Why New York’s Cost of Living Shouldn’t Deter Your Retirement Plans
State-Specific Retirement | by Jules Buxbaum | Monday, February 17, 2025
New York retirement often conjures images of sky-high housing costs and hefty tax bills. Yet the assumption that retirees cannot thrive financially in the Empire State overlooks key realities, from regional variations in expenses to generous tax exemptions.
Many parts of New York offer a blend of affordability and top-tier amenities. In fact, individuals who take advantage of available credits and smart investment strategies can still retire comfortably here. For a deeper look at budget-friendly areas across the state, check out our guide to the best places to retire in NY, NC, and FL.
New York’s Cost of Living: Reality vs. Myth
New York’s overall cost of living is about 26% higher than the national average, according to RentCafe research. This figure, however, can be misleading if you only focus on pricey neighborhoods in New York City.
Upstate communities like Rochester and Buffalo come with far lower housing expenses. A 2024 median home sales price of $214,000 in Rochester or $240,000 in Buffalo pales in comparison to Manhattan’s $1.1 million median. That difference can free up thousands in retirement assets for healthcare, travel, and leisure.
Monthly living costs also vary widely. In rural Chenango County, an average budget for two adults might hover around $4,900 a month. In Westchester County, that figure can exceed $7,400.
Yet high-level numbers don’t tell the entire story. Retirees in New York enjoy programs like the Senior Citizen Rent Increase Exemption (SCRIE) in NYC, and some counties offer property tax breaks for individuals over 65.
Regional context matters here. If you plan strategically—perhaps selling a high-valued downstate property and moving upstate—you could potentially fund much of your retirement using proceeds from that sale. According to SmartAsset 1, about 12.3% of New York City’s population will be in the retirement-prep phase by 2025, but many of these future retirees are already looking beyond the five boroughs.
Strategies That Lighten the Financial Load
High taxes in New York may spook newcomers, but the state also offers valuable deductions. Social Security benefits are untaxed at the state level, and up to $20,000 of qualified pension income per person can also be exempt.
Retirees considering a move from one local jurisdiction to another often discover cost savings. For detailed insights on how each state compares, read our overview of state-specific tax benefits for retirees.
Beyond taxes, healthcare is a crucial line item for seniors. While New York’s healthcare costs run about 7% above the national average, the state boasts some of the country’s best medical centers. Many retirees weigh beneficial factors—like specialized care and robust Medicare Advantage plans—against higher premiums.
Public transportation discounts also reduce living expenses. In New York City alone, seniors can apply for half-fare MetroCards that shrink monthly commuter costs by over $800 a year. Even in smaller cities, bus passes and senior ride programs can further stretch a fixed budget.
On top of these measures, the local cost-of-living gap can be narrowed by downsizing to a smaller home or apartment. Some retirees even choose multi-generational living arrangements to share expenses. With the right approach, the notion that “New York is just too expensive” starts to lose its bite.
Why Higher Equity Allocations Are Key
Retirement success isn’t just about which city you live in. It also hinges on how you invest. Many retirees keep their portfolios overly conservative, assuming low-volatility assets will preserve what they have.
However, a cautious approach can degrade long-term growth, especially for those without massive nest eggs. Equities have historically outperformed bonds and other low-risk instruments, delivering returns that help offset the higher cost of living.
Experts call the spread between bond and equity performance the Equity Risk Premium (ERP). This premium has been documented for decades, indicating that equity markets compensate for their volatility through greater returns over time.
If your goal is to live comfortably across 20 or 30 years of retirement in a place where monthly bills stand above the national average, that extra boost can be essential. Retirees who embrace a higher equity allocation might find their portfolios better suited to keeping pace with everything from taxes to real estate costs.
For even more detail on managing risk and diversification, you can explore why target-date funds may not be the best fit. This resource demonstrates how a one-size-fits-all glide path often simplifies retirement planning at the expense of better-performing strategies.
Stepping Away from the Age-Based Glide Path
The conventional wisdom says you should dial down risk as you get older, usually by moving your money out of stocks and into bonds. Yet age alone doesn’t always determine how much risk your financial picture can handle.
What actually matters is the ratio of your future earnings to your current wealth. A younger teacher in New York City who plans to switch careers soon might have minimal earning potential if they step away from the workforce. Meanwhile, a 62-year-old consultant with a steady contract could theoretically shoulder a higher dose of equities.
Data over the past century supports the idea that consistent equity exposure often leads to superior outcomes, especially when the goal is to sustain a comfortable living standard in places like New York. A forced reduction in stock holdings solely because of your birthday can undermine portfolio growth.
Target date funds automatically reduce risk by formula. They rarely account for whether you plan to move upstate, continue some part-time consulting, or inherit property. That’s why customizing your asset mix for your unique circumstances remains critical.
How 2Pi Financial Empowers Retirees
Planning for a lifetime in New York requires more than a simple guess. That’s why Two Pi’s Financial Planning Engine helps you input your savings rate, retirement age, risk tolerance, and more. It then projects your probability of success, showing you how adjustments—like an earlier retirement date or a higher equity allocation—might influence your finances over time.
Higher risk in the equity market doesn’t have to be alarming if you have a clear plan that can adapt. Our research at 2Pi suggests many people shortchange themselves by steering clear of stocks in a high-cost environment. If you have ample future earning potential, it’s wise to consider an equity allocation that matches your true capacity for risk.
We also provide guidance on withdrawal amounts, plus an assessment of how future inflation impacts your buying power. With these insights, retirees can better weigh the cost of living in different areas of New York rather than dismiss higher-priced regions outright.
Finally, we challenge the old notion that lowering volatility is always best. Our stance is that if your net worth isn’t sky-high, you may need the growth that equities provide. This perspective sets us apart from traditional advisors who rely solely on age-based transformations in portfolio structure.
Bottom Line
Despite its reputation, New York doesn’t have to be out of reach for your golden years. Tax exemptions, differing regional prices, and higher-return investment strategies can tip the scales in your favor.
If you want to solidify a step-by-step plan, have a look at our tips on planning retirement withdrawals for maximum security. A well-managed approach, combined with thoughtful risk-taking, can let you savor what the state has to offer—from top-tier theaters in Manhattan to peaceful waterfronts in the Finger Lakes.
Most importantly, do not let sticker shock hold you back. Smart tax choices, targeted equity allocations, and personal earnings potential matter more than a single cost-of-living figure. If you build a plan that suits your evolving goals, you can enjoy all the culture, scenery, and comforts New York provides—long after your final day on the job.
References
1. SmartAsset. (2025). “Where Most People Are About to Retire.” Available at: https://smartasset.com/data-studies/where-most-people-about-to-retire-2025
2. Fox5NY. (2025). “SSA COLA 2025 Social Security Increase October.” Available at: https://www.fox5ny.com/news/ssa-cola-2025-social-security-increase-october
3. Investopedia. (2024). “Retirement in New York.” Available at: https://www.investopedia.com/retirement-in-new-york-8777116
