When it comes to the value of $100 in the United States, do you know how far your fixed retirement dollars will go? It varies greatly from state to state. In Mississippi, for example, it’s about $117, while in New York, it’s worth only $86. Because of the lack of geographic adjustments, this is critical for retirees on fixed incomes.
If you’d want to see how much money you’ll spend in each state, the Tax Foundation crunched the numbers using data gathered from the US Bureau of Economic Analysis (BEA).
Using RPPs, the BEA calculated a region’s price level in relation to the United States as a whole. The BEA concluded that “areas with high/low RPPs often correspond to areas with high/low price levels for rentals” after studying prices for “all consumable goods and services, including housing rents.”
In terms of RPPs, Hawaii, New York, and California are the states having the most. Those states have some of the most expensive rental housing costs nationwide. Mississippi, Arkansas, and Alabama have the lowest RPPs.
According to the Tax Foundation, regional price disparities are significant. Mississippi has around 35% more purchasing power than New York. In other words, if you have $50,000 in after-tax income in Mississippi, you would need $67,500 in after-tax income in New York merely to afford the same overall standard of living.
What Can You Do?
Some states are exceptions from the general norm. According to the Tax Foundation, North Dakota has high incomes but low costs.
We should pay attention to this since it could significantly impact how we perceive a state’s true poverty or wealth. Consider two states, North Dakota and Vermont, where the average yearly wage is $52,000. Even after considering price parity, North Dakota’s real income is approximately $7,000 higher.
Those on a fixed income who wish to improve their quality of life without having to relocate abroad should keep this in mind. If you intend to do a lot of traveling, it can be worth your while to relocate to a state with a low RPP . You can take advantage of the lower cost of living.