U.S. Cities Where Retirement Most Promising by Age 40
By Cole Feldman
Honolulu ranks as the top metropolitan area for individuals who earn a “high” income to retire before the age of 40 in a new report from Redfin, a real estate brokerage site.
“Honolulu historically offers a great rate of home value appreciation, and there are many investment opportunities. If you are able to afford to retire here, you can’t beat the sunny weather and year-round beach and hiking,” Redfin agent Ali Ban said.
Redfin defines “high-earners” as those “who earn a household income in the 75th percentile for their metro, start working at age 22, live in a median-priced two-bedroom condo, have average annual non-housing expenditures and save the rest.”
For example, one who lives in Boston, which Redfin ranked as the second-best metro for retirement by 40, must live in a $614,000 condo and earn $207,500 with $45,301 in non-housing expenditures while saving $82,104 per year. This lifestyle “takes a lot of discipline to maintain… especially when you can afford not to. But the payoff, for some, to retire decades early might be well worth it,” Redfin chief economist Daryl Fairweather said.
However, for the average hopeful 22-year-old reading this report, the calculations are slightly misleading. The report does not factor age into the percentile household income or income fluctuations.
The 75thpercentile household income in these states is more unattainable for recent college and high-school graduates, who make $27,000 per year on average according to a 2017 report by the Bureau of Labor Statistics. The report also assumes an unrealistic flat income throughout one’s entire working life.
For those who meet these steep criteria, retiree hopefuls must keep up the same frugal lifestyle for the next 45 years, living off of their savings and investments. They will have to make sacrifices, such as “living in unpopular neighborhoods” to avoid work.
Look below to see if you meet the requirements for a decades-early retirement:
1. Honolulu, HI (pictured)
Median sale price of a two-bedroom condo: $425,000
Total non-housing expenditures: $40,745
75th percentile median household income: $184,000
Estimated yearly savings needed to retire by 40: $77,806
2. Boston, MA
Median sale price of a two-bedroom condo: $614,000
Total non-housing expenditures: $45,301
75th percentile median household income: $207,500
Estimated yearly savings needed to retire by 40: $82,104
3. Washington, D.C.
Median sale price of a two-bedroom condo: $325,000
Total non-housing expenditures: $50,820
75th percentile median household income: $207,000
Estimated yearly savings needed to retire by 40: $91,494
4. Chicago, IL
Median sale price of a two-bedroom condo: $220,000
Total non-housing expenditures: $39,328
75th percentile median household income: $152,600
Estimated yearly savings needed to retire by 40: $68,222
5. Tampa, FL
Median sale price of a two-bedroom condo: $142,500
Total non-housing expenditures: $31,522
75th percentile median household income: $115,375
Estimated yearly savings needed to retire by 40: $52,522
6. Baltimore, MD
Median sale price of a two-bedroom condo: $200,000
Total non-housing expenditures: $45,878
75th percentile median household income: $170,000
Estimated yearly savings needed to retire by 40: $73,673
For comments, questions or concerns, please contact Dennis Kaiser
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