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Hawaii is the ‘perfect place to retire by the beach,’ says millionaire—but there are 3 big downsides – CNBC

In 2012, at 34 years old, I left my investment banking job and retired early with a net worth of $3 million. Currently, I live in San Francisco with my wife and two young kids.

But since 1977, I’ve regularly traveled back and …….

In 2012, at 34 years old, I left my investment banking job and retired early with a net worth of $3 million. Currently, I live in San Francisco with my wife and two young kids.

But since 1977, I’ve regularly traveled back and forth to Hawaii, where my parents have been retired for 15 years. They have a simple life with a modest budget, living off retirement savings and a government pension — thanks to the three decades they spent working in the U.S. Foreign Service.

Seeing my parents live their dream, we want to follow suit. Our plan is to move to Hawaii by 2025. Between my parents’ experience and my own, I’ve learned a lot about the ins and outs of retiring in Hawaii.

Our consensus it’s the perfect place to retire by the beach — although there are still a few downsides to keep in mind.

How much money do you need to retire in Hawaii?

Hawaii was ranked ranked in the top five states where Americans want to retire most. But it also has the highest cost of living in the U.S.

Many financial experts suggest maintaining a 4% withdrawal rate to ensure that your investments last throughout retirement.

The median household income in Honolulu County, for example, is $88,000. If someone wanted to withdraw that $88,000 from their assets each year, they’d need about $2,200,000 in investments to withdraw at a rate of 4%.

But that’s just one example. How much money you need depends on where you’d like to live, your standard of living and your expected income.

If you can comfortably live off $42,500 a year, have a pension or can file for Social Security, you can have a lower net worth and less income-generating investments at the beginning of your retirement journey.

The downsides of retiring in Hawaii

Before you start your beach retirement plan, beware of these three biggest downsides first:

1. High cost of housing

As of June 2022, the median single-family home price in Honolulu is $1,050,000. Meanwhile, the median price for a condo on Oahu, which is considered a great place to retire on a budget, is currently $535,000 — up 16% from June 2021.

If you want to retire in Hawaii, consider buying a small condo or rent, rather than purchasing a single-family home. The average rent for a 594 square foot apartment is roughly $2,042, according to RentCafe. 

2. Expensive groceries and gas

According to a 2021 report by the Missouri Economic Research and Information Center, Hawaii’s grocery prices are the highest in the nation.

For example, I’ve paid $8.99 for a gallon of whole milk on Oahu, whereas in …….

Source: https://www.cnbc.com/2022/08/09/heres-how-much-money-youd-need-to-retire-in-hawaii-and-the-biggest-downsides-says-millionaire.html

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