Moving to Ohio Brilliantly Solved Our Retirement Dilemma

Living in San Diego was a dream come true. The sun, the beach, a great job at San Diego State University and Disneyland pretty nearby! What more could I want? The chance for a balanced life and a successful retirement.

After our daughter was born in 1998, it became clear to my husband and me that living in California meant an opaque path to retirement, even if we worked full time indefinitely. The results from GOBankingRates’ latest study clarifies today what we knew instinctively two decades ago: Living — and retiring — in California is outrageously expensive.

The GOBankingRates study determined the average total expenditures for people 65 and older (which included groceries, housing, utilities, transportation and healthcare) and then adjusted that total based on each state’s cost of living index to find how long a hypothetical $100,000 would last in retirement. In California, $100,000 will last approximately one year and six months.

My husband and I agreed we had to make a change and move to a place with a lower cost of living. But would the change make it easy enough to save for retirement?

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I was smart and began saving for retirement in my 20s. It was very difficult because living in California was extremely expensive. In fact, in 1988, our modest home cost almost $200,000 ($435,620 in today’s dollars). The cost of living index in California is 141 — or 41 points above average — and we felt it.

Despite all the benefits of living in San Diego, we made a bold decision after our daughter was born. We needed to get to a low cost of living area. We were living in paradise but had no time to enjoy the benefits. In fact, during our final year in San Diego, even though we lived less than 2 miles from the beach, we went exactly three times the entire year.

At the time, we weren’t thinking about this decision as a boon to our retirement plans, but it was. My husband lined up a job in Dayton, Ohio, and we packed up and became Midwesterners. The cost of living index in Ohio is 92.7, almost eight points below the national average of 100. Although not the cheapest place to live in the country, Ohio is more affordable than California.

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We bought a home in a top-notch neighborhood for $125,000. Our daughter went to a well-ranked public school and, best of all, I could afford to step away from full-time work for several years to avoid incurring child care expenses.

Because my husband and I were aggressively saving, we weren’t thinking about where we would end up. We simply wanted to get to that first $100,000 savings benchmark. As we continued to save and invest, our goal was to amass as large a retirement fund as possible, so that we could retire where we chose. We knew that living in Ohio would allow us to super-charge our retirement saving.

In fact, my family is proof that living in a low-cost-of-living area while saving for retirement can result in a better lifestyle in the present and greater retirement financial flexibility in the future. We actually had enough saved that we decided to return to California.

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My husband and I are both down-to-earth and abhor displays of extravagance. That makes simple living choices easy for us. We lived modestly and saved money on things that didn’t matter. We saved and invested the maximum in a 401k and we each contributed to IRAs. I only wish free robo-advisors were around back then to simplify our investing.

Living in Ohio (and later, Pennsylvania), made it possible to live the life we wanted and save for retirement. In 2011, my husband took a job in California and I followed with my location-independent business. By understanding the cost-of-living differences in various locations and strategically living in an affordable place, we were able to save enough to retire anywhere.

Today, we choose to work because we’ve met our retirement goals, thanks to aggressive saving, investing and living in a low-cost state for many years. And although $100,000 won’t last as long in retirement in California as it would in Ohio, our years in the Midwest gave us the opportunity to retire wherever we wanted.

Click here to find out what living in a pseudo-retirement community taught this family about money.

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Methodology: In order to determine how long $100,000 will last the average retiree in each state, GOBankingRates found the average total expenditures for people 65 and older, which includes groceries, housing, utilities, transportation and healthcare. Then, we multiplied that by the cost of living index in each state to find the average annual expenditure cost for each state. Once the annual cost was found, it was divided by $100,000 and then converted into years, months and days in order to show how much average annual expenditures for people 65 and older would last in every state.


This article originally appeared on Moving to Ohio Brilliantly Solved Our Retirement Dilemma