Best Places for FIRE Early Retirement

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Updated on Tuesday, May 18, 2021

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

  • 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.

10 best places for FIRE early retirement
RankMetroFinal scoreCost-of-living scoreQuality-of-life score
1Minneapolis, MN76.761.691.8
2Des Moines, IA72.669.375.8
3Provo, UT72.567.777.3
4Madison, WI71.466.276.6
5Atlanta, GA69.268.569.9
6Austin, TX69.169.968.3
7Raleigh, NC68.266.569.8
8Denver, CO67.763.971.4
9Boise, ID66.97063.8
10El Paso, TX66.584.748.2

Source: MagnifyMoney calculations.

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.

Reminder: “If you retire early, you need to figure out how to pay for health insurance because you won’t be eligible for Medicare until you’re 65,” Mangla says.

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.

In more Provo news, a recent MagnifyMoney study named the metro as having the worst gender pay gap for women.

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.

San Jose, for example, has a 66.1 point difference between its two scores in the index — most significant among the 100 metros. Outside of Rochester, N.Y. — which scores low in both fields — Atlanta and Austin have the most negligible point differences across the 100 metros at 1.4 and 1.6, respectively.

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
10 worst places for FIRE early retirement
RankMetroFinal scoreCost-of-living scoreQuality-of-life score
1New York, NY36.113.958.2
2Syracuse, NY44.551.837.2
3New Orleans, LA44.871.118.5
4Miami, FL44.950.938.9
5Baton Rouge, LA45.174.415.8
6Lakeland, FL46.774.119.3
7San Francisco, CA47.217.876.6
8Buffalo, NY47.753.741.7
8Birmingham, AL47.775.419.9
10Palm Bay, FL47.970.125.6

Source: MagnifyMoney calculations.

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)

The “Find a Financial Advisor” links contained in this article will direct you to webpages devoted to MagnifyMoney Advisor (“MMA”). After completing a brief questionnaire, you will be matched with certain financial advisers who participate in MMA’s referral program, which may or may not include the investment advisers discussed.