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.
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:
Johnstown, PA
Monroe, LA
Springfield, OH
Decatur, AL
Florence-Muscle Shoals, AL
Anniston-Oxford, AL
Sumter, SC
Gadsden, AL
Carbondale-Marion, IL
Enid, OK
Rocky Mount, NC
Wheeling, WV-OH
Pine Bluff, AR
Weirton-Steubenville, WV-OH
Parkersburg-Vienna, WV
Dothan, AL
Lawton, OK
Fort Smith, AR-OK
Houma-Thibodaux, LA
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.
Anniston-Oxford, AL
Gadsden, AL
Morristown, TN
Florence-Muscle Shoals, AL
Jackson, TN
Kingsport-Bristol, TN-VA
Las Cruces, NM
Dothan, AL
Decatur, AL
Monroe, LA
Johnstown, PA
Sumter, SC
Carbondale-Marion, IL
Springfield, OH
Great Falls, MT
Lewiston, ID-WA
Jonesboro, AR
Johnson City, TN
Owensboro, KY
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.
Category
Percentage
Dollar Amount
Housing
36.8%
$1,104
Other
17.5%
$525
Out-of-pocket healthcare
14.0%
$420
Transportation
13.1%
$393
Food
12.0%
$360
Entertainment
4.8%
$144
Apparel
1.7%
$51
Total
100.00%
$2,997.00
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.
A monthly budget of $2,500 to $3,000 can provide a comfortable lifestyle in Spain, covering rent, utilities, food, and leisure activities. The cost of living is generally lower than in many parts of the United States, especially housing and healthcare.
A monthly budget of $2,500 to $3,000 can provide a comfortable lifestyle in Spain, covering rent, utilities, food, and leisure activities. The cost of living is generally lower than in many parts of the United States, especially housing and healthcare.
The ideal monthly retirement income for a couple differs for everyone. It depends on your personal preferences, past accomplishments, and retirement plans. Some valuable perspective can be found in the 2022 US Census Bureau's median income for couples 65 and over: $76,490 annually or about $6,374 monthly.
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.
Social Security offers a monthly benefit check to many kinds of recipients. As of July 2024, the average check is $1,782.74, according to the Social Security Administration — but that amount can differ drastically depending on the type of recipient. In fact, retirees typically make more than the overall average.
According to the Bureau of Labor Statistics (BLS), the average income of someone 65 and older in 2021 was $55,335, and the average expenses were $52,141, or $4,345 per month.
Take your estimated monthly expenses (be sure they're realistic) and divide that number by 4% to figure out how much income you'll need in retirement. For example, you'll need $1.25 million ($50,000 ÷ 0.04) going into retirement if you estimate that you'll need $50,000 a year to live comfortably.
If you retire with no money, you'll have to consider ways to create income to pay for your living expenses. That might include applying for Social Security retirement benefits, getting a reverse mortgage if you own a home, or starting a side hustle or part-time job to generate a steady paycheck.
The cheapest places to retire abroad include Panama, the Philippines, Portugal, Malaysia, Mexico, Thailand and Vietnam. Before making the move, consider expenses such as travel costs, taxes and visas, which can vary significantly from one country to another.
Average monthly retirement income in 2021 for retirees 65 and older was about $4,000 a month, or $48,000 a year; this is a slight decrease from 2020, when it was about $49,000. In general, monthly income ranges somewhere between $2,000 and $6,000 a month.
To fund an “above average” retirement lifestyle—where you spend 55% of your preretirement income—Fidelity recommends having 12 times your income saved at age 67, which is the normal Social Security retirement age.
Jania says that living on $1,500 per month during retirement is definitely a possibility if you consider residing in certain states that tend to have a lower cost of living like Kansas, Mississippi or Alabama.
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