Month: February 2021

This story originally appeared on SmartAdvisor Match, by SmartAsset.com.

The COVID-19 pandemic has forced many Americans into an early retirement: In fact, the majority of the seven-percentage-point drop in the labor participation this past spring can be attributed to unemployed people who have prematurely decided to exit the workforce for good, according to a paper from the Becker Friedman Institute for Economics at the University of Chicago.

And though less than 1% of workers in the U.S. ordinarily retire before 50, according to data from the LIMRA Secure Retirement Institute, the rise of the “Financial Independence Retire Early” (FIRE) movement has Americans searching for ways to leave the labor force in advance of what may be the typical age range.

That’s contingent upon such factors as lowering your tax burden and living expenses while also enjoying low housing costs as a percentage of income while working to have the wherewithal to grow your nest egg. With all that in mind, SmartAsset crunched the numbers to uncover the most affordable cities for an early retirement.

To do so, we analyzed 100 of the largest U.S. cities across the following metrics: effective income tax, health insurance costs, cost of living, housing costs as a percentage of income, various other taxes, crime rates, medical facilities and unemployment rate.

For details on our data sources and how we put the information together to create our final rankings, check out the Data and Methodology section at the end.

1. Gilbert, AZ

Gilbert, Arizona, finishes first in three separate metrics included in this study:

• Low housing costs as a percentage of income (18.75%).
• Low violent crime rate (just 97 incidents per 100,000 residents).
• Low property crime rate (just 1,203 per 100,000 residents).

Gilbert also finishes strong for its September 2020 unemployment rate of 6.3%, ranking 20th overall for this metric.

2. Chandler, AZ

Housing costs in Chandler, Arizona, represent 19.87% of income, the seventh-lowest percentage for this metric in the study.

The average effective property tax rate is 0.55%, the 10th-lowest overall. In addition, the violent crime rate in Chandler is low, with just 228 incidents per 100,000 residents, the eighth-lowest rate for this metric across all 100 cities we analyzed.

3. Scottsdale, AZ

Scottsdale, Arizona, has an average effective property tax rate of 0.51%, the sixth-lowest of the 100 cities in this study. It also finishes 13th for housing costs as a percentage of income, at just 20.54%.

Scottsdale has a slightly higher sales tax than the other two Arizona cities in the top three, finishing in the center of the study for this metric, at 8.05%. This indicates that making everyday purchases may prove a bit pricier, even if you’re saving on housing.

4. Boise, ID

Boise, Idaho, has a sales tax rate of 6.00%, which ties for the seventh-lowest rate for this metric in the study.

Though Boise ranks in the bottom 10 for its fairly high income tax — with an estimated burden of 21.04% for a retiree with a $50,000 income — the city finishes fifth for its low property crime rate (just 1,579 incidents per 100,000 residents) and 12th for its low unemployment, at 5.9% in September 2020.

5. Lexington, KY

Lexington, Kentucky, has a fairly high income tax. The effective rate for a retiree with $50,000 in income is 23.86%, ranking third-highest for this metric in the study.

The city fares better in some of our other metrics, though, including tying for seventh for sales tax, at 6.00%. Lexington also has housing costs that represent 20.38% of income, the 11th-lowest rate across all 100 cities we studied.

6. Plano, TX

Plano, a suburb of Dallas, is tied for the study’s lowest effective tax rate for a retiree with an income of $50,000, at just 16.33%. It also has affordable housing. It ranks eighth for housing costs as a percentage of income, at 20.02%.

In addition, Plano is a relatively safe city, finishing in the top 10 for both violent crime incidents (148) and property crime incidents (1,683) per 100,000 residents. That said, Plano doesn’t fare as well in terms of property tax, where the average effective rate is 1.71%, a bottom-quartile ranking for this metric.

7. Colorado Springs, CO

Colorado Springs has the second-lowest average effective property tax rate in this study, at 0.43%. Colorado Springs’ unemployment rate for September 2020 was 5.9%, which ties for the 12th-lowest rate in the study.

The city has a sales tax of 8.25%, putting it near the middle of the pack for this study (tied for 51st). It also ranks within the top 30 of the study for relatively low housing costs as a percentage of income and average annual cost of a silver health insurance plan for a 60-year-old in the city.

8. Henderson, NV

Henderson, Nevada, is tied for the lowest effective income tax rate for a retiree with an income of $50,000, at 16.33%.

The city is also affordable when it comes to housing. Housing costs represent 20.36% of income, the 10th-lowest rate in the study, and the average effective property tax rate is 0.57%, the 15th-lowest rate in the study.

9. Fort Wayne, IN

The Fort Wayne, Indiana, cost of living — the amount needed to cover a single person’s basic needs — comes to $18,904, the third-lowest amount in our study.

Housing is also relatively affordable in Fort Wayne, as housing costs there on average make up just 18.92% of income, also a third-place ranking in our study. That said, the taxes in Fort Wayne are fairly high. The effective rate for a retiree making $50,000 is 20.82%, in the bottom quartile of our study.

10. Mesa, AZ

Mesa, Arizona, has an average effective property tax rate of 0.52%, the seventh-lowest rate for this metric in the study.

The city also finishes in the top quartile for both of its relatively low crime rankings — it places 13th for property crime incidents (1,869 per 100,000 residents) and 23rd for violent crime incidents (377 per 100,000 residents). The downside is that sales tax in the city is fairly high at 8.30%, ranking in the bottom third of the study for this metric.

Data and Methodology

To rank the most affordable cities for an early retirement, we looked at data for 100 cities. Specifically, we compared them over the following 10 metrics.

• Effective income tax rate. This is the estimated income tax rate for a retiree with $50,000 in annual income. That income is split between $15,000 from Social Security, $10,000 from a private pension, $15,000 from retirement savings like a 401(k) or an IRA, and $10,000 in wages.
• Average annual cost of a silver health insurance plan. To find this number, we used the Kaiser Family Foundation health insurance calculator. We estimated the cost of a silver plan for a 60-year-old in each city, not including any subsidies.
• Cost of living. This is the cost of living for one person. Data comes from the MIT living wage study.
• Median housing costs as a percentage of median household income. This is median housing costs divided by median household income. Data comes from the Census Bureau’s 2019 1-year American Community Survey.
• Average effective property tax rate. This is annual property taxes divided by median home value. Data comes from the Census Bureau’s 2019 1-year American Community Survey.
• Sales tax. This is the combined state and local sales tax rate.
• Property and violent crime rates. This is the number of violent property crimes and violent crime rates per 100,000 residents. Data comes from the FBI UCR report and is for 2019.
• Medical facilities per 1,000 residents. Data comes from the Census Bureau’s County Business Patterns Survey and is for 2018.
• Unemployment rate. Data comes from the Bureau of Labor Statistics and is for September 2020.

In order to create our final rankings, we first ranked each city in each metric. We then found each city’s average ranking, giving a half weight to both crime metrics and a full weight to every other metric.

Using this average ranking, we created our final score. The city with the best average ranking received a 100 and the city with the worst average score received a zero.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Even before the COVID-19 pandemic clobbered our economy, many Americans were struggling to make ends meet. And now, more than ever, it’s important to know all the tricks to avoid creeping costs. Start with this rule: Never pay retail.

These savvy tactics help you make every penny count. A dollar you don’t spend on needs or wants can be working for you in an emergency fund, a health savings account, retirement savings or a college plan for your kid.

1. Use a cash-back shopping site

Sites like Rakuten and TopCashback typically get a finder’s fee when they send shoppers to any of thousands of retailers with links on their portal. They split those fees with consumers, so you get a rebate of from 1% to 30% on what you spend through their sites. Swagbucks Shop, which offers shoppers several ways to save, has a cash-back option, too.

How it works: On a cash-back site, type in the name of a retailer, click through to the site and sign up. You’ll typically need to accumulate a minimum amount in rebates ($25, say) before you can cash them in.

After finding the best price and accessing it through a cash-back site, you can add yet another layer of savings if you …

2. Use a rewards credit card

Why would you not pay with a rewards card? It’s free money — or hotel or airline points. If you handle the card wisely, the benefits are potentially great.

There are two reasons not to use a rewards card:

• You tend to carry a card balance. In that case, your priority is finding a card with the lowest interest rate possible.
• The card has an annual fee. You don’t want to spend more on fees than you’ll reap in rewards although, in some cases, the rewards are enough that it’s worth paying to own the card.

As always, use credit cards wisely: Pay off your entire account balance each month. Otherwise, interest rates can eat up any benefit and can throw you into debt.

Money Talks News’ credit card finder helps you choose a card that’s right for your personal circumstances.

3. Pay with discounted gift cards

You’ll find tons of gift card resellers offering to buy cards consumers don’t want or can’t afford to keep.

How do you save money using gift cards, you ask? Here’s how: Buy gift cards at a discount from these resellers and then use them to do your shopping. Suppose you’ll be shopping at Target, for instance. Buy discounted Target cards to use at the store, effectively saving 2% to 20% or more on your purchases.

A couple of sources for discounted cards:

• Aggregator sites like Raise, which point you to good deals. Also at Raise, you can sell gift cards you aren’t using.
• Multipacks of discounted gift cards, found at warehouse stores like Costco (membership required).

4. Use shopping tools

Shopping apps are another path to savings. Ibotta’s mobile (Android or Apple) app offers rebates for purchases. Use it while shopping to:

• Upload receipts.
• Link your store loyalty cards for automatic tracking.
• Amass points for gift cards and cash (through Venmo or PayPal).

Programs like Drop and Target’s Circle let you track your purchases and receive discounts and/or points to cash in for rewards.

5. Look for coupons

Coupons can save you a bundle, both online and off. Find them through:

• Coupon websites: A few are RetailMeNot, Savings.com and Coupons.com.
• Store websites: Download coupons to your store’s loyalty card.
• Regional publications: I look forward to my monthly local “Good Deals” magazine, with coupons for all kinds of stuff, from ice cream cones to bathtub restoration. Watch for a shopper publication in your area.
• Valpak: You may receive the familiar blue envelope in the mail; if not, visit Valpak.com and insert your ZIP code.
• Social media: Follow your favorite retailers, and they’ll often mail you coupons regularly.

6. Be a preferred customer

Everyone’s a VIP these days. To claim your “special” status:

• Sign up for email lists with favorite companies. You’ll be notified of sales and may get one-time discount codes, too.
• Join the club. Establishments offering membership programs can include free products, discounts, birthday freebies and other goodies. When you check out at a store, ask if a rewards club exists.
• Sign up for a store loyalty card. These can earn discounts and possibly points for more savings.
• Rewards with every purchase. Some retailers go over and above, offering rewards with each purchase you make.

If you’re not a member of Costco and have been wondering whether you should be, check out this special promotional offer for online signups.

7. Hit the dollar store

Certain items should never be purchased at a dollar store.

But if you follow these shopping secrets, dollar stores can have plenty of great deals on other things you need. (Really, how much do you want to pay for a mop bucket, greeting cards, reading glasses or other necessary or handy items?)

Recently I helped my daughter clean and repaint her rental unit. The mop, sponges, cleanser, white vinegar and other supplies all came from a dollar store.

8. Buy secondhand

“Used” doesn’t have to mean “shoddy,” as our veteran thrift shopper explains, sharing his best tips.

At thrift stores and yard sales, you may even find clothing with department-store price tags still attached and unopened shrink-wrapped gift items.

Consignment stores are a happy medium between secondhand stores and retail stores. The managers at these places can be discriminating, so you’ll spend less (maybe a lot less) for new-looking goods.

A few more possibilities for pre-owned goods:

• Craigslist.org is the grandaddy of local secondhand sales sites. Letgo and its affiliate OfferUp are newer additions to this rich world of previously-used items.
• Facebook has local sales pages: Type in your city or ZIP code and search terms like “yard sale” or “garage sale.”
• The Freecycle Network has thousands of chapters in the United States with goods people offer free of charge. Or, post an “ask” for something you’re seeking.
• The Buy Nothing Project, a hyper-local version of Freecycle, is a nonprofit effort to get neighbors to give to neighbors. I’ve seen great stuff offered for free, and, as with Freecycle, you can ask for things you want.

9. Use social buying sites

Need the chimney swept or your windshield replaced? Can’t afford pricey restaurants? Social buying sites — Groupon and LivingSocial are two — offer discounted products, services, activities and even travel packages. The prices can be downright startling, and they offer a cheaper introduction to fun activities like ceramic painting, laser tag or bowling.

Pro tip: For even more savings, access Groupon and Living Social through a cash-back shopping site. Go to Rakuten and others mentioned above and type in “Groupon” or “Living Social” in the search box to enhance your savings.

10. Buy in bulk

You don’t have to join a warehouse club to pay less by purchasing in bulk. Other places for bulk pricing:

• Ask a supermarket manager if you can get a price break for buying an entire case of canned goods.
• Produce auctions are a great source of sometimes unbelievable deals. Search online for “produce auction near me.”
• Restaurant supply stores often are open to the public.
• Check prices in your supermarket’s natural foods section for spices, rolled oats, cornmeal and other bulk goods at substantial discounts.
• “Ethnic” markets often feature larger-sized options, especially for staples like rice and beans.

And of course, you’ll find discounts at Costco, Sam’s and BJ’s. See “10 Best Buys at Warehouse Clubs” for ways to use your memberships to the fullest.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.