The Augusta Chronicle compared cost-of-living data with U.S. Census information to find affordable metro areas.
An eye-opening study released last week shed light on how few Americans have saved enough for their retirement years. The Washington, D.C.-based association Employee Benefit Research Institute on Tuesday said 28 percent of Americans don’t think they’ll be able to retire comfortably, the highest mark in the 23-year history of its study.
Many people can expect to live another 20 years after retirement. So, stretching that money becomes important. And where a person lives in retirement can help.
“When I drive out of town ... one of the things that pops immediately into my head is the price of gas. Transportation in Augusta is a lot easier cause it is smaller,” said Gene McManus, a financial planner with AP Wealth Management in Augusta.
Using the annual averages in the ACCRA Cost of Living Index and Census data in the American Community Survey on what people over 60 pay for housing expenses, Augusta emerged as one of the least expensive cities for seniors.
Other affordable urban areas with amenities attractive to retirees are Nashville and Knoxville, Tenn., Jackson, Miss., Louisville, Ky., Winston-Salem, N.C., and Savannah, Ga.
Financial planners say $40,000 a year in retirement income is an attainable mark.
“If you’re a couple, you’re going to have $2,000 to $2,500 a month in Social Security,” said Will Caywood, a chartered retirement planning counselor at Fehrman Investment Group in Augusta.
With an IRA or 401(k) of $250,000, that would contribute another $1,000 a month in income, he said.
McManus said there are a lot of people in the Augusta area who also draw from military or Savannah River Site pensions, which would fill in for a lack of IRAs.
Financial planners use a rule of thumb of 70 to 80 percent of working income to plan for comfortable retirement. Some costs go down when people stop working, Caywood said. Gas use goes down without a commute. Health insurance premium costs shift to Medicare.
McManus has conversations with clients about how they want to live when they retire and start drawing from the money they’ve saved.
“We figure on the high side. Assuming a house is paid off, we figure their living expenses are going to (increase) 100 percent,” McManus said.
He said he’d rather plan for the worst and the client live off less than for the reverse to happen.
Homeowners over 60 who live in Augusta, and have no mortgage, spend $353 a month in housing expenses, according to data in the U.S. Census. Renters will spend an average of $626.
According to the cost of living index, health-care costs in Augusta are 7 percent lower than the national average. Housing is nearly 20 percent lower.
Hilton Head, for example, is 12 percent more expensive in health care and 13 percent more expensive in housing than the national average.