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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“Military Retirement” study garners major media coverage

Our Best Cities for Military Retirement and Second Careers study is a making a big splash in the media.  The team at Fleishman-Hillard PR orchestrated a great campaign for our USAA-sponsored study.

A big front-page above-the-fold feature in USA Today:  Job-Seeking Veterans.

Forbes.com featured a two-page story and a slide show, and the American Morning show on CNN spent over four minutes discussing our results.

Articles on news sites across the country:

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Military Retirement – Second Careers

Coinciding with Veteran’s Day, we just completed an interesting study about the best places in the U.S. for military retirees to start a second career.  Since most veterans retire from service in their 30’s or 40’s, they have plenty of time to start a new professional chapter in their lives.

source: allamericanpatriots.com

So what are the best places to enter the civilian job sector?  To help us find out, we partnered with USAA (a financial services provider) and Military.com (the largest military and veteran membership organization).  We looked at factors such as affordability, unemployment rate, prevalence of military skill related jobs, and number of veteran-owned businesses.  But we didn’t stop there.

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Washington Post – DC Gains Urban Hipsters

I was asked by the Post to explain why the DC metro has suddenly gained so many 25-34 year olds.  According to the Census Bureau, DC is now right up there with hipster havens like Austin and Portland (Oregon).

DC Area Gains Young Adults

Reporter Carol Morello asked me, “Does this mean Washington is now ‘cool’?”

My answer was, “Umm, sorry, no.”  I explained, it’s a simple case of economics.  The DC area has had one of the lowest unemployment rates in the U.S. along large metro areas.  Young people are flocking to where the jobs are.

Bill Frey, of the Brookings Institution, also chimed in, agreeing that it’s the economy, but also stating that DC has a “certain vibe.”

My quote in the article spoke about each place has its own identity or brand, and Washington’s is one of government and power.  “I don’t know if you want your seat of government to be too cool and quirky.”

Sort of like, you don’t want to find out your heart surgeon also does stand-up comedy.