By Matthew Theal, CFP®

As our clients get ready to retire, one of the common questions we receive is “Should I move out of California?”

There are lots of reasons why our clients would ask this question—with cost being a primary one. In fact, CNBC named California the second most expensive state in the nation, right after Hawaii! For starters, state taxes in California are incredibly high. The state has the highest cost of living and income tax rate in the nation. The cost of real estate is expensive compared with the national average.

This brings up the question, if you are retired from your job and your children no longer need your support, then why are you living in California?

Finding a Desirable State to Live In

As someone who lived in New York for three years after college, I think there are a few requirements every Californian should have as they begin the search for a new retirement home. First, your retirement home should be located on the West Coast. There are two reasons why you want this: the warm weather and the people. There’s a certain laid-back coolness about people who live on the West Coast that you won’t find elsewhere. The weather is self-explanatory—being cold is fun for a few weeks, but being cold is not fun for five to eight months out of the year.

Based on these criteria, there are only two states that fit: Arizona and Nevada. Both states are great for retirement, but for this article, we are going to take a look at Nevada.

Why It Makes Sense to Retire in Nevada

When I think of Nevada, I think of Las Vegas and gambling. This is probably the most common thought everyone has when they think of Nevada. That said, the state isn’t just slot machine and craps tables.

Nevada has warm weather, desert air, beautiful golf courses, world-class spas, outdoor activities, affordable housing, and no state tax and no inheritance tax. Not to mention, it’s a short flight or drive from California!

Kiplinger ranked Nevada the 25th best state for retirees. The reason for this ranking is the higher cost of health care and cost of living. That said, compared with California, Nevada shines.

Why It Makes Cents to Retire in Nevada

We’ve looked at the qualitative reasons for picking Nevada as your retirement home, but what about the quantitative ones? Do the numbers support moving from California to Nevada?

To help determine this, we used our financial planning software to simulate a couple’s potential move from California to Nevada.

Before we get into the results, let’s review the scenario. We will call our clients Bob and Jane. The husband and wife have retirement assets of $1,000,000 and a brokerage account with $200,000.

They would like $120,000 of income in retirement. Currently, they have combined Social Security of $60,000 and a pension of $40,000. They will need to withdraw $20,000 a year from their retirement accounts to meet their desired retirement income.

After we input these variables into our software, we press “Simulate.”

By simulating a move to Nevada from California, we find that Bob and Jane save over $156,000 in taxes throughout their retirement! This is enough to get them a little over one extra year of income.

Furthermore, below you can see a year-by-year breakdown of Bob and Jane’s estimated taxes. Notice the “Other Income Taxes” column (highlighted red). That column represents the state taxes paid.

On average, Bob and Jane will save around $3,000 to $4,000 a year by moving to Nevada. About the cost of a nice vacation!


From a numbers’ standpoint, it will make sense for many retirees to move from California to Nevada. The state tax savings alone is enough to alter a retirement drastically. What do you think, does a move make sense for your retirement plan?