The Pros and Cons of Retiring in California

California has long captured the imagination of those seeking sun, sea and a laid-back lifestyle. But is it the right place to spend your retirement? The answer depends on what matters most to you.

With its stunning coastline, vibrant cities, year-round outdoor living and top-tier health care, California offers a retirement lifestyle that’s hard to match. However, the high cost of living and tax burden can be significant hurdles, especially for those on a fixed income.

In this guide, we’ll explore the pros and cons of retiring in California to help you decide if the Golden State fits your retirement vision.

THE PROS OF RETIRING IN CALIFORNIA

DIVERSE CLIMATE AND LIFESTYLES

From foggy San Francisco mornings to the dry heat of Palm Springs, California offers a range of climates and communities to suit just about anyone:

• Coastal towns like Santa Barbara and San Diego offer ocean breezes and walkable neighborhoods
• Wine country regions like Napa and Sonoma blend small-town charm with world-class dining
• Mountain communities in the Sierra Nevada provide cooler temps and year-round recreation
• Desert areas like Palm Desert and La Quinta offer golf, sunshine and resort-style living

Whether you’re drawn to beaches, vineyards, mountains or the art scene, California offers something for nearly every type of retiree.

EXCELLENT HEALTH CARE OPTIONS

California is home to some of the best hospitals and medical institutions in the country:

• Renowned facilities like Stanford Health Care, UCLA Medical Center and UCSF Medical Center
• An abundance of specialists and access to cutting-edge treatments
• Integrated health systems and Medicare Advantage plans widely available across the state

For retirees who prioritize health care access and innovation, California is tough to beat.

YEAR-ROUND OUTDOOR LIVING

California’s weather is one of its biggest draws for retirees:

• Mild winters in many areas make it easy to stay active year-round
• Access to beaches, parks, trails and mountains encourages a healthy lifestyle
• Opportunities for hiking, biking, swimming, golfing and more are practically endless

If sunshine and fresh air are part of your retirement plan, California delivers in spades.

CULTURAL ACCESS AND LIFELONG LEARNING

California’s cities and towns are rich with educational and cultural opportunities:

• Museums, concerts, theatres and festivals abound from Los Angeles to the Bay Area
•  Public universities and community colleges offer lifelong learning programs for seniors
•  Diverse communities make it easy to explore new perspectives and experiences

Staying engaged intellectually and socially is easy in a state known for its innovation, diversity and entertainment industry.

NO STATE TAX ON SOCIAL SECURITY INCOME

California does not tax Social Security benefits, which can help reduce your overall tax burden. Other financial perks include:

• Special exemptions for Railroad Retirement benefits
• Property tax protections under Proposition 13 that help limit annual increases for long-time homeowners
• A variety of senior-focused property tax and utility assistance programs available at the county level

THE CONS OF RETIRING IN CALIFORNIA

HIGH COST OF LIVING

Let’s face it – California isn’t cheap:

• Home prices and rents are among the highest in the country, particularly in urban and coastal areas
• Groceries, fuel, utilities and services often exceed national averages
• The median home price statewide was around $884,350 in early 2025, with higher prices in the Bay Area and Southern California

While some inland and rural areas are more affordable, retirees may have to compromise on location or amenities to make their budget work.

STATE TAX BURDEN

Although Social Security is exempt, California taxes most other forms of retirement income:

• State income tax ranges from 1% to 13.3%, with the highest rate among U.S. states
• Pensions, 401k withdrawals and IRA distributions are all fully taxable at the state level
• Sales taxes and fuel taxes are also among the highest in the country

Without careful planning, these taxes can significantly reduce your retirement income over time.

TRAFFIC AND URBAN SPRAWL

California’s beauty sometimes comes at the cost of convenience:

• Major metro areas like LA and San Francisco are known for heavy traffic and long commutes
• Public transit can be inconsistent, especially in suburban and rural areas
• Driving is often necessary, which can be challenging for retirees who prefer walkable communities

Some retirees find quieter coastal towns or smaller inland cities a better fit for a slower pace.

NATURAL DISASTERS AND CLIMATE RISK

Retirees considering California should be aware of environmental risks that come with living in a state known for its stunning, but sometimes volatile, natural landscape:

• Wildfires are a growing concern in many parts of the state, especially during dry summer months. These fires can lead to evacuations, poor air quality and property damage, even in suburban or semi-rural communities.
• Earthquakes, while unpredictable and often minor, remain a persistent risk in certain regions, particularly along the San Andreas Fault and in densely populated urban areas like LA and the Bay Area.
• Drought and water restrictions are ongoing challenges in California. In dry years, retirees may face limitations on outdoor water use, which can affect gardening, landscaping plans and even recreational opportunities.

Additionally, some areas are seeing increased insurance premiums or difficulty securing or keeping coverage altogether due to wildfire and earthquake exposure. Depending on where you choose to live, it may be necessary to invest in a supplemental insurance policy for natural disasters.

IS CALIFORNIA THE RIGHT FIT FOR YOUR RETIREMENT?

California offers retirees an unparalleled mix of lifestyle, climate and opportunity. But the financial realities and geographic considerations aren’t for everyone.

You may thrive in California if you:

• Value a mild climate and love being outdoors year-round
• Want access to excellent health care and cultural amenities
• Have the financial flexibility to manage higher living and tax costs
• Prefer to stay connected to West Coast family or travel frequently via major airports

But if affordability and low taxes are your top priorities, you might also consider other retirement-friendly states like Arizona, Tennessee or Florida, each offering different blends of cost and lifestyle.

PLAN SMART, RETIRE WELL – WHEREVER YOU CALL HOME

At Edelman Financial Engines, we help clients across the country build retirement strategies that align with their unique goals, budget and lifestyle. Whether you’re considering California or comparing your options nationwide, our team is here to help you navigate the trade-offs and build a plan that supports the future you envision.