Everyone Wants to Leave California. Should Retirees Follow the Crowd?

Everyone Wants to Leave California. Should Retirees Follow the Crowd? Drew Wood Sun, June 28, 2026 at 2:27 AM GMT+7 6 min read Quick Read Prop 13 saves California's long-term homeowners up to $11,000 annually in property taxes compared to what a new buyer pays on the same home. Texas property taxes, Florida insurance, and annual family travel costs can easily erase $30,000 or more in expected savings after relocating from California. Californians over 55 can use Proposition 19 to downsize within the state, preserve their Prop 13 tax base, and free up $750,000 in equity. Are you ahead, or behind on retirement? SmartAsset's free tool can match you with a financial advisor in minutes to help you answer that today. Each advisor has been carefully vetted, and must act in your best interests. Don't waste another minute; learn more here. A couple in their early 70s sits on a paid-off California home and watches a familiar pattern unfold. Friends leave for Texas, Tennessee, Arizona, and Florida, lured by lower taxes, cheaper housing, and the promise of stretching retirement dollars further. The temptation is understandable. On paper, selling a California house and relocating can unlock hundreds of thousands of dollars in home equity while reducing everyday expenses. But retirement is not lived on paper. This couple's children and grandchildren are nearby, their doctors are familiar, and thanks to California's property tax rules, they pay a fraction of what a new buyer would pay for the same house. The question is not whether another state is cheaper. The question is whether the savings are large enough to compensate for giving up the life they already have. Here is what the math actually says. Are you ahead, or behind on retirement? SmartAsset's free tool can match you with a financial advisor in minutes to help you answer that today. Each advisor has been carefully vetted, and must act in your best interests. Don't waste another minute; learn more here. California continues to lose residents to states such as Texas, Arizona, Nevada, Tennessee, Idaho, and Florida. The reasons are not hard to find. Housing costs remain among the highest in the country, taxes are steep, homeowners insurance has become increasingly difficult to obtain in some wildfire-prone areas, and many people are looking for more space and a lower cost of living. Some are also frustrated with traffic, regulation, homelessness, or state and local politics. Whatever the motivation, the financial appeal of leaving is real. Retirees, however, often experience California differently than working families. A couple with a paid-off home, nearby family, established doctors, and a property tax bill protected by decades of ownership may be insulated from many of the costs that push newcomers and younger households away. The question is not whether another state is cheaper. The question is whether the savings are large enough to justify leaving behind the relationships, routines, and financial advantages they already have. Proposition 13 quietly does the heavy lifting. A home bought in the 1990s for $250,000 may be assessed today around $400,000 after the 2% annual cap, even if it would sell for $1.4 million. At a roughly 1.1% effective rate, that is a property tax bill near $4,400, while a new buyer at $1.4 million would owe closer to $15,400. That $11,000 annual gap, indexed forward, is the single largest line item working in the stayer's favor. Assume the couple draws Social Security based on a wage-indexed average of their 35 highest-earning years, plus modest IRA withdrawals. Annual budget: roughly $78,000. Housing carry (taxes, insurance, maintenance) around $14,000. Healthcare runs about $9,500 per person once you stack the 2026 Medicare Part B premium of $202.90 per month and the $283 Part B deductible, a Medigap plan, and Part D. Food, utilities, transportation, gifts, and travel to see grandkids 20 minutes away: the rest. It works, and the home equity is a backstop for long-term care. Sell the California house for $1.4 million, net roughly $1.25 million after costs and the federal $500,000 joint capital gains exclusion. Buy a comparable newer home in suburban Dallas, Nashville, or Sarasota for $650,000. On paper, $600,000 lands in the portfolio. Then the real numbers show up. Property tax in Texas often runs 2.0% to 2.5% of full market value, so $13,000 to $16,000 on that $650,000 home, wiping out most of the California-versus-Texas income-tax savings on modest retirement income. Florida and Tennessee insurance premiums on newer construction have climbed sharply with hurricane and severe-storm exposure, frequently $4,000 to $8,000 per year. Cooling bills in July and August are not trivial when energy is running 18.26% year over year. Three or four annual trips back to see grandchildren, at $2,500 a trip for two, is another $10,000 line item that did not exist before. Sell the big city house, buy a smaller place in Fresno, Redding, or t

Everyone Wants to Leave California. Should Retirees Follow the Crowd?

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