In retirement planning we work with clients to come to conclusions about how much their cost of living will be in retirement. We start with basic living expenses (needs) and then layer on discretionary spending (wants) and other legacy and family considerations. Everyone’s situation is uniquely theirs but over the years we’ve developed a good eye for the sorts of spending numbers that ring true for a given family or individual. The various spending numbers have a huge impact on the ability of a given portfolio to provide needed income over time. Because we’re in the financial planning and portfolio management business anything that can help folks figure out their income needs is a resource that might be helpful.
We recently came across such a resource. The Economic Security Database developed by Wider Opportunities for Women (WOW) along with the Gerontology Institute at the University of Massachusetts Boston and the Center for Social Development at Washington University in St Louis allows users to look at the cost of living for basic needs, both for families and for the retired. The BEST index (Basic Economic Security Tables) are used for families and younger workers while the Elder Index is used for older adults. Both can be accessed at a website maintained by WOW. Registration is required but free.
For older individuals using the Elder index expenses are tabulated by state and county for the entire US. Are you single and live in Multnomah County, Oregon? According to the Elder index data your basic needs will cost $20,244 if you live in your own home with no mortgage and $23,400 if you rent a one bedroom apartment. While these numbers perhaps don’t represent the lifestyle that you aspire to in your retirement years they nonetheless do provide a baseline estimate of basic living expenses across the US, accessible and searchable by county and featuring the ability to compare locations.