The Complete Guide to Retiring in California
Learn about retirement in California, from taxes and income to lifestyle choices
If you are considering retiring in California (whether you already live there or plan to move there) you’re not alone. Almost a quarter of the population of California is over 60-years-old. Before you make the decision to join them, it’s important to know what retiring in California might be like. In this guide, we’ll cover the pros and cons of retiring in California, including taxation, climate, and retirement communities.
Key Takeaways:
California is one of the most popular retirement states, and a quarter of the population is 60 or older.
The weather in California is mild year-round, making it a great place for people who enjoy being outside or are sensitive to hot and cold temperatures.
Housing and healthcare costs in California are higher than in many other parts of the country.
There are a lot of resources available for seniors in California, including meal delivery and support at home.
Pros and cons of retiring in California
There’s a reason “California dreamin’” is said so often—and it’s not just because it’s a song. California is popular for its mild, year-round temperatures and diverse landscapes. However, like any state, there are pros and cons to living and retiring in California. Below is a list of the most important pros and cons for retiring in California.
Pros
Weather in California is generally mild throughout the year. If extreme temperatures bother you this may be a big advantage.
California has plenty of indoor and outdoor attractions and events. From Disneyland and national parks to literary festivals, there’s something for everyone to do in California.
The California State University system offers free education for people who are 60 or older.
California has no taxes on Social Security income.
Many top hospitals and medical centers are located in different parts of California.
Cons
Housing and healthcare costs in California are higher than in many other states. Some parts are more affordable than others, but the state may not be the best choice for retirees on a limited budget.
California is infamous for natural disasters, from earthquakes to drought and wildfires.
The sales tax in California is 7.25%, one of the highest in the country.
The largest urban areas in California are all densely populated, and traffic can be incredibly frustrating.
Retirement taxes in California
California doesn’t tax Social Security Income. However, you may pay federal taxes on Social Security income if your total yearly income is over a certain amount.
Excluding Roth IRAs, income from retirement accounts is taxed. If you withdraw any money from a retirement account before you turn 60, you will be taxed an additional 2.5 percent. Capital gains are taxed as ordinary income, but both short and long-term gains are taxed at the same rate.
Residents of California who are over 65 may apply for a senior head of household tax credit. You may receive a credit of up to $1,748, but only if your household income is $92,719 or less.
Retirement communities in California
There must be several retirement communities to accommodate the roughly 25% of Californians who are 60 or older. There are currently 377 retirement communities in the state. With options to choose from, it’s easier to find a community that fits your financial and lifestyle preferences. Once you’ve decided where you want to move in the state, look up the communities in the area and see what they have to offer you. Make sure to tour the facilities before joining a community to get a sense of how the community will work for you.
Climate and outdoor recreation in California
Most parts of California have a mild climate. The state is known for warm summers and cool, rainy winters. The southernmost parts of the state are usually much warmer throughout the year, so if you’re sensitive to heat this may not be the best part of the state to retire to. If you have allergies, consider spending time in the area you want to retire to to make sure your allergy symptoms aren’t unbearable.
Because the California climate is so mild, outdoor recreation is popular year-round. There are 28 national parks, beaches all down the coast, and local parks that allow for picnics and other casual outdoor activity.. Some places in California are known for specific outdoor activities. For example, Venice Beach is popular for roller skating. California’s 840 miles of coastline fits almost any water activity you can think of, including whale watching and boat tours.
While California’s climate is mild, it experiences extreme environmental conditions caused by wildfires, earthquakes, and drought.
Housing and cost of living in California
It’s often reported that California is an expensive place to live. Of course, there are areas within California that are more and less expensive. For example, Silicon Valley is one of the most expensive places to live in the US. That said, the average cost of a home in California is $733,500, which is far more than the national average of $338,100.
The state sales tax in California is 7.25%. Some local areas have their own sales tax, which will add to the state tax.
To help older adults, those over 55 who are buying a home in California can transfer the property taxes from their previous home to the new one under Proposition 19. Proposition 13 allows those over 55 to transfer the value of their old home to the new one.
Resources for seniors in California
The California Department of Aging offers a wide variety of resources for seniors. These include:
Resources for caregivers
Home-delivered meals
Community nutrition centers where free meals are served
Home-based services to help seniors with aging in place
Senior employment training is available for those 55 and older with low incomes. Legal services are available for anyone over 60 who’s dealing with legal issues. There are also programs for those with memory problems and transportation services.
We’ll go over Medicare in California in a later section, but another valuable resource for seniors is a Chapter Medicare agent, who can help you understand your options and enroll in the right coverage.
Quality of healthcare in California
The United Health Foundation ranked California 29 out of the 50 states for overall health of older adults. That said, California’s hospital ecosystem is good. 32 California hospitals made the list of the 250 best hospitals in the US. Many of those hospitals, like Cedars-Sinai Medical Center, have also earned top rankings in cardiac care, stroke care, and the critical care department.
Medicare in California
Medicare, the program that offers insurance coverage to those over 65. There are about 6.6 million Californians enrolled in Medicare, making up about 17% of the population. It’s available for Americans who are 65 or have certain disabilities.
If you’re eligible for Medicare by way of age, there’s a seven-month period around your 65th birth month in which you can enroll. This period is called your Initial Enrollment Period (IEP). There are a number of California Medicare plans available, and one of our Medicare agents can help you understand and choose the best Medicare coverage for your unique needs. Give us a call at 855-900-2427 to get help comparing your options. Not ready to give us a call? You can also schedule a time to talk through your Medicare here.
Below are a handful of resources that can help you with your research:
Retiring in California
California has a lot to offer retirees, and it may be a perfect fit for you. If the idea of living in California interests you, pick some areas where you may want to live and visit them to see what they’re like.You may even consider renting a place for a few months to get a good sense of the area you want to live.