This Sunny California City Was Ranked a Most Expensive Place To Retire. Here’s What You Should Know

San Diego, Calif., has a well-deserved reputation as one of the most desirable retirement destinations in the United States. Unfortunately, it is also among the country’s most expensive places to retire, according to new research from Travel + Leisure and Investopedia.

We examined property prices, state and local taxes, and the overall cost of living—as well as the many factors that make San Diego appealing despite the big price tag.

Key Takeaways

• San Diego is a prime retirement destination, based on climate, recreation, and access to health care.
• It is also expensive, with a high cost of living, driven primarily by housing.
• Taxes can also be high, depending on the retiree’s income sources.

Understanding the Costs of Retiring in San Diego

Overall Cost of Living

San Diego isn’t cheap. The website Payscale pegs the cost of living there as 44% higher than the national average. Breaking that down, the site found that housing costs were 115% higher, transportation costs 35% higher, utilities costs 20% higher, and grocery costs 14% higher.

According to the Economic Policy Institute’s Family Budget Calculator (which takes into account housing, food, transportation, health care, taxes, and other necessities), a household with two adults and no children living in San Diego County would spend $86,243 a year, on average.

That’s high even for a retirement haven. The comparable figure for Beaufort County, S.C., home to Hilton Head Island, is $74,229. For Maricopa County, Ariz., which includes Phoenix and Scottsdale, it’s $68,525.

Property Prices

The high cost of retiring to San Diego County starts with the price of admission: home prices. According to Census Bureau data, the median home price in San Diego was recently $791,600.

That compares with the national median home price of $403,700, as of May 2025, according to the National Association of Realtors.

A search of Realtor.com showed many homes in the $1 million-plus category, quite a few with $2 million and $3 million asking prices. Coastal properties are particularly desirable and, given that there is only so much coastline, are often in limited supply.

In other words, property prices alone can put the area out of reach for many retirees. 

Even for retirees who can scrape up the cash, devoting too large a portion of their budget to housing can mean forgoing other pleasures, such as travel or dining out. In fact, housing accounts for nearly 38% of San Diegans’ annual spending, compared with a national average of just over 33%.

Local Taxes

California is known as a high-tax state, and San Diego is no exception. While not specific to retirees, the Economic Policy Institute’s Family Budget Calculator estimates that a household with two adults and no children in San Diego County can expect to pay an average of $1,055 a month in taxes. Those taxes take a variety of forms.

Sales taxes: California has the highest state sales tax in the U.S., at 7.25%, according to the Tax Foundation. San Diego County adds another 0.5% to that, for a combined total of 7.75%.

Counterbalancing that somewhat, California exempts many of the items that are likely to be on retirees’ shopping lists, including prescription drugs and most food products, except for heated prepared foods.

Income taxes: California has a progressive income tax, with marginal tax rates ranging from 1% to 12.3%. A married couple whose income was between $80,490 and $111,732, for example, would pay a top rate of 6%.

Important

Unlike some states, California treats pension benefits and withdrawals from IRAs and similar retirement accounts as taxable income. On the plus side, it does not tax Social Security benefits.

Property taxes: California actually has relatively low property tax rates, due in part to the restrictions imposed by the passage of Proposition 13 in 1978. According to the Tax Foundation, residents pay an average effective rate of 0.68%. However, because of the high local housing values, that can still add up. In 2022, San Diegans paid median property taxes of $5,214.

Estate taxes: Also on the plus side, California doesn’t have either an estate tax or an inheritance tax, which can be a concern for wealthier retirees.

Health Care Costs

San Diego has abundant and high-quality health care. For example, the Medicare.gov website lists 18 hospitals within a 25-mile radius, many with coveted four- or five-star quality ratings.

Health care costs in San Diego tend to be no higher and, in some cases, lower than those in many other parts of the country. While its figures don’t focus specifically on retirees, the U.S. Bureau of Labor Statistics found that in 2022-2023, San Diegans had average health care expenses of $5,514 a year, compared with a national average of $6,042. In Denver, for example, the comparable figure was $7,118, and in Phoenix, $7,550.

What Makes San Diego So Expensive?

Desirable Coastal Location

The southernmost major city on California’s Pacific coast, San Diego offers agreeable weather year-round. The county’s 70 miles of coastline are dotted with an array of public beaches for swimming, surfing, and basic lounging.

For retirees on the go, San Diego also has an international airport and two downtown cruise ship terminals serving 10 major cruise lines. The Mexican border city of Tijuana is about 30 minutes away by car.

Strong Local Economy

San Diego has a solid, well-diversified economy with major sectors including aerospace, defense, life sciences, manufacturing, and tourism. The county is also home to two dozen universities, colleges, and community colleges.

Those employers draw a well-educated workforce, with salaries to match. The average household income in San Diego was $122,832 in 2022-2023, according to the Bureau of Labor Statistics, compared with the national average of $97,911. That accounts, in part, for higher local prices.          

Limited Housing Supply

The housing market in San Diego ranks as “very competitive,” according to the real estate website Redfin. That demand is driven by regular full-time residents and second-home owners, including retirees.

Another factor is local zoning policies. While not uncommon in California or much of the U.S., San Diego’s zoning policies heavily favor single-family homes over multi-family units. A 2022 report from the Othering & Belonging Institute at the University of California, Berkeley, concluded that, “the San Diego region’s residential areas are dominated by single-family-only zoning, stifling the development of denser housing options, perpetuating racial and economic exclusion, and shaping access to opportunity for millions of Californians.”

Note

In 2024, the San Diego City Council approved a set of initiatives known as Blueprint SD, intended to increase the development of new homes, among other goals.

Retirement Considerations in San Diego

So, to sum up some of the major pros and cons of retiring to San Diego:

Pros: Beautiful Climate and Top-Tier Services

San Diego’s climate is likely a significant attraction for retirees who like to get out and about. As the National Weather Service explains, “The prevailing winds and weather are tempered by the Pacific Ocean, with the result that summers are cool and winters warm in comparison with other places along the same general latitude.” That means active retirees can enjoy the area’s many beaches, parks, and other outdoor attractions for much of the year.

San Diego also has many highly rated hospitals and health care facilities, as well as being well-situated for retirees who like to jump on a plane or cruise ship when the mood hits. Public transportation is limited, so residents are likely to want a car, but downtown San Diego and its coastal neighborhoods are pedestrian-friendly. 

Cons: High Housing and Everyday Costs

The major downside to a San Diego retirement, as we’ve indicated, is the cost of living. That’s driven primarily by housing prices, which are not only significantly higher than the national average but also higher than many comparable retirement hotspots.

Other, everyday costs, such as groceries and utilities, will also drive up the bill. So will state and local sales and income taxes. In particular, anyone whose prime sources of retirement income are likely to be pensions and IRAs, rather than Social Security, might want to look into a state that doesn’t tax them.  

The Bottom Line

San Diego’s considerable charms come at a price. Prospective retirees should consider how much of a premium they’re willing to pay for the area’s congenial weather, recreational opportunities, and top-flight health care, among other pluses. By comparing San Diego with other suitable retirement destinations, they can decide whether the high price tag is worth it. Many may decide that it is.