2022 witnessed retirement 401(k) balances lose nearly one-quarter of their value, severely impacting retirement plans. Trillions of dollars have been wiped out due to the U.S. stock market rout, and those retiring in these conditions are being hit the hardest. The real question is managing the cost of living expenses in your dream retirement destination and how to recover 401(k) losses incurred in the previous years.
Cost of Living in Florida
The sunshine state of Florida is home to 22 million people. Blessed with a subtropical climate and up to 300 days of sunshine, the state is Americans' number one retirement destination—no wonder the state witnesses its population growing by approximately 1,000 people daily. The state also boasts the highest % of citizens 65 or older at 19.1%. The U.S. Census Bureau has estimated that by the year 2030, 32.5% of the population in Florida will be 60 years or older.
With regard to retirement, the president of the Sarasota/Manatee Realtors Association, Brian Tresidder, firmly believes that the pandemic has accelerated people's retirement plans. Moreover, since Florida is a peninsula with limited development sites available, the influx of new residents has been exerting pressure on the real estate market.
320,000 Americans relocated to the state in 2022 alone. Housing prices have significantly risen as a result, with the median single-family home price standing at $405K with a 2% year-on-year gain. Available inventory, or the number of homes available for sale, remains comparatively low at 2.7 months’ supply. Together, these trends imply that homes that are correctly priced, sell off as soon as they hit the market. Typical home values have been growing by 11.1% as of 2023, with the median sale-to-list ratio standing at 0.997.
If retirement costs $1,120,408 on average in the United States, it costs retirees an estimated $1,184,110 to retire in Florida. While a high cost of living drives these costs, another reason for the higher-than-average numbers is the increased average life expectancy in the state. According to data, the average life expectancy for Floridians over the age of 65 is 19.2 years.
Slight declines in these figures have also been recorded due to pandemic-related deaths and drug overdoses. The Missouri Economic Research and Information Centre (MERIC) notes that the cost of living index for Florida stands at 102.8. This means that, on average, the cost of living in the state is 2.8% higher than in the rest of the nation. Moreover, food, groceries, and utilities in the state cost higher than average.
The U.S. Census Bureau notes that the median monthly cost for a mortgage is $1,168.00, while the median monthly cost for rent is $1,301. Federal taxes are between 12-24% on average. However, the state does not tax social security income. Meanwhile, costs for Medicare start at $164.90 per month. While the cost of living in the state is a little higher than average, Florida offers great weather, good livability, high quality of life, and decent healthcare for retirees to live in the state.
Recovering 401(k) losses
Fidelity Investments reports that average 401(k) balances have plummeted by 23% to $103,900. Average retirement balances sank by 20% to $112,572, while there was an increase in the number of hardship withdrawals. Moreover, since nearly three-quarters of all retirement money is held in the form of stocks, Americans are heavily impacted by stock market volatility. S&P was down by 19.4% in 2022, Dow Jones Industrial Average lost 8.8%, and the Nasdaq Composite was down by 33.3%.
These figures help explain why 48% of Americans have started to believe that they will outlive their retirement savings. It is also one of the reasons why the number of older adults working has been growing rapidly. As of 2021, the workforce participation rate stood at 25.8% among adults aged 65 to 74. Moreover, the share of workers aged 70 and over is expected to reach 11.1% from 8.6%.
Another strategy being used by prospective retirees is adding quality investments during market dips. Of course, this is a strategy that can only be adopted by those who have the time and money. It helps to increase the contribution percentage to 401(k)s. Currently, the average (401) k contribution rate stands at 13.7%, while the recommended rate is 15%.
Employees who are yet to retire must benefit from the retirement plans being offered by their company, such as those by ConocoPhillips (NYSE:COP) and Amgen Inc. (NASDAQ:AMGN). Amgen Inc. (NASDAQ:AMGN) provides comprehensive retirement plans with an upfront contribution of 5% regardless of contributions initiated by employees. On the other hand, ConocoPhillips (NYSE:COP) provides several retirement products to their employees as well. As such, both ConocoPhillips (NYSE:COP) and Amgen Inc (NASDAQ:AMGN) play an important role in the provision of retirement plans to employees.
13 Best Places in Florida to Retire On a Budget
Methodology
In order to compile a list of the 13 best places in Florida to retire on a budget, we take a look at six (1,2,3,4,5,6) sources. After gathering the best places in Florida to retire on a budget, we awarded each place a point based on the number of times they were recommended.
Here are the 13 best places in Florida to retire on a budget:
13. Titusville
Insider Monkey Score: 1
One of the top destinations for retirees in Florida is the city of Titusville. The city boasts both a great climate and affordability, which makes it an ideal location to spend one's golden years. The cost of living index for this city is 87.9, which means living is 12% cheaper than average. 22.9% of the population in this city comprises seniors that are 65 or older. There are over 17 independent living communities for retirees, with average costs ranging between $1,265 and $2,654. Moreover, assisted living costs are $3,835 on average. Median home prices in the city stand at $299,900, while affordable housing options are also available for people based on what they earn.
12. Sanford
Insider Monkey Score: 2
Sanford, based in Seminole County, is a diverse city sitting on the shore of Lake Monroe. Retirees love to settle here in the city due to its low cost of living, mild climate, and easy access to healthcare. The integrated healthcare system in Monroe comprises 47 medical centers, over 2800 physicians, and other practice providers. Best Places lists Sanford’s cost of living index at 98.7, which is 1.3% lower than the U.S. average. Median home costs, according to the website, are around $328,300, while average rents are around $1,675. The city is home to about 20 retirement communities, with the median cost of living of approximately $1,839 per month or $22,065 annually.
11. Lake Wales
Insider Monkey Score: 1
Lake Wales, Florida, is another good option to consider for retirement, with plenty of things to do for retirees. The city is celebrated for its diverse community, with 23.39% Black or African American residents, 0.27% Asians, and 8.768% of two or more races. The cost of living in the city is 85.7, according to Best Places.com, making it 14.3% lower than the U.S. average. Average one-bedroom apartments cost around $900, grocery is 2% more expensive, while housing is affordable and cheap. Median home prices in the city cost around $280,000. The city also offers 3 independent living communities that cost around $1,930 per month, lower than the state average.
10. Kissimmee
Insider Monkey Score: 2
Located South of Florida, Kissimmee is very close to popular attractions such as Disney World, Sea World, and even Universal Studios. Retirees with grandchildren love to live here due to the proximity to these locations. Other than that, the city’s low cost of living is a huge attraction in itself. Standing at 97.6, living costs are 2% lower than the state average. Groceries are 1% cheaper, while housing is affordable too. Median home prices are around $360,000, while median rents are approximately between $1,125 and $2,057 as of 2023. Even though the cost of living is relatively cheap, independent living communities for retirees can be higher than the national average of $2,545.
9. Panama
Insider Monkey Score: 2
Panama City is another very affordable city to live in when compared to other cities in Florida. Retirees love it for its proximity to world-class beaches and outdoor activities such as fishing, scuba, sailing, paddle boarding, and snorkeling, to name a few. The cost of living in the city is 88.4% of the national average, groceries are 4% cheaper, and healthcare is affordable too. Realtor notes that the median home prices are $315,000, while average rents are approximately $1 467. The city is also home to 9 independent retirement communities whose average cost is $3,294 per month.
8. Fort Meyers
Insider Monkey Score: 2
Spectacular weather and active lifestyle opportunities make Fort Meyers a preferred destination for many retirees. The city boasts the largest number of seniors aged 65 and older, which make up 21.6% of the population. Fort Meyers is popular for its shell-covered beaches, spectacular scenery, and rich history. Healthcare is good in the city, and there are plenty of opportunities for golf. The cost of living in the city is 96.9, making it 3% lower than the state average. Groceries are 3% more expensive, while utilities are 2% cheaper. Median home prices in Fort Meyers are approximately $400,000, while average rents are between $1300 and $1600.
7. Tampa
Insider Monkey Score: 2
Another well-known city to retire to in Florida is the city of Tampa. Tampa is famous amongst people of all age groups due to its stunning sidewalks, scrumptious eateries, contemporary museums, and lush parks. There are beautiful white sand beaches, theme parks, and attractions such as Busch Gardens and the Zoo Tampa. The Tampa Bay Area is also home to more than 80 retirement communities. Average independent living costs around $3000-$4000. 12.8% of the population is 65 years or older. Overall, the cost of living stands at $2,714, on average, for a single person, making it an affordable place to retire.
6. Sarasota
Insider Monkey Score: 2
Sarasota is home to world-class beaches, excellent weather, and superb healthcare and assisted living facilities. The city may not be the cheapest place in Florida, but a number of factors make it desirable and affordable for retirees. For instance, it costs approximately $1,527 to own a home with a mortgage. However, the cost of living is 3% higher than the state average. Utilities are 6% cheaper, while Transport is 9% lower than the state average. The median home value for ages 60 or over is $245,000, as noted by U.S. News & World Report.
