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The top 10 U.S. cities for retirees who want a low cost of living

“Where you live is one of life’s top decisions.”

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Experts recommend that Americans have 10 times their annual salary saved for retirement by the time they're age 67 — but not everyone is able to reach that goal. As of the fourth quarter of 2020, the average 60-to-69 year old with a 401(k) account had $229,100 saved, according to Fidelity. That's only about three times the median U.S. household income of $68,703.

If you've fallen short of your retirement savings goal, one important action can help you stress less about and during your golden years: choosing a low-cost-of-living place to retire.

Americans ages 65 and older spend an average of $50,220 annually, according to the Bureau of Labor Statistics' latest Consumer Expenditure Survey. Using that survey, as well as data from Sperling's 2020 Best Places cost-of-living index, researchers at GOBankingRates found 10 U.S. cities that have some of the lowest annual costs for retirees, while maintaining high AreaVibes "livability scores" thanks to assets like low crime rates and nice weather.

If you're thinking of moving to cut costs in retirement, here are some "livable" cities to consider.

10. Des Moines, Iowa

Estimated annual expenditure for seniors: $40,778
Livability score (out of 100): 78 

9. Amarillo, Texas

Estimated annual expenditure for seniors: $40,226
Livability score: 81

8. Fort Wayne, Indiana

Estimated annual expenditure for seniors: $39,623
Livability score: 80

7. Shreveport, Louisiana

Estimated annual expenditure for seniors: $38,920
Livability score: 66

6. Montgomery, Alabama

Estimated annual expenditure for seniors: $38,066
Livability score: 61

5. Birmingham, Alabama

Estimated annual expenditure for seniors: $37,213
Livability score: 62

4. Toledo, Ohio

Estimated annual expenditure for seniors: $36,509
Livability score: 63 

3. Cleveland, Ohio

Estimated annual expenditure for seniors: $36,459
Livability score: 62 

2. Brownsville, Texas

Estimated annual expenditure for seniors: $35,304
Livability score: 76

1. Akron, Ohio

Estimated annual expenditure for seniors: $34,902
Livability score: 65

How to decide whether you should move for retirement

Nearly 60% of Americans think that $1 million is the ideal amount they need to retire comfortably, but it's possible to settle down happily with much less.

For those who are nearing retirement age without hitting their savings goal, it can be wise to "rethink where [you] retire," says Jonathan I. Shenkman, an accredited investment fiduciary and financial advisor at Oppenheimer & Co. "For instance, if you had a high-paying job in New York or L.A. and planned to stay in the area during your retirement, considering a location where the cost of living is substantially lower can still make retiring feasible, without having to work longer or save more money."

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Look at the full picture first before moving to cut costs. First and foremost, you'll want to be content in the place you choose: "If you are not happy with your location, you will spend a lot of money traveling just to get away," says Dorothy E. Bossung, a certified financial planner and executive vice president of Lowery Asset Consulting. "Look at your hobbies, social interaction, and where family and friends live. You can pack up and move … but look at the opportunities provided by [your new] community." 

You'll also want to consider the full spectrum of costs in your new home, from home prices to income and property taxes to utility costs. "Perhaps a state with no income tax like Florida or Texas is an option, or the Midwest, where housing costs are cheaper," Shenkman says.

For example, Akron, Ohio, the No. 1 city on GOBanking Rates' list, has significantly more affordable housing compared to the rest of the country. Its median home value is $89,086, according to Zillow, compared to a national median of about $281,400. And utilities in Akron cost 3% less than the national average, PayScale reports.

Last-minute strategies to boost your savings

While time (and compound interest) is the aspiring retiree's best friend, there are always strategies to help boost your income and trim your spending, even late in the game.

To ensure your reserves will last once you're retired, plan ahead. Figure out "what your new ongoing lifestyle expenses will be," says Erika Safran, a certified financial planner and principal at Safran Wealth Advisors. "Will you have to withdraw funds from savings to supplement your living expenses?"

If you'll need more money to keep your retirement plans afloat, consider picking up a side hustle. Cut down on extraneous phone and cable bills, and refinance your mortgage if you need more money. And try reducing high-interest credit card debt by transferring to a lower-interest card, Safran suggests.

Still have time before retirement? Start saving now

If you're still years, or even decades, away from retirement, now is the time to focus on making a plan and saving for it. Do you want to spend your golden years in a warm climate? Close to family and friends? Engaged in a special activity you love?

Think about "what you want your future life to look like," Safran says. "Make changes in your current life to meet financial goals, so you can live where you want to live."

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Experts recommend taking the time to understand your workplace retirement accounts and setting a goal of saving at least 10% to 20% of your monthly income in a 401(k), Roth IRA, or a traditional IRA. These vehicles offer compound interest to help your money grow over time, so you'll have a nice cushion when you retire.

Even a small amount of savings right now can make a big difference down the line. "You don't have to 'get it right' immediately," Bossung says, "but if you start planning early, you can make the wonderful experience you are hoping for."

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