Calculate retirement costs with a new online tool
(MoneyWatch) Want to know how much income you'll need to meet your basic living needs? You can find out with the Elder Index, a new tool from Wider Opportunities for Women (WOW) that reveals the typical costs people age 65 and over have for housing, food, transportation, health care and miscellaneous expenses for every county and state in the U.S.
WOW's Elder Index is a conservative estimate of needs and doesn't include any extras such as vacations, electronics, gifts or meals out. It outlines the basic living costs for six categories:
1. Single owner with a mortgage
2. Single owner without a mortgage
3. Single renter with a one-bedroom place
4. Couple with a mortgage
5. Couple without a mortgage
6. Couple renter with a one-bedroom place
You can use this tool to compare the costs in the county you're currently living in to other locations you're considering moving to when you retire. For example, if you're currently living in a major metropolitan area, you can probably reduce your living expenses by moving one or two counties away. You'd still be close to friends, family and other activities that are important to you, but your living expenses would be lower.
How to choose the best place to retire
Retirement planning outside the box: Move out of the suburbs
In my case, my wife and I downsized and moved to Ventura County, Calif., which is one county north of Los Angeles. We're about an hour's drive away from our old haunts, so we can maintain the important parts of our prior lives, but we're making new friends and finding new activities in our new home. The Elder Index shows that the basic living costs in our new home are about 6 percent lower than what they'd be if we'd stayed in Los Angeles. By moving, we've been able to reduce our living expenses, enjoy a lack of congestion and breathe cleaner air, while easily keeping in touch with family and friends.
The tool also confirms that paying off your mortgage by the time you retire is a sound financial strategy. The two categories shown above for those who own but don't have a mortgage generally had 30 to 50 percent lower basic living expenses than the other four categories. You can also reduce your housing expenses by moving to a smaller residence, living with your children or other close relative, or taking in a roommate.
WOW's Elder Index is just one way to jumpstart your thinking about where to live once you retire. In addition to living costs, you'll want to consider such important factors as proximity to family and friends, availability of work, accessibility of public transportation, availability of medical services and, most important, the life you want to live.
Image courtesy of iStockphoto contributor leventince
Steve Vernon
View all articles by Steve Vernon on CBS MoneyWatch»
Steve Vernon helped large employers design and manage their retirement programs for more than 35 years as a consulting actuary. Now he's a research scholar for the Stanford Center on Longevity, where he helps collect, direct and disseminate research that will improve the financial security of seniors. He's also president of Rest-of-Life Communications, delivers retirement planning workshops
and authored Retirement Game-Changers: Strategies for a Healthy, Financially Secure and Fulfilling Long Life and Money for Life: Turn Your IRA and 401(k) Into a Lifetime Retirement Paycheck.
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