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Where retirees have the highest income, and where it goes furthest

·Jaclyn DeJohn, CFP for SmartAsset

Robert Kneschke // Canva
Robert Kneschke // Canva
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Adults spend most of their lives preparing for retirement, but the hard work isn't entirely over once they reach their golden years. Retirees have to watch their money extra carefully, given that their income is fixed through Social Security payments, pensions and conservative portfolio shifts. Retirement income can get taxed like regular income and local costs of living may further dent a fixed cash flow. So where retirees rake in the most money doesn't necessarily tell the whole story – it's how far those dollars stretch that make one comfortable throughout retirement.

To determine where retirement incomes stretch the furthest, SmartAsset examined local mean retirement incomes, and applied the cost of living and effective tax rates in the 100 places with the highest proportion of seniors.

Key findings

  • The average annual retirement income across the U.S. is $29,600. Each place has a unique average retirement income, ranging from $12,892 to $65,982. How far those incomes stretch depends on the local tax rates and cost of living.
  • Palm Bay, Florida, retirees have it best by a wide margin. The annual retirement income value here is $44,724 – 15% more than second place Poinciana, FL. Palm Bay and Poinciana each have particularly high retirement incomes, while Palm Bay residents get the added benefit of a lower-than-average cost of living.
     
  • Bethesda and Rockville, Maryland have the highest retirement incomes. Retirees in these D.C. burbs average about $62,000 and $60,000 per year, respectively. But due to higher taxes and cost of living, they rank 10th and 13th when it comes to how far those fixed incomes stretch.  
     
  • Income for retirees in these Floridian areas doesn't go very far. Mostly due to particularly low retirement incomes – ranging as low as $16,000 annually – retirees in Tamarac, Hialeah, Lauderhill, Pembroke Pines, Deerfield Beach and West Palm Beach have some of the lowest valued retirement income after adjusting for taxes and cost of living. However, thanks to no state income taxes in Florida and low average incomes, retirees in these cities are taxed lower than most.
     
  • Of the top 10 cities where retirement income goes furthest, these two Texas cities have the lowest tax rates. While neither Florida nor Texas charge a state income tax, Sugar Land and Georgetown, Texas, come out ahead of the other top 10 contenders when it comes to taxes. The average tax rate on the average retirement income level is just 19% in these cities. 
     
  • The senior population per capita in these Florida areas is double the average. Just over 33% of the population is aged 65+ in Port Charlotte, and more than 29% of residents in Palm Coast and Delray Beach. This is double the national average of 14.77%. However, the largest senior populations by sheer volume are in Honolulu, HI, Scottsdale, AZ, and Henderson, NV.
A chart listing 30 U.S. cities based on the effective value of their retirement income after considering taxes and the cost of living.

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10 places where retiree income goes furthest

 

1. Palm Bay, Florida
Retirees in Palm Bay have the fifth highest mean retirement income at $55,437. With this income level, taxes come out to about 21.7%. The cost of living is 3% lower than average, however, bringing the value of the average retirement income to $44,724.74.

2. Poinciana, Florida
Just over 20% of Poinciana's population is made up of retirees – or 13,531 people. The overall average value of their annual retirement income is $38,779 after accounting for taxes and cost of living. 

3. Evanston, Illinois
Evanston comes in third overall, and also has the third highest mean retirement income at $58.559. At this income level, the effective tax rate is roughly 27%. This Chicago suburb's cost of living is about 17% higher than the average place in the U.S. 

4. Casas Adobes, Arizona
Nearly 22% of Casas Adobes' population is aged 65 or over. While the cost of living in the area is a modest 4.1% higher than average, Casas Adobes retirees have the seventh highest average retirement income at $49,638.

5. Sugar Land, Texas
Sugar Land's local cost of living offers a break on the average $39,498 retirement income. In general, things like housing, groceries, transportation and other necessities cost just about 4% less than average. After accounting for that and taxes, the average retiree's income stretches to about $33,238.29.

6. Springfield, Illinois
Springfield only has the 19th highest retirement income with retiree's receiving $40,154 per year, but the cost of living helps compensate because it is 7.7% lower than average. The tax rate on the average retirement income comes to roughly 23.8%.

7. Scottsdale, Arizona
Scottsdale has both the second largest senior population per capita and the eighth largest senior population by volume. Over 64,000 retirees here earn an average of $45,268 annually, which equates to $33,087 after taxes (22.66% at this income level) and cost of living (5.8% higher than average).

8. Georgetown, Texas
About 26.5% of Georgetown residents are aged 65 or over. The cost of living is close to the national average – just 1% higher. Taxes come out to roughly 19% on the $41,072 average retirement income. The value of that income after taxes and cost of living is $33,207.

9. Bismarck, North Dakota
Bismarck's average retirement income of $40,012 is 20th highest of the 100 cities with the largest senior populations per capita. The 1.3% cost of living premium earns the 36th rank, and with taxes puts the value of the average salary at $31,551. Out of Bismarck's 74,141 residents, 13,519 are 65 or older.

10. Bethesda, Maryland
While Bethesda has the highest retirement incomes of places with a sizable senior population, this D.C. suburb has a particularly high cost of living – 40.1% higher than average. It also has the highest tax rate of average retirement income in the study, with the effective tax rate coming in slightly above 30%.

10 places with the highest average retirement income

1. Bethesda, Maryland: $62,26
2. Rockville, Maryland: $60,425
3. Evanston, Illinois: $58,559
4. Newport Beach, California: $56,009
5. Palm Bay, Florida: $55,437
6. Poinciana, Florida: $52,311
7. Casas Adobes, Arizona: $49,638
8. Napa, California: $48,444
9. Walnut Creek, California: $48287
10. Yorba Linda, California: $48,102

Data and methodology

The study examined data for the 100 U.S. Census Designated Places with the largest senior population (aged 65+) as a percentage of the total population. Population data came from the U.S. Census Bureau's 1-Year American Community Survey DP05 for 2021. Mean retirement income data came from the U.S. Census Bureau's 1-Year American Community Survey DP03 for 2021. 

Tax rates were determined using SmartAsset's Paycheck Calculator for relevant income levels, assuming an individual tax filer with no dependents for each location. Cost of living data comes from Q3 2022 Cost of Living Index from the Council for Community and Economic Research. It creates a composite score for price premiums on necessities like housing, groceries, medical care, transportation and miscellaneous goods and services.

This story was produced by SmartAsset and reviewed and distributed by Stacker Media.

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