Considering settling down in the Golden State? You’re not alone. California is one of the most coveted states to retire in—one that many active adults put on their shortlist of dream retirement locations.
The state boasts idyllic weather, a booming economy, and beautiful scenery, but it’s not without its disadvantages. To help make the all-important decision of where to retire a bit easier (and perhaps whittle down that list), here’s our comprehensive guide to retiring in California.
Retiring in California Pros and Cons
Pros
Warm, Sunny Weather
Overall, the weather in California is mild and warm with an average of 284 glorious sunny days in Los Angeles. By contrast, the U.S. has 205 average sunny days. California’s Mediterranean climate is one of its main attractions.
Top-notch Attractions and Entertainment
With world-famous national parks, popular beaches, renowned wine regions, theme parks, thriving tech hubs, destination ski resorts, as well as cities famous for food, shopping, and entertainment, there’s always something to do and never a shortage of day trips to take in California. From Napa Valley to Lake Tahoe to Palm Springs, there are entertainment opportunities and activities galore in California.
Natural Beauty
From the breathtaking waterfalls of Yosemite to the majestic Sequoias of Calaveras Big Trees State Park, there’s no shortage of natural wonders in California. This great state boasts nine National Parks and about 300 State Parks. The sunsets in Southern California are some of the prettiest in the nation. Also, driving along the coast on Highway 1 is as breathtaking a scene as one could imagine.
Cons
High Cost of Living
As most are well aware, the cost of living in most of California is high. Typically, high housing prices are seen in metropolitan areas where the job market is thriving (think the Bay area and Silicon Valley) or in beachside communities such as Carmel or Santa Monica. Luckily for retirees, being a distance from a thriving job market isn’t a dealbreaker, and there are plenty of beautiful communities that are still affordable. But there’s no way around it, California is one of the most expensive states to live in.
High Population Density
There are plenty of rural areas left in California, particularly in the mideastern areas of the state and up north. But when you get near the metropolitan areas, the traffic and crowds are undeniable. California remains the most populous state in the country with a 2019 estimated population of 39.5 million people—about 12% of the U.S. population.
Extreme Weather in Certain Areas
Most of California enjoys hot, dry summers and mild winters, but more extreme weather can be found in the upper and lower eastern areas of the state. In the arid desert areas of mid and lower-east California, temperatures can spike up well past 100°F. Death Valley is the hottest location in the world, with a record-breaking temperature of 134°F. Additionally, up north in the Sierra Nevada Mountains, winter lows drop to around 15°F with plenty of snow.
Luckily, most of the coastal and metropolitan areas of the state are mild. On the coast, the average daily high temperature is around 70°F with coastal fog that usually burns off by midday, while inland usually runs a high of 91°F in the summer.
California Taxes
California Property Taxes
Compared to the national average property tax rate of 0.99%, California’s standard property tax rate is 0.71%. That’s great news for active adults worried about California’s cost of living. That lower property tax rate helps offset the higher-than-average cost of living. Calculating the exact property tax you would be expected to pay requires your property’s assessed value multiplied by the current property tax rate based on your property’s address.
California Retirement Income Taxes
The income tax rate in California ranges from 1% to 12.3%, depending on which tax bracket you’re in. The retirement income tax rate remains the same, but California does exempt Social Security retirement benefits from taxation. However, California is one of the states that taxes pensions.
California Tax Exemptions for Seniors
California offers several property tax exemptions for seniors, including Proposition 60 and 90, which allow homeowners aged 55+ to move into a new home without significantly increasing their property taxes. Disabled veterans living or moving to California enjoy a significant tax exemption, starting at $100,000.
Also, homeowners in California voted to approve Proposition 19 on November 3, 2020. This new law means those over 55 can move residences up to three times in their lifetime, all while keeping their current property tax rate. However, their children may not be able to keep that low tax rate.
California Health Care
There are a variety of affordable health care options to choose from in California, with the most popular health insurance companies being Anthem Blue Cross, Kaiser Permanente, Blue Shield, Health Net, and SHARP. Low-income seniors can also qualify for Medi-Cal, California’s version of Medicaid. According to U.S. News and World Report, some of the best hospitals in the state include UCLA Medical Center, Cedars-Sinai Medical Center, UCSF Medical Center, Standford Hospital, as well as Keck Medical Center of USC.
Where to Live In California
California is a large state and different areas vary drastically, from climate and geography to demographics and cost of living. We’ve broken down the three major areas of California (North, Central, and South) into their popular major metro areas.
Northern California
Northern California enjoys cooler weather than Central or Southern California, with more rainfall and even some snow in higher elevations like the Redding/Tahoe area. The area has a thriving economy thanks to tech hubs like Silicon Valley. Enthusiastic sports fans are loyal to their Northern California Bay area teams, which include the San Francisco 49ers, the Golden State Warriors, the Oakland A’s, as well as the San Francisco Giants.
Check out the four major Northern California metro areas below:
Bay Area
The Bay area boasts a thriving economy (based on tech jobs in Silicon Valley and San Francisco), a rich and diverse population, moderate weather, and some of the world’s most notable dining and entertainment venues. Along with all those attractions, this area has some of the highest home prices in the state, but many retirees choose to pay the higher prices to be near all the shopping, museums, theatre venues, and more.
Sacramento Area
The Sacramento area is rich in history, farmland, warm weather, and a nice mixture of urban and rural cities. The state capital boasts plenty to do, from museums and fine dining to parks and shopping to fishing and hiking in nearby Folsom Lake. Nearby cities such as Rocklin, Elk Grove, and Lincoln offer upscale active adult communities with plenty of open space.
Stockton/Modesto Area
The area in and near Stockton and Modesto offers more affordability than the Bay area as it’s farther from job centers and the coast—not a problem for retirees looking to enjoy California’s sunny weather. This area sits directly east of the Bay area and enjoys a beautiful year-round climate with surrounding farmland and a laid-back lifestyle.
Central California
Central California is a mixed bag of climates and demographics. Near the coast, home prices are higher, the weather is cooler, and the cost of living is more expensive. As you move east, home prices fall dramatically, and the geography and weather change considerably.
Central Coast
The central coast of California boasts some of the most beautiful coastlines in the country, with sunny weather, a laid-back beach lifestyle, and fewer crowds than Northern and Southern California beach cities.
Bakersfield Area
Active adults looking for wide open spaces, affordable homes, warm weather, and a slower pace of life should consider the Bakersfield area, where there are many 55+ communities to choose from.
Southern California
Southern California is world-famous for its gorgeous beaches, sunny weather, exciting cities, and luxurious neighborhoods. It’s a popular place to live for many people, from those looking to find fame and fortune to retirees looking to settle down in one of the most desirable climates in the world. Also, the area is full of entertainment, activities, and shopping and dining venues.
Take a closer look at the major metro areas in Southern California below:
Palm Springs Area
The Palm Springs area of California is a haven for active adults. This desert oasis boasts numerous 55+ communities with affordable homes and resort-like amenities. The Palm Springs area offers year-round warm weather, world-renowned golf courses, outdoor recreation such as hiking and biking, numerous shopping centers, and world-class restaurants.
Inland Empire Area
The Inland Empire of Southern California is extremely popular with retirees, for good reason. It’s much more affordable than beachside regions, but it’s still close enough to the ocean for day trips to the beach. The Inland Empire area is between Orange County and Palm Springs, so it’s a short drive away from popular cities such as San Diego, Palm Springs, and Los Angeles. The weather is sunny and warm but not as hot as nearby desert areas.
Orange County Area
Known for its upscale homes and stunning ocean surroundings, Orange County is perfect for active adults who enjoy elegant surroundings and idyllic weather. Orange County offers stunning beachside 55+ communities with homes perfect for enjoying an active, sun-drenched lifestyle.
San Diego Area
At the Southernmost tip of California, the San Diego area is rich with history and diversity. San Diego is a beautiful city with vast offerings when it comes to dining, entertainment, shopping, and cultural attractions. The weather in this area is highly desirable, with year-round sunny and temperate days. There are miles of beaches to stroll along, and fun day trips to Mexico are only a short drive away.
Los Angeles Area
If you’re looking to settle down near the beach, but you still want a faster pace of life, the Los Angeles area may be for you. Enjoy sunny weather, proximity to the beach, and the exciting urban offerings of “The City of Angels.”
Retire in the Golden State With 55places!
Ready to explore your retirement options in the Golden State? 55places.com will connect you with a local real estate expert specializing in 55+ homebuying. They’ll be your guide through every step of the process. Contact us today to take the first step on your real estate journey!
