Retiring on $100 a Day

senior citizens riding bikes together

Can you really retire in America and only spend $100 a day?  Turns out it’s a lot more possible than you might think.

When I started this recent study with AARP, I’d expected only about 20 or 30 U.S. cities would be this affordable.  But I was surprised to discover that most U.S. metro areas have a low enough combination of housing prices and property taxes to meet this criteria.

So what are the best cities for a $100/day retirement?

Based on things like arts and culture, rich community and great restaurants, here’s the Top 10:

City State Population
1 Spokane WA 471,221
2 Las Cruces NM 209,233
3 Eau Claire WI 161,151
4 Roanoke VA 308,707
5 Morgantown WV 129,709
6 Pittsburgh PA 2,356,285
7 San Antonio TX 2,142,508
8 Omaha-Council Bluffs NE-IA 865,350
9 Grand Junction CO 146,723
10 Gainesville FL 264,275

I’m assuming a 25% tax rate, which will reduce your yearly income of $36,500 to $27,375 spendable income.  That’s $2,281 per month.

The Bureau of Labor Statistics uses a percentage of 31.5% for the housing component of the Consumer Price Index.  That means that we have $719 per month for mortgage payments and property taxes.

I’m assuming a 20% down payment, which means that with current low interest rates, we can afford a house priced at $192,000.  Of course, putting up the nearly $40,000 (20% of $192,000) for the down payment may be challenging.

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“Millionaire Flight” theory – Don’t fall for it

a world war one or two plane crashes

There have been a number of news stories over the last two years about how the wealthy are fleeing states which have increased taxes on the highest tax brackets.

I’ll show you this line of thinking is not borne out by the facts, and is irrational to boot.

Here’s an example; a new story from the Wall Street Journal  – titled “Millionaires Fleeing Taxes” (August 7, 2012).

The description of the video interview with the reporter (Arden Dale) states “When states raise taxes millionaires move out.”  And the interviewer starts the piece by declaring, “Millionaires are fleeing from taxes!”

Wow, that sounds serious, and certainly very definitive.  Let’s learn more.

Interviewer – “So tell us, where are the millionaires going?”

Ms. Dale – “People don’t want to be taxed… but when we looked the actual numbers, the actual studies of whether ‘Millionaire Flight’ occurs, what we found was that there is no really great statistical data that shows that it does.” (Note: while this is being said, a banner on the screen reads “Millionaires moving to avoid taxes.”)

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A Cost of Growth

In the study of cities, getting bigger is usually seen as desirable if not inevitible.  So interesting issues are raised when growth starts to bring with it some questionable effects.

image: http://williamlitchfield.wordpress.com/

Austin, Texas has been a sanctuary for pickers, singers and painters for generations.  The problem is, the creative class is starting to get squeezed out.

People move to Austin because it’s so cool and hip, but the influx has pushed the cost of living UP and the artists OUT.

Now Austin is the priciest place to live in Texas.  The fancy $500,000 condos must be the target of the famous “Keep Austin Weird” slogan on the back of every VW van down there.

It’s a tricky chicken-and-egg situation when prosperity rides into town with unaffordability as its sidekick.  Austin is stepping up admirably, though – the city has spent $55 million on affordable housing in the past five years.

There’s an article all about it on the NPR site:

http://www.npr.org/blogs/therecord/2011/12/23/143725019/austin-the-brooklyn-of-the-south?ps=mh_frhdl1

Realtor group admits flawed numbers

My work is all about data and what it can tell us.  So I know that numbers aren’t always what they seem, and they are often misleading either as an accident or part of a larger agenda.

The National Association of Realtors (NAR) announced today that it will be restating home-sales data going back to 2007.  (Hey, isn’t that when the housing market started to tank?  That’s a coincidence.)

“The Chicago-based organization has known for a long time that the existing home sales data it releases to the public each month were significantly inflated. It knew that it was double-counting, miscounting and relying on outdated census results that pumped up its report on housing activity.”
Chicago Tribune, 12/21/11

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Best Cities for Seniors

I just completed a really in-depth study on the best metro areas for seniors to live in.  Minneapolis came in first, with Boston and Pittsburgh rounding out the top three.  There’s an overview of the study here, with the top 25 cities:

2011 Best Cities for Seniors

We considered nine broad categories, each consisting of several specific measures:  Healthcare, Economy, Health & Longevity, Social Life, Environment, Spiritual Life, Housing, Transportation, and Crime.

Here you can download a PDF of the entire study, with all 50 cities ranked, as well as full methodology and detailed city writeups:

Best Cities for Seniors Full Study

In the PDF, we’ve even broken how cities scored in each of the individual categories.  For example, the #1 city for Environment was San Francisco, whereas the #1 city for Housing was Oklahoma City.