villages catering to all tastes. On top of this, it's far cheaper to live in than the U.S. (See also: 5 Countries That Welcome American Retirees)

Rent prices are a major reason for the difference in the cost of living. They are on average a quarter of the cost of rents in the U.S., with the rent for a one-bedroom apartment in the city center typically coming in at around $272. You can expect basic utilities and internet services to cost under $60 per month combined.

Food costs are also low, with fresh produce prices from local markets being far lower than in the U.S. You'll even be able to afford to eat out regularly, as a meal at an inexpensive restaurant will total less than $5.

Transportation costs are low no matter where you are in the country, with one-way tickets on local transportation averaging 42 cents. Taxi flag fare is about $1.60, plus you'll pay around 77 cents per mile after that. Also, health care is generally half or less than what you'd expect to pay in the United States. (See also: How Almost Anyone Can Afford to Retire in Mexico)

Thailand

Southeast Asia is a well sought after destination for those on the lookout for something exotic, and Thailand is probably the most favored country in the region. Expats tend to head to either the large cities with great infrastructure like Bangkok and Chiang Mai, or the tropical islands with their white sand beaches and laid-back lifestyle.

One of the most attractive things about living in Thailand is just how affordable it is, regardless of where in the country you choose to settle. Rent is significantly cheaper, costing about 40 percent of the average rent in the U.S. A one-bedroom apartment in the city center averages around $494 per month. Utilities and internet for your apartment will total around $96 a month.

Thai food is some of the most celebrated in the world, and you'll be happy to hear that it's also extremely inexpensive. Street food is a huge part of the culture, so much so that many Thai homes don't have a kitchen. You can eat out for just a couple of dollars per meal, and even midrange restaurants are unlikely to cost you more than $10 per head.

Transportation is cheap, too. A one-way journey on local transportation will set you back around 83 cents, and tuk tuks or taxis are also an affordable option, costing $1.09 to get started and around 60 cents per mile thereafter. (See also: How I Saved Enough for a Down Payment While Working in China)

India

India isn't necessarily the first place that would spring to many people's minds when it comes to expat destinations. However, it's got a booming economy and a large number of English speakers, which helps to break down any potential language barriers. If the subcontinent immediately conjures up images of the chaotic streets of New Delhi, it's worth noting that the country also has stunning mountain scenery, laid-back beach towns, and tranquil hill stations.

Rent prices are some of the cheapest in the world, coming in at only 15 percent of the average U.S. rent, with a one-bedroom city center apartment averaging $174. Because prices are so low, it's easy to upgrade to more luxurious lodgings if you choose without breaking the bank. Either way, around $50 will be enough to cover your monthly utilities and internet bills.

The food in India is some of the most flavorful in the world, and it's also unbelievably cheap. Inexpensive meals will cost you little more than $2, and a meal at a midrange restaurant will be under $5, so you'll be able to eat out a lot if you choose to.

Getting around is affordable, too. A one-way fare on local transportation will cost around 30 cents, and taxi flag fare is 78 cents, with each additional mile costing about 33 cents. (See also: 13 Financial Steps to Take Before Retiring Abroad)

Colombia

Colombia's reputation has been improving for the past few years, and it's now regularly touted as one of the "it" destinations for travelers to visit. From its super modern cities to it's chilled out Caribbean coast and lush countryside, the country's varied environments make it a wonderful place to live.

Colombia's popularity among expats is growing considerably. As the country sheds its tumultuous past, more and more retirees and expats are finding that the country is safe and offers great value for the cost.

Rental costs in Colombia, even in the bigger cities, are far lower than in the U.S. It costs around $277 per month for a one-bedroom apartment, about a quarter of the average rent price in the U.S. Utilities and internet services average less than $100 per month, leaving you with plenty to spend on other things such as sampling the delicious cuisine.

Fresh food is very affordable throughout Colombia, and eating out is also a popular pastime thanks to the affordability of restaurants. For a few dollars, you can get an inexpensive meal, and for less than $10, you can eat at a midrange restaurant.

Transportation in Colombia is quite advanced, particularly in the big cities, which have good metro and bus networks. A one-way journey on local transportation will cost around 70 cents, and you may want to stick to it because taxis are considerably more expensive at about $2.53 per mile on top of a $1.57 flag fare. (See also: 5 Countries Where You Can Retire for $1,000 a Month)

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This article is from Nick Wharton of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

7 Smart Reasons to Retire Abroad

Nick Wharton — Tue, 05 Dec 2017 09:30:10 +0000

For some people retirement is a time to slow down, take stock, and simply enjoy not having to suffer the nine-to-five grind every day. For others it's an opportunity to fulfill long held ambitions and head overseas on a great adventure. If you're caught in two minds about what sort of life you want when you wave goodbye to your work commitments, here are seven reasons to retire abroad. (See also: 9 Things to Know Before Retiring Abroad)

1. Reduced cost of living

The U.S. is ranked by Numbeo.com as one of the top 25 most expensive countries in the world in terms of cost of living. That means there is a huge number of alternative countries where you could potentially reduce your living costs, and in many instances quite drastically. A 2015 report by the U.S. Government Accountability Office says that "most households approaching retirement have low savings," meaning that many Americans could struggle in retirement.

Perhaps you're among those concerned about the level of your savings as you head into retirement. But even if you're not, moving abroad to a country with a lower cost of living could be a good way to make your savings stretch. For as little as $1,000 a month you could afford a comfortable retirement in a number of exciting countries. (See also: 5 Countries Where You Can Retire for $1,000 a Month)

2. Higher standard of living

Along with a decrease in expenses, moving abroad could also bring you a higher standard of living than you'd achieve by staying in the U.S. Perhaps you dream of living by the beach, having help around the house, pursuing a pricey hobby, or being able to afford private nursing as you grow older. These may not necessarily be things you'd be able to afford at home, but could well be within your reach by moving abroad.

Getting more for less is one of the main reasons many retirees decide to take the plunge and emigrate. Depending on the country you choose, things you might otherwise consider to be luxuries could become part of your everyday life. (See also: Retire for Half the Cost in These 5 Countries)

As an example, I'm currently living in Koh Samui, Thailand. Just the other day I spent $10 on a wonderful one-hour massage on the beach and I had a delicious organic meal at a beautiful yoga retreat for just $11. These types of experiences would have cost me a lot more in the U.S.

3. Better weather

A driving factor for a lot of retirees who decide to settle abroad is the promise of better weather in other countries. For many, people a cold climate and dreary weather are harder to cope with as they get older. There are plenty of places with tropical climates where you can expect blue skies and consistent heat, regardless of the month.

Being able to say goodbye to long, hard winters and swap heavy overcoats for shorts and T-shirts is a fantasy that appeals to many of us. More sunshine doesn't just mean a permanent tan; it can also have a positive effect on your quality of life by allowing you to do more outdoor activities throughout the year. (See also: How to Choose the Perfect Country to Retire In)

4. Cheaper health care

As we get older, the price and quality of medical services available to us naturally becomes a bigger concern. The cost of health care in the U.S. can be so expensive, it can drive you into medical debt. Many overseas retirement hot spots have excellent, affordable health care systems that are easily accessible. There are various options for how to pay for health care when you're abroad, and, depending on your circumstances, each has benefits and drawbacks.

An international medical insurance policy is often the safest bet, as it provides comprehensive international coverage. This is ideal if you plan to travel. However, be aware that these policies often don't include treatments back in the U.S. so it's unlikely you'll be covered during visits home. Single country medical policies are available for if you're planning on staying solely in your chosen country and not traveling abroad.

5. To avoid regrets

Nobody wants to look back on their life and have regrets over the things they wish they had done, but never managed to. As a retiree you've most likely worked hard over the course of your career and potentially even sacrificed some of the aspirations that you had when you were younger.

It's never too late to build the life of your dreams, and rest assured you won't be alone in heading overseas to do just that. Don't let fear of the unknown stop you from fulfilling those objectives in your golden years. (See also: 6 Ways Travel in Retirement Keeps You Young)

6. To slow down the aging process

Retirement abroad is the perfect time to welcome new challenges and take advantage of the exciting opportunities that come your way. The Alzheimer's Association suggests that mental stimulation can help stave off mental decline associated with aging and help build new brain cells in the process. Learning about a new culture, exposing yourself to different experiences, and taking up a new language are all great ways to exercise the brain. (See also: 5 Ways Science Says Travel is Good For Your Health)

7. For the adventure

No one knows exactly how retiring abroad will turn out, but one thing is for sure: It will be a great adventure. It will give you the opportunity to start afresh and live the life that you've always dreamed of. With all of the free time you'll have, the opportunities to travel, explore, and meet new people from a new culture are endless.

Experience the different cuisine, take in unfamiliar scenery, and welcome the chances that arise with open arms. You might find your entire outlook on life changed, your opinions challenged, and preconceptions dashed. Retiring abroad could be the best thing you ever do. (See also: 5 Countries That Welcome American Retirees)

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This article is from Nick Wharton of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Here's How Far $1 Million Will Actually Go in Retirement

Toni Husbands — Tue, 28 Nov 2017 10:00:06 +0000

For years, saving $1 million for retirement has been on my nest egg to-do list. Using the 4 percent rule, where you withdraw 4 percent of your savings each year during retirement, a million dollars would produce a hypothetical income lasting up to 33 years. That seems like a nice round number and reasonable goal, especially with the traditional retirement age holding steady at 65 and the average American living for 20 years after retiring.

However, depending on where you live, $1 million may not last very long at all. So before you dive into your golden years, you should make sure you know exactly how far your savings will take you. (See also: How Much Can You Afford to Spend in Retirement?)

Where you live matters most

GoBankingRates compared the cost of basic living expenses in each state and found the length of time a million dollars lasts varies significantly across the country. In Hawaii, a state with the highest cost of living index, you could run out of cash in under 12 years. Unless camping out on the beach while subsisting on pineapples is your thing, Hawaii may not be the best option.

On the other hand, there's Mississippi. That same nest egg would last 26 years in the Magnolia State. Mississippi has the lowest cost of living index in the country. A retiree could live comfortably paying just $11,000 a year for housing. You may not be able to visit the white sandy beaches of Oahu, but the Gold Coast is nothing to sneeze at.

Other expenses to plan for in retirement

In addition to housing, the cost of living index accounts for basic necessities like food, taxes, and health care. Some states, like Vermont, tax Social Security benefits. Florida residents have the lowest Social Security payout, but they don't pay state taxes on those benefits.

Access and affordable health care options, senior transportation, and job opportunities for people over 65 are other financial aspects to keep in mind according to the Best Cities for Successful Aging index. Durham-Chapel Hill clocks in at one of the top spots in their list of best retirement cities. Retirees are attracted to the mild climate, low state and property taxes, and ample access to world-class medical facilities. Your $1 million nest egg would last nearly 24 years in this area. (See also: 9 Unexpected Expenses for Retirees — And How to Manage Them)

Calculating your retirement goal

I like my hometown. Chicago may not top the charts on any best-place-to-retire mega list, but access to my extended family, proximity to my future grandchildren, and a vibrant walkable city with great public transportation options may still be quality of life factors I value in my golden years. Staying put may be desirable even if your hometown doesn't make a "where to retire" hot list on the internet. Determining your retirement savings goal should start with where you plan to live and how much it will cost to live there.

Roger Wohlner, a financial adviser with The Chicago Financial Planner, advises would-be retirees to consider a number of options. Calculating a retirement savings goal is different for everyone.

"Are you going to have a mortgage? Are you going to move somewhere else and downsize? What are you going to spend your money on? It's really no different from how you live pre-retirement," he says.

Most of all, he suggests we factor in health care costs into any post-employment savings projections. "As you get older, [medical expenses] are more pronounced in retirement," Wohlner says.

Fidelity's annual study on health care costs found that a retired couple can expect to spend $275,000 on medical expenses during retirement, not including long-term care. And health care costs are rising well beyond the rate of inflation: The increase in medical spending from 2016 to 2017 alone was $15,000.

With your basic living expenses in mind, estimated health care projections, and a few dollars thrown in for hobbies — like traveling or spoiling the grands — head to your nearest online retirement calculator.

Experts suggest that a comfortable retirement lifestyle will require 70 to 80 percent of your current annual salary. Using a simple retirement calculator, you can figure out what your savings goal should be based on your savings starting point and estimated withdrawal needs. With a custom retirement savings goal in hand, you can start to determine if $1 million is still a workable goal, relocation is in your retirement future, or you need to revise your current savings strategy. (See also: How Much Should You Have Saved for Retirement by 30? 40? 50?)

In either case, determining your retirement goal should be an annual exercise, according to financial experts like Roger Wohlner. "This is not something you just do once. Circumstances change. People should really be updating this calculation every year," he says.

If entering your golden years with $1 million in savings doesn't work out in a desirable U.S. location, consider retiring abroad to one of many affordable countries where your savings will stretch even further. (See also: 5 Countries Where You Can Retire for $1,000 a Month)

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This article is from Toni Husbands of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Countries Where You Can Retire for $1,000 a Month

Nick Wharton — Tue, 11 Jul 2017 08:30:11 +0000

Most of us dream of retiring to a life of leisure, with a nest egg that will enable us to live comfortably. But according to the Government Accountability Office, up to two-thirds of workers are at risk of not maintaining the same standard of living they enjoyed pre-retirement.

Moving to a new country to live out your retirement could provide the perfect solution. Numbeo's Cost of Living Index has the U.S. listed as the 18th most expensive country to live in, meaning retirees have a huge number of cheaper countries to select from. Here are five countries where you can retire on $1,000 per month or less. (See also: 5 Countries That Welcome American Retirees)

1. Thailand

Thailand is best known for its tropical islands and exciting big cities, but it's also a destination where an increasing number of overseas retirees are settling down. It's got the magic combination of being well-developed while maintaining very low living costs.

Cost of living

Groceries are well-priced and good quality, and fresh produce is widely available. According to Numbeo, the average price of a loaf of bread is $1, a dozen eggs is $1.60, and a pound of rice costs just 50 cents. A three-course meal for two at a midrange restaurant costs $18, so you'll also be able to enjoy regular evenings out.

The transport infrastructure in Thailand is also good, with tuk tuks, taxis, and public transport providing easy ways to get around. Costs are low, with Numbeo suggesting the flag fare for an average one-way taxi ride is about $1, plus 50 cents per mile after that.

Typical fixed costs per month:
Rent for one-bed apartment in city center: $440
Utilities: $68
Internet: $20

Visa requirements

Retiring in Thailand is not so difficult either, as the country offers a one-year retirement visa for those age 50 and older, which is renewable every year in Thailand. You will have to report to the immigration department every 90 days. According to the Thai Embassy website, applicants must:

Be 50 or older.
Have no criminal record in Thailand or the country where you are applying.
Apply in your country of nationality or residence.
Not have prohibited diseases, including tuberculosis or drug addiction.
Have monthly income of 65,000 baht ($1,984 at the time of writing) per month, or a Thai bank account with a minimum deposit of 800,000 baht ($24,420 at the time of writing) in savings.

2. Bolivia

Although not the most fashionable country in South America, Bolivia is a great retirement option for outdoor lovers. From the Amazon rain forest to the Andes Mountains, there's an abundance of beautiful landscapes to explore. It's also one of the most affordable countries in South America.

Cost of living

The cheapest place to buy fresh produce is from the local markets throughout the country, but there are also many supermarkets with wider selections of international goods. As of this writing, Numbeo lists the average price of a loaf of bread as $1.10, a dozen eggs as $1.40, and a pound of rice as 50 cents. Splashing out on a three-course meal for two at a midrange restaurant will cost $16.

Transport systems in Bolivia are not the most advanced, but there are good public bus networks and inexpensive taxi services in most areas. According to Numbeo, the average cost of a one way bus fare is about 30 cents, and the starting fare for a taxi is $1.15 with $1.85 added for each mile.

Typical fixed costs per month:
Rent for one-bed apartment in city center: $274
Utilities: $46
Internet: $68

Visa requirements

To retire in Bolivia, you’ll need to first apply for a specific purpose visa (visa de objeto determinado, in Spanish) with the Bolivian consulate in your country. The specific purpose visa is a travel visa that allows you to be in Bolivia for 30 days. During these 30 days you must begin your application for residency. One of the main requirements for retirees is proof that you can support yourself financially while living in Bolivia. You’ll usually be required to submit six months’ worth of recent bank statements. You’ll also need to get a police clearance.

Once you've turned in your residency application and have completed all the requirements for residency, you can remain in Bolivia until the government either accepts or rejects your application. During this time you will get a document that shows your residency application is "en trámite" (being processed).

The application process for residency in Bolivia is not complicated, but requires a fair amount of running around to different institutions. Still, the cost of living is so low here that it’s worth the effort to apply.

3. Nicaragua

Central America's largest country has become a popular destination for retirees in recent years. The scenery is dramatic and lush, with numerous volcanoes peppering the countryside, verdant rain forest covering large portions, and coastal areas lined with white sand beaches.

Cost of living

Between the markets and the major supermarkets, one of which is owned by Walmart, it's possible to get virtually everything you're used to in the U.S. The average price, according to Numbeo, for a loaf of bread is about $1.50, a dozen eggs run about $1.75, and a pound of rice 54 cents. A three-course meal for two at a midrange restaurant will run you $23.

Buses, taxis, and mototaxis are the most popular and inexpensive forms of transportation, with many of the buses being the familiar old yellow school buses imported from the U.S. Numbeo lists the average fare as just 50 cents, while the starting tariff for taxis is 67 cents. Each mile after that costs $1.38.

Typical fixed costs per month:
Rent for one-bed apartment in city center: $318
Utilities: $72
Internet: $67

Visa requirements

Nicaragua’s Law of Resident Pensioners and Retirees gives tax incentives to encourage foreign retirees to move to the country, and makes it relatively easy to obtain a residency.

To qualify, you’ll need to be at least 45 (or married to someone who is 45 or older). You’ll also need to prove you’re healthy (both mentally and physically), you have a clean criminal record and that you earn at least $600 a month from Social Security or another income source.

4. Malaysia

Year-round warm temperatures, stunning beaches, and diverse, bustling cities make Malaysia a great choice for people on the lookout for top spots to retire. Thanks to English being spoken by virtually everyone, it's an easy place to get by without learning a new language.

Cost of living

Though it's easy to get your hands on international branded goods, local produce is far cheaper and of good quality. The average price for a loaf of bread is 70 cents, a dozen eggs will cost you about $1.25, and a pound of rice is available for 45 cents, according to Numbeo. Eating out is a particular pleasure is Malaysia, thanks to the unique fusion of cuisines found here. It's also cheap at just $12 for a three-course meal for two at a midrange restaurant.

Kuala Lumpur, the capital, is well connected by trains and buses, while the rest of the country is serviced by good bus networks. The average price of a one way train fare is 60 cents, and taxis are also a price-effective option, with starting tariffs of 72 cents and a per-mile cost of just 78 cents.

Typical fixed costs per month:
Rent for one-bed apartment in city center: $348
Utilities: $45
Internet: $39

Visa requirements

Retiring in this modern Asian country is surprisingly easy with its MM2H or Malaysia My Second Home program, a 10-year renewable visa. When applying, you must show that you have a regular monthly income of 10,000 Malaysian ringgit ($2,420 as of this writing) and liquid assets of at least RM350,000 ($84,700 as of this writing). You’ll also need to get a medical exam in Malaysia, and show proof that you have medical insurance and no criminal record.

Once approved, you’ll need to either keep a fixed deposit of RM150,000 ($36,300 as of this writing) or prove that you receive Social Security payments of RM10,000 a month ($2,420 as of this writing). After a year, if you have a fixed deposit, you can withdraw RM50,000 ($12,100 as of this writing) from it for approved expenses related to buying a home or car, paying medical bills, or covering your children’s education in Malaysia.

5. Georgia

No, we're not talking about the state tucked down in the southeast U.S., but a tiny nation that lies on the edges of both Europe and Asia. Though it's little known, Georgia is growing in popularity, especially among retirees, thanks to its beautiful countryside and extremely low living costs.

The city of Tbilisi is, in my opinion, one of the more charming cities in Europe and makes for the ideal place to live. Beautiful cobblestoned streets maze their way through ancient churches and old stone buildings, all spilling down the hillside toward the lovely Kura River. Historic pubs place tables on the streets, the wine is fantastic, and both ancient and modern life and architecture are brought together in the city.

Cost of living

Georgia is known for its abundance of fresh produce, as well as reputedly being the birthplace of wine. Both are extremely cheap in this country, as are most groceries. A loaf of bread is about 30 cents, a dozen eggs come in at about $1.40, and a pound of rice at 40 cents. Eating out is also reasonable at $20 for a three-course meal for two at a midrange restaurant.

Transport in the capital Tbilisi is excellent, with a metro system as well as good bus links and cost-effective taxis. Elsewhere in the country, buses and trains are easy to use. The average fare is just 20 cents, and taxis start at around $1.20, with it costing 35 cents per mile after that.

Typical fixed costs per month:
Rent for one-bed apartment city center: $303
Utilities: $50
Internet: $12.74

Visa requirements

Georgia grants visitors incentives to invest and retire in the country. Citizens of the US and 49 other countries can enter Georgia and stay visa-free for one year. This is a good way that would-be retirees to sample the country before committing to full retirement.

If you do decide to retire in Georgia, you may want to opt for an investment visa. You’ll have to invest 300,000 GEL (around $117,000 at the time of writing) in order to apply for the visa, but once you have it you can remain in Georgia full time and enjoy the lower tax benefits of this relatively free economy. (See also: Retire for Half the Cost in These 5 Countries)

This article is from Nick Wharton of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How Almost Anyone Can Afford to Retire in Mexico

Amanda Gokee — Fri, 10 Feb 2017 10:30:38 +0000

If you're thinking about retirement, you're not alone. However, out of 100 Americans who start working at age 25, only 4% are expected to have saved enough for retirement at age 65.

While this number may seem surprisingly low, retiring doesn't have to be as expensive as you may think. If you can lower your monthly income requirement, you can also greatly reduce the total capital that you need to save to retire.

One easy way to do this: retire abroad. For many Americans, Mexico is a top choice. It's not only geographically close, it's also very affordable. Adventure seekers love its bustling cities full of colonial architecture and rich culture, as well as the natural beauty found along its coastlines and highlands. (See also: Retire for Half the Cost in These 5 Countries)

If you're worried you might be among the 96% of people who haven't saved enough for retirement, moving to Mexico may be an effective way to make your nest egg go further.

Cost of Living in Mexico

The cost of living is drastically lower than in the U.S. or in Canada. According to Numbeo, the cost of living in Mexico is nearly 60% lower than the United States, with rent costing 79% less.

However, keep in mind that those are costs averaged over the entire country. Expenses are higher in bigger cities such as the capital, and in places that attract a lot of foreigners, such as Playa del Carmen.

Rental Costs

Based on my experience living in Mexico City and traveling extensively through the country during 2015 and 2016, I have found rents to be far lower than the U.S. You can find a place for as low as $100 a month in off-the-beaten-track destinations, such as the small beach town of Mazunte. However, a great deal like this often means sacrificing on some of the comforts of home such as air conditioning and hot water.

On the upper end of the budget, if you're willing to spend $600–$1,000, you can rent a luxury apartment, even in the more expensive and cosmopolitan destinations.

Health Insurance Costs

Private health insurance is significantly cheaper in Mexico than in the states. It can cost you as little as 20% of what it would cost in the U.S.

Because the cost of routine visits and minor incidents is so small, you may also choose to self-insure, which means simply paying for these costs out-of-pocket as opposed to purchasing an insurance plan.

Doctor Costs

As with rental prices, the cost of going to the doctor also varies to some extent, so these numbers should only serve as a rough guideline.

From my experience, a routine teeth cleaning from a dentist costs $15–$20. A regular doctor's visit costs as little as $25 to $50, while a specialist normally costs $35–$50 and up per visit.

Food Costs: Restaurants and Grocery Shopping

Groceries in Mexico are about a third of the price of food in the U.S., depending on the season and availability. You can even sometimes find American chains like Wal-Mart, where you can buy cheap groceries.

Restaurant prices vary, too, based on type. On the lower end, you can visit food stands to get snacks, which Mexicans call antojitos for as little as 50 cents to a dollar. These include tacos, quesadillas, and burritos. Freshly pressed juice and prepared fruit is also in this price range.

One step up from the food stands are restaurants called fondas. These are small, family-owned establishments that serve two- or three-course meals, including soup or salad, a full entree, and a drink. Sometimes they also come with dessert. Expect to pay $3–$10 dollars.

A truly gourmet, upscale dining experience should set you back $10–$30.

Alcohol Costs

Alcohol in Mexico is widely available, and enjoying tequila or mezcal is a common cultural practice. There are no taboos on drinking, and alcohol is accessible at the local corner store for very affordable prices.

For a bottle of tequila or mezcal you can expect to pay $10 for a low-quality bottle and up to $40 for an artisanally produced bottle of very good quality alcohol.

A six-pack of beer starts at $4–$6. There are not as many microbrew options available as in the U.S., but some bars do offer local, small-batch beer, usually priced around $4 a bottle.

Mexico is an attractive place to retire, not only because it is an affordable option, but because of all that it has to offer, from interesting cultural experiences to the hospitable locals who often go out of their way to make you feel at home.

Transport Costs

If you're traveling by plane, prices start around $250 for round-trip tickets to or from the U.S., and $40–$100 for trips within country. Long-distance coaches are an even cheaper alternative to internal flights. An eight-hour basic bus trip costs about $25, varying a bit depending on your destination. You also have the option of paying more for a first-class bus that includes drinks, snacks, entertainment (TV and music), and seats that are designed to be comfortable to sleep in.

Local transportation options include the bus (on average 50 cents) and, in Mexico City, the Metro (25 cents).

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This article is from Amanda Gokee of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Would You Move to One of These States to Avoid Taxes?

Andrea Cannon — Fri, 06 Jan 2017 10:00:16 +0000

Some states have no state income tax — but at what expense?

If you're thinking of moving to one of the seven states with no income tax, consider that you may not actually be saving much money in the end, due to higher sales taxes, higher property taxes, and other additional costs. After all, these states can't just forego taxes altogether as a source of revenue; they simply make up the money somewhere else.

So how do you assess how much you're really saving, if anything at all?

The States With No Income Taxes

Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming have no state income tax. Residents of New Hampshire and Tennessee are also spared from state income tax, but have to pay taxes on dividends and income from investments. Other states (such as Kansas, Louisiana, Michigan, Nebraska, Ohio, and Wisconsin) have considered forgoing state income tax, as well, because it tends to result in economic and population growth throughout the state.

These states argue that cutting the state income tax can help to create jobs and prevent workers from leaving the state.

How Much Are You Really Saving?

For this example, let's compare living and working in California to Washington. Let's say your personal income is $60,000 per year. California's marginal income tax rate at this income is 9.3%, while Washington’s is 0%. The effective rate at this income is 4.47%, which will result in $2,680 in state taxes.

California and Washington have similar costs of living, depending on where you live. For instance, Los Angeles and Seattle have very similar costs of living, while San Francisco’s cost of living is 24% higher than Seattle’s. On the other hand, California's sales tax rate is 7.5%–10%, while Washington’s sales tax ranges from 7%–9.9%, depending on where you live.

Consider how much you’d be saving after you factor in your moving costs. According to the American Moving & Storage Association, the average move costs $3,868–$5,415 for the average two or three bedroom home from California to Washington. However, this depends on your personal move and how much you are able to save. In fact, Worldwide ERC estimates the average moving cost from one state to another to be closer to $12,935.

No Income Tax Usually Means Higher Sales Taxes

By forgoing a state income tax, the state needs to make up for their budget in other ways. For instance, the sales tax on your clothing, food, gasoline, and other purchases may be higher in the new state. There are also other fees to consider, such as property taxes, tuition costs, and cost of living expenses, which should be factored into your state-by-state comparisons.

For example, Tennessee has the highest average state and local sales tax rate in the country, which the Tax Foundation estimates at around 9.45%. Nevada also has above-average sales taxes. Texas and Florida also have above-average sales tax and effective property tax rates. Meanwhile, Washington has the highest gasoline prices due to a high gasoline tax of around $0.37 per gallon.

And Higher Property Taxes

It’s also important to consider the property tax rate in the state-by-state comparison, which is 1% of assessed property value in California and 1.025% in Washington, as well as the vehicle tax rate, which is 7.5% in California and 6.8% in Washington.

Property tax can make a big difference, depending on where you live and how much your home is worth — and how long you've owned it. For instance, Warren Buffett pays property taxes of $14,410 (at a 2.9% tax rate) on his $500,000 home in Nebraska and only $2,264 (at a 0.056% tax rate) on his $4M home in California. (California's Proposition 13 essentially "locked in" Buffett's property tax rate at 1970s levels.)

And a Bunch of Other Fees and Taxes

Along with potentially higher sales taxes and property taxes, each state can also employ its own unique fees and taxes. New Hampshire has some of the highest effective property taxes in the country, as well as the highest average in-state tuition. By contrast, Wyoming and Alaska derive high tax revenues from coal mining and oil drilling operations. In fact, nearly 70% of Alaska's income comes from nontax revenue. Nevada receives taxes and fees on gambling, which totals nearly $1B each year, as well as a modified business tax rate of 1.17%.

While South Dakota has a below average sales tax rate, the state charges a range of other fees and taxes to make up for it, including a cigarette excise tax, bank franchise and alcoholic beverage taxes, high motor fuel tax, and licensing fees on coin-operated laundries. Texas charges more than 60 separate taxes, fees, and assessmentsto make up for the lack of income taxes.

Before You Go, Compare All Expenses

According to the Center for Regional Economic Competitiveness, Alaska, Florida, New Hampshire, South Dakota, and Washington all have above average cost of living. Each state is unique in its taxation systems, so it’s important to research your new state’s tax code and alternative revenue streams before factoring in what you would save in state income taxes. Make sure to also use a cost of living comparison tool for a better idea of how much you will save overall (if anything at all) by making the big move.

How to Reduce Your Income Tax Without Moving

Before you decide to move to a state with no income taxes, consider the alternatives. You can contribute more to your 401K, donate more, and take advantage of tax deductions. There are various ways to save money on your taxes each year, so speak with your tax pro to ensure you are taking advantage of every possible deduction.

This article is from Andrea Cannon of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Rent Your Home or Buy? Here's How to Decide

Dan Rafter — Tue, 22 Nov 2016 11:00:15 +0000

There are plenty of advantages to renting an apartment, and just as many to buying a home, instead. But what about financially? Is renting or buying the smarter money move?

Not surprisingly, the answer is complicated, and depends on where you live, what kind of home you want to buy or apartment you want to rent, and how long you plan on staying in one place. Here's a look at the numbers that might help you solve the rent-vs.-buy puzzle.

Prices Are Rising for Buyers and Renters

Renting an apartment is more expensive today than it was even a year ago. But the same is true of buying a home.

Consider the cost of buying a home. The National Association of Realtors reported that in September of this year, the median price of existing homes stood at $234,200.

You won't necessarily have to pay $234,200 or more, depending on where you buy. But the median sales price continues to increase, meaning that home prices overall are on the rise. The median price in September was up 5.6% from the same month one year earlier, when it was $221,700. And don't expect median prices to fall anytime soon. The association says that September's price increase represents the 55th consecutive month of year-over-year gains.

And what about renting? Apartment rents continue to rise, too. ApartmentList reported that in November of this year, the median national rent for one-bedroom apartments was $1,110 a month. For two-bedroom apartments that figure was $1,270. The good news is that median rents actually fell in 55 out of the country's 100 biggest cities from October to November, according to ApartmentList.

The bad news? Rents are still higher today than they were one, two, or three years ago. According to ApartmentList, the median national rent was 2% higher in November of this year compared with the same month one year earlier.

So no matter if you rent or buy, know that prices are generally rising.

Which Is More Affordable?

That leads to the big question: Given that both buying a home and renting an apartment are getting more expensive, which option is most affordable?

The answer to this question includes plenty of variables. For instance, owning a home provides a tax benefit: You can deduct the interest you pay on your mortgage loan each year up to $1 million, resulting in a lower tax bill. But even this isn't a crystal-clear financial plus for all owners. You can only claim your mortgage interest deduction if you itemize your taxes. And if that interest deduction isn't higher than the IRS' standard deduction — which stood at $12,600 for married couples filing jointly and $6,300 for singles in 2016 — there is no real reason for you to itemize your taxes and claim the deduction.

Then consider the variables of going the apartment route: You might be able to find an apartment with low rent. But that apartment might not be located where you actually want to live, especially if you want to live in the center of a large city. Apartments in urban areas tend to come with higher rents today.

And if you do find a cheaper apartment, it will almost certainly not be a newer one. RENTCafe found that in 2015, 75% of all large new apartment properties built across the country were high-end luxury properties, buildings that charge far higher monthly rents. Most of these new apartments are being built in the center of big cities, too, according to RENTCafe.

So if you want to rent an apartment in San Francisco? ApartmentList says that a two-bedroom apartment here had a median price of $4,700 a month in November, while a one-bedroom had a median monthly rent of $3,440. In Boston, two-bedrooms rented for a median price of $2,350 a month, while in Seattle it cost a median of $1,720 for a one-bedroom unit and $2,300 for two bedrooms.

Given this jumble of numbers, is it cheaper to rent or buy? According to real estate website Trulia, buying a home is cheaper on a national basis. Though, not surprisingly, there are some caveats.

Nationally, Buying Is Cheaper

Trulia reported in October that buying a home was 37.7% cheaper than renting on a national basis. But that 37.7% figure only holds true for those who live in their homes for at least seven years and can afford to come up with a down payment of 20% on their homes.

Given that standard, Trulia reports that buying is cheaper than renting in each of the 100 largest metropolitan areas of the country. According to Trulia, for example, it is 50% cheaper to buy in Miami and just under 20% cheaper to buy in San Francisco and Honolulu.

Part of the reason that buying is more affordable comes down to mortgage interest rates. Rates are still at historically low levels, with the Freddie Mac Primary Mortgage Market Survey reporting that as of Nov. 10, the average interest rate on a 30-year fixed-rate mortgage loan stood at 3.57%. This makes borrowing money for a mortgage loan more affordable.

Want to see what Trulia thinks of the rent-vs.-buy decision in your community? Visit the site’s rent-vs.-buy calculator, punch in your metropolitan area and wait for the results.

What Should You Do?

These numbers, and Trulia’s rent-vs.-buy calculator, should serve as a general guide. But they alone can't tell you whether you should rent or buy. That's because everyone's situation is unique.

Say you only plan to live in an area for three or four years before moving. Renting is almost always the better financial move. Say you hate the thought of mowing a lawn for 15 years. Again, renting might be the better choice, even if it is more expensive than owning a home. If you dream of gardening in your own backyard? Then buying might make you happier.

Your best bet is to carefully analyze what you want out of a home, whether it's the stability of owning and building equity or the freedom that comes with renting. Then make your decision based on what type of home will best meet your needs.

This article is from Dan Rafter of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Here's How Much Life in the Big City Will Cost You

Andrea Cannon — Tue, 01 Nov 2016 10:00:15 +0000

So, you got a new higher-paying job in the big city. Now you have to decide whether it's worth making the big move. Fortunately, there's an easy cost analysis that can help you determine if the move is worthwhile.

Cost of Living Calculators

For a better estimate of how much you'll need to earn to maintain the same standard of living, use a cost of living calculator. Once you enter your current income, where you currently live, and where you would like to move, you can see a side-by-side comparison of what it will cost to live in both cities.

Some basic calculators will show how far your salary will go in another city by comparing the price differences of major categories, like housing, utilities, and groceries. There are also more advanced cost of living calculators that will break down everything from what gas costs in the two areas, to how much you pay for coffee and ibuprofen.

For example, say you're living somewhere like Bakersfield, California with an income of $50,000, and you're deciding whether to move to a big metro like San Francisco. So, how much will you need to earn in order to maintain your same standard of living? Using a cost of living calculator, you can see that you would need to be making $81,636. Otherwise, you'll have to get used to a lower standard of living and cut costs wherever possible.

Housing

Generally speaking, the closer you live to downtown, the more expensive the rent, food, and entertainment costs. When you live in a bigger city, it also generally means that you will have a smaller living space. Worst of all, rent just keeps getting more expensive over time. According to StreetEasy's annual New York City Rent Affordability Report, the median rent-to-income ratio in NYC rose from 59.7% in 2015 to 65.2% in 2016. This means that nearly two-thirds of New Yorkers' income is devoted to rent. (See also: The Simple Way to Decide How Much Rent You Can Really Afford)

Higher Income

In most cases, a higher cost of living also means that the area has a higher than average median household income. While you can usually get a more robust starting salary in a large city, you might not want to count on hefty raises. Income growth is lagging behind things like rent increases and cost of living growth, so your expenses may increase in the years to come, but your income might not keep up.

Transportation

In most cases, the closer you can live to work, the better. This will allow you to bike to work, take part in a carpool, use Uber, or even take public transportation.

If you will be taking advantage of public transportation, consider storing or selling your car, so you don't have to worry about parking. Driving can also be a lot more overwhelming for someone moving from a smaller town to a big metro (think Los Angeles gridlock). Look into public transportation options in your new city to determine if you can reasonably live there without a car, and how much you would save by making the change to public transportation. Keep in mind that places that are more walkable, or have better transportation options, are typically more expensive to rent.

Parking

In cities like Los Angeles, New York, San Francisco, and Seattle (to name a few), free parking is basically a pipe dream. With parking meters and paid parking lots as far as the eye can see, it's very unlikely that you'll find free parking. Even if you did find street parking, the posted rules can be very confusing and, in large cities, parking tickets are very common.

Convenience

Living in a large city means most things will be at your fingertips. For instance, there isn't much that you won't have access to in New York City. However, getting what you want and need is a different story. Living in a small town means quicker trips to the grocery store and general merchandise stores like Target.

In a big city, on the other hand, you have to worry about fighting traffic and finding parking before you even get to the store. Then, there are hordes of people to deal with and long lines at the checkout counter, so small day trips can become much longer and more stressful. Try completing your errands at odd times, like early in the morning or during your lunch break, to beat the crowds.

Entertainment

Living in a big city means there are generally boundless things to occupy your time, such as endless places to eat, shows to watch, people to meet, and free activities to take part in. In a city like San Francisco or New York, you will be exposed to more culture more easily, and can find more fun, free events for the kids.

To better deal with the culture shock, try seeking out social groups and other resources for newcomers to the area. Make a valiant effort after moving to make friends with locals and other transplants so you can quickly become acclimated with the city and what is available to you.

Is It Worth It?

Moving to a large city can be very expensive. The move itself can be a frustrating, expensive undertaking, and once you're there, things like rent, groceries, utilities, health care, and transportation can be much more expensive than what you're used to. Take this into account when you're deciding whether to make the move or not.

The decision on whether it is worth it to make the big move is an entirely personal one. After living in New York City, San Francisco, and Los Angeles, I can attest to the fact that there is nothing comparable to living in a big metro. What you can (and will) experience in a shorter amount of time there is well worth the higher cost of living. However, if you are trying to save more money or contribute more towards your debt, savings, or retirement accounts, you'll need to use a cost of living calculator (at minimum) to determine whether it's worth it for you.

This article is from Andrea Cannon of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

The Real Cost of Moving to Canada (If That's Your Post-Election Plan)

Dan Rafter — Fri, 14 Oct 2016 09:01:03 +0000

The odds are high that you don't like either Hillary Clinton or Donald Trump. According to an ABC News/Washington Post poll released in late August, 56% of U.S. adults viewed Hillary Clinton unfavorably. The same poll found that 63% said the same about Donald Trump.

No matter who wins the presidential election this November, a lot of people are going to be upset. You might even have heard people claiming that they'd flee to Canada if Trump — or Clinton — wins. Maybe you've even made this boast yourself.

But you might be surprised to learn that life can get costly over the border. Here is a quick look at what you'll pay when you flee to our neighbors to the north after Nov. 8.

Conversion Rate

First, a bit of good news. One U.S. dollar as of Oct. 6 was equal to $1.32 in Canada. So if you head north with $30,000, you'll have a bit more than $39,640 once you cross the U.S./Canadian border.

Taxes

Hate paying taxes in the United States? Well, you won't like it in Canada, either. The Fraser Institute think tank reported that the average Canadian family spent $34,154 in taxes in 2015. By comparison, NerdWallet in 2015 reported that the average American family paid about $14,000 in taxes. That figure, like the Canadian one, includes real estate, income, and sales taxes.

That difference looks less imposing when you factor in the U.S.-Canada currency conversion rate. In Canadian dollars, the average U.S. family in 2015 paid nearly $26,000 in taxes. That is still quite a bit lower than in Canada.

According to the Fraser Institute, the average Canadian bill for income taxes collected by governments in 2015 was $10,616, while payroll and health taxes came out to an average of $17,160.

Housing

Homes are expensive in Canada. The Real Estate Board of Greater Vancouver said that the average price of a single-family detached home in Vancouver rose to $1.58 million in September. That comes out to about $1.19 million in U.S. currency.

And Vancouver isn't the only expensive place to buy a home in Canada. The Toronto Real Estate Board said that the average selling price for all home types in Toronto came out to $710,410 in August (about $537,000 in U.S. dollars).

The average selling price for all Canadian homes sold in August of 2016 was $456,722, according to the Canadian Real Estate Association. That comes out to about $345,000 in U.S. currency. In comparison, the National Association of Realtors said that the average sales price for all homes sold in the United States in August was $240,200.

Renting an Apartment

So maybe you'll rent an apartment instead. That's pretty costly, too.

According to RentGorilla, the average rent for a one-bedroom apartment in Vancouver in September of 2016 came in at $2,445 a month, equal to about $1,850 in the United States. In Toronto, the average two-bedroom rent was $1,502 the same month, equal to $1,136 in the United States.

In Ottawa, the average two-bedroom rent was $1,235, while in Montreal it stood at $852. Those last two, by the way, are quite affordable, coming out to $934 and about $644 respectively in the United States.

Goods and Services

What about basic necessities, everything from a gallon of gas to a gallon of milk? You'll find that with the conversion factor, prices in Canada are similar to what you'd pay for the same items in the United States.

Consider a gallon of gasoline. According to the Expatistan Cost of Living Index, a liter of gas — which is equal to one quarter of a gallon — came out to $1.20 in Vancouver. That means a gallon of gas would cost an average of $4.80 in the city. That comes out to $3.63 in U.S. currency, a bit higher than what you'd pay at the pump in most U.S. cities today.

Two liters of Coca-Cola, though, come out to an average of $2.48 in Toronto, according to Expatistan. That comes out to $1.88 in U.S. money. A pair of jeans here costs an average of $68, or $51.46 in U.S. currency.

In Montreal, a 40-inch flat screen TV costs an average of $509, according to Expatistan. That comes out to about $385 in U.S. money, while a pair of athletic shoes sell for an average of $110 in Montreal, equal to about $83 in the United States.

Cost-of-Living Comparisons

Expatistan compiled its own cost-of-living comparisons between Canadian cities and several in the United States. As you'll see, if you live in higher-priced areas of the United States, you might actually find it cheaper to live in Canada.

For instance, the cost of living in Toronto is 9% cheaper than it is in Chicago, according to Expatistan. And it's 32% cheaper to live there than it is in New York City. On the other hand, Toronto's cost of living is 24% more expensive than it is in Omaha and 30% more than in Iowa City.

Expatistan estimates that it is 35% cheaper to live in Vancouver than it is San Francisco and 15% cheaper than Seattle. However, it is 15% more expensive to live in Vancouver than it is Wichita and 7% more expensive than living in Columbus. So much like the election, it's really up to you.

This article is from Dan Rafter of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 American Cities Where You Can Retire On Just Social Security

Aaron Crowe — Tue, 20 Sep 2016 10:30:05 +0000

The statistics on how unprepared Americans are for retirement can be terrifying. The median retirement account balance is $2,500 for all working-age households and $14,500 for near-retirement households, according to a 2015 study by the National Institute on Retirement Security.

Two-thirds of working families fall short of conservative retirement savings targets for their age and income based on working until age 67, the report finds.

With virtually no retirement savings for the average working household and 45% (nearly 40 million) of working households not having any retirement assets, their best hope for surviving after age 67 may be income from Social Security.

What Social Security Pays

The average monthly Social Security check as of June 2016 was $1,234, according to the Social Security Administration, or SSA. Where could you afford to live on such an income?

There are some good options, but before we get to those, let's be a little more generous with the SSA income, based on the government's statistics.

While the average monthly benefit was $1,234, 82% of beneficiaries receive a little more — $1,280 from "Old-Age and Survivors Insurance" SSA beneficiaries. The largest average monthly SSA benefit was $1,348 for retired workers, who made up 67% of the pool.

Assuming you're a retired worker receiving the average $1,348 each month from SSA, that's still a low amount of money to live on each month, considering that a retirement planning rule of thumb is to plan on having 70%–80% percent of your pre-retirement income replaced with SSA, a retirement account, or other form of income in your old age.

At 80%, that $1,348 would equate to a pre-retirement monthly income of $1,685, or $20,220 per year. If you were comfortable living on $20,220 per year before retirement, then living on 80% of it during retirement should be just as comfortable, the theory goes.

For a couple who are both retired, their SSA income would double to $40,440 per year. But for our purposes, let's assume one retiree is living by themselves.

So, where to live on the average SSA check of $1,348 per month for retired workers? In no particular order, here are five cities where it's affordable.

1. Buffalo, New York

Buffalo may come as a surprise for being a cheap place to live because it's in New York state. But the median monthly rent in Buffalo is $512, making it the cheapest city in the U.S. to live in, according to a SmartAsset analysis. Buffalo also has the lowest cost of living at 79.34, meaning that the U.S. average is 100 and that $100 in groceries, for example, would cost $79.34 in Buffalo.

2. Johnstown, Pennsylvania

If you're looking for the cheapest rent in the country, this city of 20,576 residents has it with a gross median rent of $466 per month, according to data from the U.S. Census. Since housing is one of the biggest expenses in life, such low rent can make other expenses a lot more affordable.

The average per capita income in Johnstown is $16,153, according to FindTheHome, putting the average SSA income in retirement above the average there. In this city, you'd be rich.

3. Memphis, Tennessee

If you're looking for a large U.S. city that's affordable in retirement, Memphis is it. This city of 653,450 has low housing costs. The average apartment rent of $709 per month is 21% below the U.S. average, and the median home value of $98,300 is 46% below the U.S. average, according to Kiplinger.

4. Akron, Ohio

Living in the center of the country is usually cheaper than it is elsewhere, and Akron, Ohio proves that point by being one of the most affordable places to live in the country. Its median home price listing in August 2015 was $120,450, and the median household income was $45,628 — putting the average SSA income at just below the median. The amount of monthly income spent on housing, utilities, and commuting in Akron was 28.9%, allowing retirees to spend about 70% of their income on other things.

5. Indianapolis, Indiana

Listed by Trulia as one of the best cities to move to for a high-paying job, Indianapolis has low home prices for Millennials looking for work and for retirees, too. The median home price of $130,000 is $58,900 below the median home price in America. That allows about two of every five renters to be able to afford a typically priced home there. For retirees who sell their homes and have enough money to buy a home outright or put down a large down payment, then living with little or almost no housing costs can leave a lot of room in their budget for other things.

The good news is that there are plenty more U.S. cities that are affordable for retirees who only have an income from Social Security. These are only five of them, and are a good start to investigate more when deciding on the cheapest places to retire.

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This article is from Aaron Crowe of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

6 Ways That Better Paying Job Out of State May Cost You

Samantha Stauf — Thu, 08 Sep 2016 09:30:33 +0000

On the market for a new, higher paying job? Have you expanded your job search across state lines? When contemplating a job that would require you to move to a new state, part of the decision process should be determining how the local costs, public infrastructure, and local school system will affect your financial bottom line.

In some areas of the United States, the increase in salary the job offers might not be enough to offset the added potential living expense. Here are some things to consider.

1. Cost of Living

Before accepting a job in another state, it's essential you don't assume that a higher salary offer in another state will lead to a larger disposable income. Each state has a slightly different cost of living. When you move from one state to another, you can expect slightly different housing, food, utility, healthcare, transportation, and healthcare costs.

If the new job offer is from a state with a significantly higher cost of living, the "raise" might:

Not be as extensive as you expect
Be an equivalent wage
Be a pay decrease.

For example, a $25,000 salary in Boise, Idaho is comparable to a $47,274 salary in Brooklyn, New York. In order to really be considered a raise, individuals that move from Idaho to New York should expect at a little more than a salary of $47,274 a year.

Before accepting any jobs out of state, check this cost of living calculator to ensure that you are actually receiving a raise.

2. Housing

Housing costs, rent, and home ownership can differ significantly from state-to-state. You will want to evaluate how the expected rent or mortgage rates (lower, higher, the same) will affect your potential disposable income.

Moving from Idaho to New York, for example, can lead to a steep increase in potential rent or mortgage costs. Average rent cost increases from $995 (Idaho) to $3,295 (New York).

3. Transportation

Moving from an area with a good public transit system could significantly increase your expenses. According to the Evolution of the Daily Commute, car bound commuters will spend $1,129 dollars in gas annually to travel to and from work. A good subway, bus, or train system can be significantly cheaper due to the fact you're potentially trading gas and parking expenses for a reasonably priced ticket.

If you are unavoidably car bound, you might consider how the difference in gas prices between states will affect your finances. Moving from Oklahoma to California for example, would increase the amount you pay for gas from $1.39 a gallon to $2.47 a gallon. That can lead to a large extra expense.

In addition, each state has different average insurance rates due to state regulations, and the percentage of uninsured drivers on the road. Moving from a state with low insurance rates to a state with high insurance rates might mean that you won't have as much extra money from that raise as you expect.

4. Quality of K-12 Schools

The quality, success, and financial stability of the local K-12 public schools are not uniform across state or county lines. Depending on where you move, your children could be facing a potential downgrade in the quality of their education and an unexpected extra financial expense that could counteract the positive effect of your raise.

Parents can check out the quality of local schools:

By searching for news of any potential school and school district in Google.
By evaluating the statistic, reviews, and polls of any potential school with Niche's 2016 K-12 School and District Rankings.

Moving to an area where the public schools are failing could inevitably lead families to make the hard decision to either gamble on the poor educational institution or invest time and potentially money to enroll students in a more favorable environment.

5. Quality of Local Colleges

College is expensive. In-state college tuition can be a real money saver. How much college costs depends on the state that you live in. Moving from Wyoming to New Hampshire, for example, could mean that in-state college tuition is suddenly around $10,000 more expensive. Even with a raise, that might be too big of a price hike to reasonably handle.

As an added concern, you should evaluate whether or not you're moving into an area with too many colleges on rocky financial standing. These colleges and universities tend to hike tuition rates, cut back on other amenities, and possibly declare bankruptcy.

Bankruptcy, in particular, can be costly for current students. It can lead to red marks on their official transcripts (if the school closes mid-semester), forcing students to go through another college application process, and face the reality that many of the classes and credits earned won't be recognized by the new college.

6. State Regulatory Guidelines (For Your Industry)

Professional standards are often set not on a federal level, but on a state level. Moving to a new state can either create new opportunities, or limit the opportunities available to you and your significant other. The most far reaching differences can be found in the medical field.

Twenty-two states grant Nurse Practitioners full autonomy to diagnose and treat patients without supervision from physicians. This can allow NPs to open private clinics or grants the ability to apply for a broader range of jobs.
Twenty-five states have entered into a Nurse Licensure Compact (NLC) that allows nurses to practice in any other state that has agreed to join the compact. This can allow individuals to engage in travel nursing or telemedicine. Moving out of or into an NLC state could either shrink or increase professional opportunities.

There are a lot of financial factors that should be evaluated when changing jobs within the same state. When moving out of state, there are even more factors that could affect how the new higher paying jobs will negatively or positively affect your net worth.

Have you taken a job in another state? What was your experience?

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This article is from Samantha Stauf of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: