Fabulous weather. Great cultural events. World-class cities. With outstanding features like these, it’s little wonder that the cost of living is high in California. But it still may be surprising to hear that California ranks as the least affordable state for retirees in Bankrate’s most recent Best States to Retire study. The Golden State may not be the best place for many Americans to spend their golden years.
California landed dead last in Bankrate’s affordability category, putting the state in the 47th spot for retirees overall. In other key categories, such as health care, weather and overall well-being, the state fared well. However, it ranked in the bottom half of states for crime. And various measures of affordability counted for a total of 40 percent of a state’s overall retirement score.
The state’s notable positives may be great for wage-earning Americans, but for many retirees, affordability is the top concern. Some 41 percent of Americans who say they lack financial security point to their lack of retirement money as a key reason, according to Bankrate’s 2023 financial freedom survey.
Of course, if money is not a particular concern, California may be an attractive retirement spot. But 2024’s top state for retirement — Delaware — offers relative affordability as well as other positives.
Why did California rank so low for retirement?
California ranked 47th overall in Bankrate’s annual survey of the best states for retirement, which was based on the following factors and weightings:
- Affordability (40 percent): California ranked 50th. This factor includes property taxes, state and local sales tax, homeowner’s insurance premiums and cost-of-living index.
- Well-being (25 percent): California ranked 15th. This factor includes the number of adults aged 62 and older per capita, community well-being index, diversity index by state, and arts, entertainment and recreation establishments per capita.
- Quality/cost of health care (20 percent): California ranked 6th. This factor includes the cost of health care per capita, health care establishments per capita and state health system performance.
- Weather (10 percent): California ranked 12th. This factor includes the frequency of natural disasters and historic average temperature.
- Crime (5 percent): California ranked 46th. This factor includes the crime rate per state.
The heavy affordability weighting means high-cost states such as California, New York and Washington often show poorly in the Bankrate retirement rankings.
Best and worst states to retire in 2024
| Top 5 | Bottom 5 |
|---|---|
| 1. Delaware | 50. Alaska |
| 2. West Virginia | 49. New York |
| 3. Georgia | 48. Washington |
| 4. South Carolina | 47. California |
| 5. Missouri | 46. North Dakota |
California is the worst state for overall affordability
California performed poorly overall in the affordability category, ranking mostly in the bottom handful of states in the various subcategories.
The most important subcategory is a state’s rank in the cost-of-living index, which carries a weighting of 25 percent in the overall affordability rating. California scored a dismal 48th place here, tying with Massachusetts and beating out only Hawaii.
California performed only slightly better in the subcategories of property taxes and state and local sales tax, where it ranked 45th and 43rd, respectively. In absolute figures, the average annual tax on an average-value home came to $6,833, according to 2023 data from ATTOM Data Solutions.
If there’s a bright spot, it’s that California ranked 18th for the cost of homeowner’s insurance. The average annual premium came to $1,453 as of June 2024, according to Bankrate data.
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California also ranks poorly for crime rates
In terms of crime rates, the Golden State also ranked poorly, finishing at 46th overall. However, this category had the least impact in the rankings (5 percent), so it didn’t drag down the state too much.
The crime segment had two subcategories — violent crime and property crime. Here’s how California ranked in each:
- Violent crime: In 2022, California had 499.5 violent crimes per 100,000 residents, putting it in the 45th position.
- Property crime: In 2022, California had 2,343.2 property crimes per 100,000 residents, ranking the state 42nd.
After weighting those factors, California ranked 46th overall in the crime category.
Notable positives for California
While California did not rank highly for affordability and crime, it scored well on a number of other factors that affect quality of life, particularly health care, overall well-being and weather.
Health care is a strength
California’s strongest category was quality and cost of health care; it ranked sixth in the U.S. With a 20 percent weighting, the category was a meaningful positive for the state. The subcategories include health care cost per capita, health care establishments per capita and state health system performance.
In terms of health care cost per capita, California came in the middle of the pack at 22nd, spending an average of $10,299 in 2020, according to the Kaiser Foundation. For context, Utah was the lowest at $7,522, while New York was the highest at $14,007.
California ranked highly when it came to health care facilities per capita, coming in 11th. The state has about 325 facilities for every 100,000 people. For context, Alaska topped the rankings with 387 facilities for every 100,000 residents, while Alabama came in 50th, with 221 facilities per capita.
California also made a solid showing in the final subcategory, state health system performance, which shows how well a state’s health system is functioning. The state ranked 13th here, while Massachusetts led the subcategory and Mississippi finished at the bottom.
Weather is among the best in the Golden State
Known for its sunny days, California did well in the weather category, which counted for 10 percent of the overall ranking. The state landed in 12th place for its weather.
The average annual temperature in California from 2000 to 2023 was 59.3 degrees Fahrenheit, according to Bankrate’s analysis of National Oceanic and Atmospheric Administration data (NOAA). This temperature put the state in 13th place, behind such states as first-place Hawaii (75.7 degrees) and retirement paradise Florida, which ranked second at 71.7 degrees.
Where California faltered a bit was in the natural disasters subcategory. While the state doesn’t suffer from hurricanes or all that many tornadoes, it is infamous for its earthquakes. California had an average of 258 earthquakes annually from 2010 to 2015. Still, the state placed 22nd for this subcategory.
High well-being scores
California also pulled a strong ranking in what Bankrate calls its well-being score, which made up 25 percent of the overall score. California came in 15th for well-being, which is scored based on the number of adults aged 62 and older per capita, the community well-being index, the demographic diversity index, and arts, entertainment and recreation establishments per capita.
California skews youthful and ranks 46th when it comes to the number of adults 62 and older per capita. Out of every 100,000 people, 19,290 of them are 62 or above. Maine topped this list, with about 27.3 percent of its population at or above 62 years old.
When it came to the score for arts, entertainment and recreation establishments per capita, California lived up to its reputation as a global media hub. The state came in third place.
California offers strong racial and ethnic diversity, ranking second in this subcategory.
It also performed well in the community well-being index, ranking sixth, as measured by ShareCare in 2022. For context, Hawaii and Massachusetts ranked in the top spot, while Mississippi ended the list.
How much house can I afford in California?
If California is on your short list for retirement, you should carefully consider whether it meets your budget. California has plenty of other great features for retirees — balmy weather, a strong health care system and strong culture factors — but the real question is whether retirees can foot the bill for it all, especially with the state’s notably high homeownership costs.
Figuring out your budget for a new home is one of the first steps if you’re thinking about a move there. This Bankrate calculator can help you determine what amount you can spend on your home. Working with an experienced financial advisor can also help you make your retirement dreams affordable, even if they are in a state with a high cost of living.
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