Where Can I Retire on $3,000 a Month?

You can retire comfortably on $3,000 a month in retirement income by choosing to retire in a place with a cost of living that matches your financial resources. Housing cost is the key factor since it’s both the largest component of retiree budgets and the household cost that varies most according to geography. Therefore, choosing from among the U.S. cities with the lowest housing cost is a sensible first step to finding a place to retire at $3,000 a month. Get help from a financial advisor in choosing the right retirement location that matches your budget.

Geographic Cost of Living Factors

Being able to retire on $3,000 a month is largely dependent on picking a place with modest housing prices. More than a third of the typical retirement-age person’s household budget goes to housing, according to the Social Security Administration’s “Expenditures of the Aged Chartbook, 2020.”

The 36.8% share of retiree budgets consumed by housing, in fact, was more than the combined share of the next two largest categories. Those included out-of-pocket healthcare expenses at 14% and, at 17.5%, a broad grab-bag “other” category including expenses ranging from alcohol and tobacco to reading and education.

The 2022 report on personal consumption expenditures by the Federal Bureau of Economic Analysis (BEA) compared real price parity (RPP) for all consumption goods and services including housing rents for states and metropolitan areas. “Areas with high/low RPPs typically correspond to areas with high/low price levels for rents,” the report noted.

Housing prices are also by far the most variable among major expenses. The least expensive housing city as ranked by the BEA, among nearly 400 cities, was Johnstown, Pennsylvania, with a housing index of 43.8. The most expensive was San Jose-Sunnyvale-Santa Clara in California, with a housing index more than five times higher at 241.1.

Cities With Lowest Housing Costs

With this in mind, when you’re looking for a city where you can retire for $3,000 a month, starting with the cities with the lowest housing costs is a promising strategy. Here are the 20 U.S. cities with the lowest housing costs, ranked least expensive to most expensive, according to the BEA analysis:

1. Johnstown, PA
2. Monroe, LA
3. Springfield, OH
4. Decatur, AL
5. Florence-Muscle Shoals, AL
6. Anniston-Oxford, AL
7. Sumter, SC
8. Gadsden, AL
9. Carbondale-Marion, IL
10. Enid, OK
11. Rocky Mount, NC
12. Wheeling, WV-OH
13. Pine Bluff, AR
14. Weirton-Steubenville, WV-OH
15. Parkersburg-Vienna, WV
16. Dothan, AL
17. Lawton, OK
18. Fort Smith, AR-OK
19. Houma-Thibodaux, LA
20. Owensboro, KY

Ranking Cities by All Costs

While for a typical retiree, housing will be the biggest cost consideration, it’s only part of the entire budget for a household. For a broader look at a low cost of living, here are the cities with the lowest price index on all items measured by the BEA, including goods, utilities and other services. They are ranked from least expensive to most expensive.

1. Anniston-Oxford, AL
2. Gadsden, AL
3. Morristown, TN
4. Florence-Muscle Shoals, AL
5. Jackson, TN
6. Kingsport-Bristol, TN-VA
7. Las Cruces, NM
8. Dothan, AL
9. Decatur, AL
10. Monroe, LA
11. Johnstown, PA
12. Sumter, SC
13. Carbondale-Marion, IL
14. Springfield, OH
15. Great Falls, MT
16. Lewiston, ID-WA
17. Jonesboro, AR
18. Johnson City, TN
19. Owensboro, KY
20. Youngstown-Warren-Boardman, OH-PA

General City Cost Considerations

The low-cost locations tend to be in the South or Midwest and all are smaller metropolitan statistical areas. Major metropolises and cities in Hawaii, California and in the Northeast and Pacific Northwest tend to be the most expensive.

Non-metropolitan rural areas are not broken down into individual areas but, overall, they are less costly than the average city. These non-metropolitan areas have housing indexes averaging 59.9 and overall cost indexes averaging 89.

An Example $3,000 Retirement Budget

Here’s how your expenses might be allocated to a retirement budget of approximately $3,000 a month. The percentages are based on Social Security’s analysis of typical retirement-age household expenses.

Bottom Line

Picking a place to live on $3,000 a month in retirement income is largely a matter of picking a place with low housing costs. Housing is the largest and the most variable expense in the typical retiree’s household budget. Many smaller cities, often in the South and Midwest, have housing costs little more than half as high as the average and often a small fraction of the level in the most expensive cities.

Tips for Retirement

• You shouldn’t have to plan for retirement alone. You can use the help of a financial advisor to help you properly prepare no matter what your budget looks like. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• Use SmartAsset’s Cost of Living Calculator to compare living expenses in two cities you are considering for retirement.  

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