Choosing the perfect place to retire can elicit dreams of sandy beach towns and lush golf courses. However, those dreams can often look a bit different for subscribers to the FIRE (financial independence, retire early) lifestyle.

Since the primary goal of the FIRE movement is to retire quickly, adopters need to focus on “living frugally enough to save and invest huge chunks of their income, like 60% or 70%,” MagnifyMoney content director Ismat Mangla says. “Most people need to live a somewhat austere life to get to this unless their income is atypically high.”

MagnifyMoney evaluated the 100 largest U.S. metros to find the places best suited for FIRE goals. Researchers created cost-of-living and quality-of-life scores across the 100 metros, looking at items from local pricing for goods and services and health insurance costs to the number of average poor health days a month and the number of reported violent crimes.

The top-ranked metros might not feature idyllic beaches, but who needs a sunburn when you have a FIRE retirement to keep you hot?

• Key findings
• Midwest takes the cake, while other regions get a slice
• Where FIRE dreams burn out
• Graphic: Best places for FIRE early retirement
• FIRE essentials: Saving money isn’t always living better
• Keep your FIRE hot wherever you are
• Methodology

Key findings

• Minneapolis is the best place for FIRE early retirement. Although the state’s high average effective tax rate pushes Minneapolis’ cost of living higher, quality-of-life factors — including a lower violent crime rate — help push the metro to the top of the rankings. Des Moines, Iowa, and Provo, Utah, take the next two slots.
• New York is the worst place for early retirement. The metro has the worst cost-of-living score among the 100 that were examined, led by New York state having the highest average effective tax rate in the U.S. Syracuse, N.Y., and New Orleans take the next two slots.
• Southern states dominate MagnifyMoney’s cost-of-living score. Among the 10 metros with the best cost-of-living scores, eight are in the South. Two Texas metros — McAllen and El Paso — are at the top, followed by Knoxville. Tenn. Neither Texas nor Tennessee collect personal income taxes, making them more intriguing for some.
• The states with the highest quality-of-life scores are spread across the U.S. The leading metros are Bridgeport, Conn., San Jose, Calif., and Minneapolis.

Midwest takes the cake, while other regions get a slice

The top 10 metros that MagnifyMoney researchers identified as best for FIRE-motivated individuals crop up in various states throughout the U.S. Still, they all fall in the Midwest, West and South. Texas stands out as the only state with two metros in the top 10.

Among the top five places for those planning to retire early, three are in the Midwest — Minneapolis (first), Des Moines, Iowa (second) and Madison, Wis. (fourth).

While recent headlines might make Minneapolis seem like the last place where one might want to go to relax, MagnifyMoney researchers found a high quality-of-life score here that helped the Twin Cities earn the top spot.

A low reported violent crime rate of 274.9 incidents per 100,000 people contributes to Minneapolis’ quality of life, even if the metro’s cost-of-living score is the lowest among the top 10. FIRE retirees with a little bit more wiggle room in the budget can find a vibrant arts scene and a multitude of outdoor opportunities in the City of Lakes.

The runner-up — Des Moines — betters Minneapolis when it comes to local pricing for goods and services, as well as the average effective tax rate (10.8%, compared with Minneapolis’ 12.1%). However, a high statewide cost for the cheapest Silver health insurance plan under the Affordable Care Act, as well as a lower quality-of-life score, keep Des Moines from being the best.

Madison, Wis., lands in the No. 4 spot with the third-highest quality-of-life score among the top 10, due to a violent crime rate that’s just about half that of the average across the 100 metros.

Cost of living not too wild in the West

The West has three metros among the top 10, with the best option for FIRE early retirement there being Provo (third overall), according to MagnifyMoney’s research. Denver and Boise, Idaho, also represent the West in the top 10.

Though Provo has a slightly better quality-of-life score than No. 2 Des Moines, its cost-of-living score falters due to relatively high health insurance costs in Utah.

Denver and Boise also make strong options for those who wish to retire early, FIRE-style, even though prices for goods in Denver are the highest among the metros in the top 10.

Southern heat can help fuel FIRE goals

Though the South contributes four metros to the top 10 — Atlanta; Austin, Texas; Raleigh, N.C.; and El Paso, Texas — only Atlanta cracks the top five.

Where Atlanta and Austin stand out is their parity across the cost-of-living and quality-of-life scores.

Atlanta’s solid cost-of-living score is due to the low average effective tax rate in Georgia.

Raleigh, N.C. follows a similar pattern but with a slightly wider margin (3.3) between its two scores due to high health insurance costs in North Carolina.

El Paso features the best cost-of-living score among the top 10 metros — but it gets dragged down by the worst quality-of-life score among the top 10. Cheap goods and low tax rates make El Paso an attractive option for FIRE-minded folks, but a high average of poor physical health days a month might deter them.

Where FIRE dreams burn out

Bad news for those looking to live in the Big Apple and enjoy early retirement — New York City falls in last place as the worst metro for FIRE early retirement. This shouldn’t be too surprising given the notoriously high prices for just about everything there, from rent to iced lattes.

Though New Yorkers may enjoy an above-average quality of life (it comes in No. 30 of the 100 metros examined), the metro’s 13.9 cost-of-living score is the worst of all metros ranked. The metro has three things working against it:

• It has the highest average effective tax rate in the U.S., thanks to New York state
• It places in the bottom three among local pricing on services and goods
• It has the second-highest health insurance costs, again thanks to New York state

Syracuse, N.Y., offers a slightly more affordable option in the penultimate spot, but its quality-of-life score comes up far short of New York’s, largely due to ranking near the bottom in poor mental health days per month.

Southern metros were well-represented with four entries in the top 10 overall, but six metros in the bottom 10 hint at the varying conditions in the South. Florida alone contributes three metros — Miami, Lakeland and Palm Bay — ranking 97th, 95th and 91st, respectively.

Graphic: Best places for FIRE early retirement

FIRE essentials: Saving money isn’t always living better

While planning for retirement should include considerations about both money and lifestyle, MagnifyMoney’s findings show that people might have to prioritize one over the other in some metros.

The good life comes at a steep cost

Many of the metros with the highest quality-of-life scores also feature some of the worst cost-of-living scores. Bridgeport, for example, ranks first as the metro with the best quality-of-life score — it has the fewest poor physical health days per month and second-fewest poor mental health days per month — but it comes in 96th for its cost-of-living score.

The trend mostly continues throughout the rest of the metros with the highest quality-of-life scores, with only Des Moines — ranked ninth for quality of life —  cracking the top 50 of cost-of-living scores.

Living cheap might mean feeling cheap

When ranking metros by cost-of-living scores, MagnifyMoney researchers saw a similar, yet inverted, correlation with quality of life.

McAllen ranks as the metro with the best cost-of-living score, thanks to below-average local prices for goods and services, as well as the average effective tax rate and the cost of health insurance in Texas. So while it might be a great place to help individuals save for retirement quickly, it might come at a cost to overall well-being, as McAllen comes in at No. 93 in the quality-of-life rankings.

Keep your FIRE hot wherever you are

While finding a low-cost location to chase your FIRE dreams can certainly help some people, moving isn’t always an option. Use these tips to help achieve financial independence and hopefully retire early.

• Invest early and often. Investing is one of the best ways to grow your retirement savings passively. “You want to focus on long-term growth in your portfolio and minimize expenses that could eat into your returns,” Mangla says. “I like low-cost index funds, but the key is allocating the majority of your portfolio in stocks for as long as you can stomach it.” Even if your budget doesn’t have tons of extra room, investing just a little each month can go a long way. MagnifyMoney can help you find a financial advisor.
• Stick to your budget — but leave room for grace. Those aspiring to live the FIRE lifestyle typically need to stick to a strict budget. Frivolous or excessive spending often translates to less money saved toward a goal. It’s important to save as much as possible to meet early retirement goals, but remember you’re only young once. The occasional splurge or small treat may not derail your retirement plans. Quality of life matters, too, and allowing yourself to make mistakes or have a little fun now and then can help keep yourself motivated.
• Keep your priorities realistic. While many people may want to retire as soon as possible, that age or time will inevitably come later for some. One key factor to keeping and meeting any financial goal is to make sure the goal is realistic. “It’s also important to periodically assess your goals and gauge where you are,” Mangla says. “It may make sense to get some professional financial advice early on to ensure that you’re on the right track.” Even the savviest investors may not be able to retire by 30 — figure out what is possible for your situation, then set a goal that makes sense and is attainable.

Methodology

MagnifyMoney evaluated the 100 largest metropolitan statistical areas (MSAs) in the U.S. to find the places most hospitable to financially independent early retirees utilizing different FIRE strategies. The two major criteria to determine which places were best were cost of living and quality of life. All data is the most recent available.

Cost-of-living component measures

• 2019 regional price parity from the U.S. Bureau of Economic Analysis for MSAs, which considers regional price disparities for goods, services and real estate to measure the relative purchasing power of a dollar in different communities. (Double weight)
• 2021 cost of health care premiums in the state of each metro, as measured by the cheapest Silver plan available on the Affordable Care Act (ACA) exchange to a typical 40-year-old, according to the Kaiser Family Foundation. (Half weight)
• 2019 average state and local effective tax rates, according to the Tax Foundation. (Half weight)

Quality-of-life component measures

• Average number of poor mental health days each month reported by residents, as reported by the 2021 County Health Rankings. (Double weight)
• Average number of poor physical health days each month reported by residents, as reported by the 2021 County Health Rankings. (Half weight)
• Violent crimes reported per 100,000 residents, as reported by the 2021 County Health Rankings. (Half weight)

Deposits in U.S. commercial banks grew substantially in 2020, from $13.2 trillion at the start of January to $16.1 trillion at the end of December — a 22% increase.

In light of this surge in deposits, MagnifyMoney researchers explored how bank fees and interest have impacted consumers’ — and banks’ — bottom lines in the past decade. Between 2011 and 2020, deposit account bank fees outweighed interest by about 1.2 times.

“For more than 10 years, deposit rates have generally been very low,” DepositAccounts founder Ken Tumin says. “The average consumer has been paying out much more in bank fees than they receive in interest on their savings.”

• Key findings
• Consumers paid less in bank fees in 2020 than any other year in the past decade
• Banks in 2020 paid out 2.5 times less in interest than in 2019
• Banks collected more per account in 2020 than in 2019 — but far less than they did earlier in the decade
• What consumers should expect in the second half of 2021
• Methodology

Key findings

• Americans have paid far more in bank fees in the past decade than they’ve collected in interest. Between 2011 and 2020, consumers paid $345.1 billion in bank fees while collecting $231 billion in interest. That represents a deficit of $114.1 billion, or $198.40 per account.
• Bank account holders paid less in fees in 2020 than any other year dating to 2011. Americans last year paid $32.2 billion in bank fees, or an average of $53.79 per account.
• The amount of interest per account paid out by banks plummeted in 2020. Banks paid out $26.6 billion, or $44.48 per account, in interest last year, down $73.85 from a record-breaking $118.33 per account the year prior.
• Banks more than doubled what they collected per account in 2020. For each dollar paid out in interest to deposit accounts in 2020, banks collected $1.21 — a jump from 55 cents in 2019, but a far cry from what institutions were netting earlier in the decade.

Consumers paid less in bank fees in 2020 than any other year in the past decade

MagnifyMoney examined 10 years of data and found that Americans paid the lowest total — $32.2 billion — in bank fees in 2020 than in any year since 2011.

Consumers have paid $345.1 billion in bank fees over this period, or a yearly average of $34.5 billion. Here’s a year-by-year breakdown:

The coronavirus crisis could be the catalyst for the 2020 drop in fees, Tumin says. When the pandemic started in early 2020, many banks provided temporary fee waivers to assist impacted customers.

In addition, the federal government began issuing economic impact payments (also known as stimulus checks) and offering various relief programs to assist Americans with their bills. This likely resulted in fewer overdraft fees — which Tumin says make up a large percentage of the total fees that banks receive — being collected.

Tumin also cites consumers spending less money due to pandemic-related restrictions as another reason for the drop in overdraft fees.

What this meant on a per-account level

How did this drop in fees affect consumers on average? Average bank fees in 2020 were $53.79 per account, which is significantly lower than $64.84 per account in 2019.

Bank fees per account peaked in 2017 at an average of $66.66. On average since 2011, banks have charged $60.75 yearly in fees per deposit account.

Banks in 2020 paid out 2.5 times less in interest than in 2019

In 2019, banks paid out $66.1 billion in interest, but that amount plummeted to $26.6 billion in 2020, or about 2.5 times less. Since 2011, banks have collected $231 billion in interest — or an average of $23.1 billion yearly.

Compared to the interest payouts from 2011 to 2017, though, the 2020 amount was still high. Here’s a year-by-year breakdown:

The pandemic relief measures that impacted the amount of bank fees collected also affected the amount of interest paid out on checking and savings accounts, Tumin says.

The Federal Reserve assisted consumers when the pandemic began, including lowering its benchmark interest rate to near zero. As the Fed lowered its rate, deposit rates also fell, reducing the amount of interest banks paid out.

The Fed started to reverse its rate hikes in August 2019, causing deposit rates to start falling in the second half of 2019.

Deposit rates then plummeted in March 2020 after the Fed slashed its benchmark interest rate to help the economy try to overcome the pandemic’s effects.

What this meant on a per-account level

The interest paid out to consumers dropped in 2020 to $44.48 from a record-breaking $118.33 the year before — a fall of $73.85.

In the past 10 years, average bank fees per deposit account have ebbed and flowed, as has the amount of interest paid out to consumers. The average interest paid out by U.S. banks grew by:

• 68% from 2016 to 2017
• 98% from 2017 to 2018
• 43% from 2018 to 2019

From 2019 to 2020, though, it fell 62%. Since 2011, banks have paid out $40.67 yearly per deposit account.

Banks collected more per account in 2020 than in 2019 — but far less than they did earlier in the decade

Despite all the turmoil that came banks’ way in 2020, they more than doubled what they collected per account compared to 2019. For each dollar paid out in interest to deposit accounts in 2020, banks collected $1.21, a large jump from 55 cents in 2019.

However, this win for banks in 2020 still left them falling behind the much more lucrative years earlier in the past decade. Here’s a year-by-year breakdown:

Since 2011, banks have, on average, made out better than they did last year. Banks have charged a yearly average of $60.75 in fees per deposit account since 2011 and paid out $40.67 per deposit account — or $1.49 in fees for each dollar in interest (better than 2020’s $1.21).

“Consumers who are not careful with their bank accounts will likely pay much more in bank fees than they earn from interest on their deposits,” Tumin says. “This will likely continue since interest rates are expected to remain very low for at least the next couple of years.”

Tumin believes it may worsen as fee waivers and government relief programs end, which may result in more overdraft fees.

What consumers should expect in the second half of 2021

Additional government impact payments in 2021 have contributed to record levels of deposits at banks. As noted at the top, deposits in U.S. commercial banks stood at $16.1 trillion at the end of December 2020. As of the latest available data through April 28, 2021, that figure now stands at nearly $17 trillion.

In the second half of 2021, Tumin expects consumers to start returning to their pre-pandemic spending habits as the pandemic ends.

“That should help the economy strengthen, which should boost loan growth and reduce deposit levels at banks,” he says. “Such a combination should result in some small gains in deposit rates, but significant gains in deposit rates are unlikely to occur until the Federal Reserve starts raising its benchmark interest rate, which is unlikely to occur before 2023.”

Methodology

MagnifyMoney analysts aggregated quarterly call report data provided by the FDIC’s Federal Financial Institutions Examination Council to determine the average amount of bank fees charged for each deposit account and the average amount of interest paid per deposit account. Interest paid out included transaction accounts and savings deposits (including money market deposit accounts), which are predominantly checking and savings accounts. Certificates of deposit (CDs) were excluded.

The average amounts were calculated by dividing the total amounts charged and paid out each quarter by the total number of deposit accounts at the end of each quarter and then summing those results for each calendar year.