Retiring in California: Taxes, Healthcare & Cost of Living (2026)
California is expensive, and no amount of sunshine changes the math for retirees on a fixed income. But the state does not tax Social Security benefits, offers a senior property tax protection (Proposition 13 and Proposition 19), and has some of the best healthcare systems in the country. Retirees who bought homes decades ago benefit from Prop 13’s assessment caps, and Proposition 19 now allows them to transfer that low tax base to a new home anywhere in the state.
The combination of tax policy, healthcare infrastructure, climate, and cost of living determines how well your retirement savings will last in California. This guide covers the top cities for retirees, a full tax breakdown, healthcare access, and realistic budget estimates for 2026.
Whether you are relocating from a high-cost state or staying close to family, understanding the full picture matters. Use our compare taxes by state to see how California stacks up against other states you are considering, and check our affordability tool to estimate what you can buy on a retirement budget.
Top Retirement Cities in California
The following cities stand out for retirees in California based on cost of living, healthcare access, walkability, climate, and community infrastructure. The cost of living (CoL) index uses 100 as the national average — below 100 means cheaper than most of the country.
| City | CoL Index | Median Home Price | Climate |
|---|---|---|---|
| Palm Springs | 105 | $485,000 | Desert, hot summers, mild winters |
| San Luis Obispo | 118 | $795,000 | Mediterranean, mild |
| Redding | 92 | $365,000 | Hot summers, mild winters |
| Santa Cruz | 125 | $975,000 | Mediterranean, cool |
| Grass Valley/Nevada City | 98 | $475,000 | Mountain, four seasons |
| Chico | 96 | $395,000 | Mediterranean valley, hot summers |
Palm Springs
Palm Springs has been a retirement destination since the 1950s, and the city has leaned into it with walkable downtown streets, mid-century modern architecture, and more than 100 golf courses in the Coachella Valley. Desert Regional Medical Center and Eisenhower Health (in Rancho Mirage, 10 minutes east) provide strong medical care. Summer temperatures exceed 110 degrees regularly. The snowbird population swells the valley from 350,000 to 500,000+ between November and March.
Walkability: Palm Springs has a walk score of 46, which means some errands can be completed on foot in certain neighborhoods. A car is helpful for most activities, but the walkable pockets around the downtown area and main commercial corridors give retirees options for staying active without driving everywhere.
Climate: Palm Springs has a desert, hot summers, mild winters climate.
Winters are mild, which reduces heating costs and allows outdoor activity year-round. Retirees who want to avoid harsh winters will find Palm Springs comfortable from October through April.
With a cost of living index of 105 and a median home price of $485,000, Palm Springs is close to the national average in cost. Check our affordability tool to see how your retirement income translates in Palm Springs, or review closing costs in California if you are planning a purchase.
San Luis Obispo
San Luis Obispo sits on the Central Coast between LA and San Francisco and regularly appears on “happiest city” lists. The climate is close to perfect — highs in the 70s most of the year, rarely above 90 or below 40. French Hospital Medical Center and Sierra Vista Regional Medical Center provide local care. Cal Poly brings energy and cultural events. Wine country (Paso Robles, Edna Valley) is minutes away. It is expensive — budget accordingly.
Walkability: San Luis Obispo earns a walk score of 62, which means many daily errands can be completed on foot. Retirees living near the downtown core can walk to grocery stores, pharmacies, restaurants, and medical offices without needing a car for every trip.
Climate: San Luis Obispo has a mediterranean, mild climate.
Winters are mild, which reduces heating costs and allows outdoor activity year-round. Retirees who want to avoid harsh winters will find San Luis Obispo comfortable from October through April.
With a cost of living index of 118 and a median home price of $795,000, San Luis Obispo runs above the national average in cost. Check our affordability tool to see how your retirement income translates in San Luis Obispo, or review closing costs in California if you are planning a purchase.
Redding
Redding sits at the northern end of the Sacramento Valley where the Sacramento River meets mountains on three sides. Shasta Regional Medical Center and Mercy Medical Center serve the area. Whiskeytown-Shasta-Trinity National Recreation Area provides world-class outdoor access. Redding is significantly cheaper than coastal California, though summer temperatures regularly hit 100+ degrees. The Sundial Bridge and Sacramento River Trail provide 30+ miles of waterfront walking.
Walkability: Redding has a walk score of 34, which means a car is needed for most activities. Retirees should plan for reliable transportation. Several neighborhoods have sidewalks and short drives to shopping centers and medical facilities, but daily errands generally require a vehicle.
Climate: Redding has a hot summers, mild winters climate.
Winters are mild, which reduces heating costs and allows outdoor activity year-round. Retirees who want to avoid harsh winters will find Redding comfortable from October through April.
With a cost of living index of 92 and a median home price of $365,000, Redding is more affordable than the national average. Check our home affordability calculator to see how your retirement income translates in Redding, or review closing costs in California if you are planning a purchase.
Santa Cruz
Santa Cruz combines beach culture, redwood forests, and a university town atmosphere. Dominican Hospital and Sutter Maternity & Surgery Center provide care, with Stanford Medical Center 40 minutes north for specialized treatment. The cost of living is very high, but retirees with California equity can make it work. The Boardwalk, farmer’s market, and downtown Pacific Avenue create a walkable, active lifestyle.
Walkability: Santa Cruz earns a walk score of 58, which means many daily errands can be completed on foot. Retirees living near the downtown core can walk to grocery stores, pharmacies, restaurants, and medical offices without needing a car for every trip.
Climate: Santa Cruz has a mediterranean, cool climate.
The four-season climate provides variety throughout the year, with warm summers and cooler winters. Retirees who enjoy seasonal changes will appreciate the shifting market and recreational opportunities each season brings.
With a cost of living index of 125 and a median home price of $975,000, Santa Cruz runs above the national average in cost. Check our home affordability calculator to see how your retirement income translates in Santa Cruz, or review closing costs in California if you are planning a purchase.
Grass Valley/Nevada City
Grass Valley and Nevada City sit in the Sierra Nevada foothills at 2,500 feet. The Gold Rush-era downtowns are preserved and walkable, with independent shops, galleries, and restaurants. Sierra Nevada Memorial Hospital provides local care. Sacramento is an hour west for major medical needs. The area draws retirees who want mountain living without high-altitude extremes. Summer highs reach the low 90s; winter brings occasional snow but averages 45 degrees.
Walkability: Grass Valley/Nevada City has a walk score of 42, which means some errands can be completed on foot in certain neighborhoods. A car is helpful for most activities, but the walkable pockets around the downtown area and main commercial corridors give retirees options for staying active without driving everywhere.
Climate: Grass Valley/Nevada City has a mountain, four seasons climate.
The four-season climate provides variety throughout the year, with warm summers and cooler winters. Retirees who enjoy seasonal changes will appreciate the shifting market and recreational opportunities each season brings.
With a cost of living index of 98 and a median home price of $475,000, Grass Valley/Nevada City is more affordable than the national average. Check our see what you can afford to see how your retirement income translates in Grass Valley/Nevada City, or review closing costs in California if you are planning a purchase.
Chico
Chico sits in the northern Sacramento Valley and pairs a university town with affordable (by California standards) housing. Enloe Medical Center is a 298-bed regional facility. Bidwell Park covers 3,670 acres — the third-largest municipal park in the country — with swimming holes, hiking trails, and horse paths. Chico State keeps the town culturally active. The cost of living runs about 4% below the state average.
Walkability: Chico has a walk score of 48, which means some errands can be completed on foot in certain neighborhoods. A car is helpful for most activities, but the walkable pockets around the downtown area and main commercial corridors give retirees options for staying active without driving everywhere.
Climate: Chico has a mediterranean valley, hot summers climate.
Summers can be intense, with temperatures regularly exceeding 100 degrees from June through September. Many retirees adjust by scheduling outdoor activities in the early morning or evening and spending the hottest months in air-conditioned comfort.
With a cost of living index of 96 and a median home price of $395,000, Chico is more affordable than the national average. Check our see what you can afford to see how your retirement income translates in Chico, or review closing costs in California if you are planning a purchase.
Tax Benefits for Retirees in California
California does not tax Social Security benefits, making it friendlier than average for retirees. Below is a summary of how California treats the major income sources retirees rely on.
| Tax Category | Details |
|---|---|
| State Income Tax | Graduated or flat |
| Social Security Taxed? | No |
| Pension Income Taxed? | Yes (as regular income) |
| Property Tax Senior Exemption | Varies by county |
California does not tax Social Security benefits. However, the state has the highest income tax rates in the nation, ranging from 1% to 13.3%. Pension income, 401(k) distributions, and IRA withdrawals are taxed as regular income. Proposition 13 caps property tax increases at 2% per year from the purchase price assessment, which significantly benefits long-term homeowners. Proposition 19 (2020) allows homeowners 55+ to transfer their Prop 13 tax base to a new home anywhere in California, up to three times. The state sales tax is 7.25%, with local additions bringing it to 8.5% to 10.75%.
Tax rules change regularly, and your specific situation — filing status, total income, and income sources — determines the actual impact. Consult a tax professional who knows California tax law before making a relocation decision based on taxes alone. For a side-by-side comparison with other states, visit our tax comparison tool.
If you are buying property in California, factor in the closing costs and ongoing property tax obligations. The best mortgage lenders in California can help you find competitive rates if you need financing for your retirement home.
Healthcare Access in California
California has some of the best hospitals in the country. UCSF Medical Center, Stanford Health Care, Cedars-Sinai, UCLA Medical Center, and City of Hope are nationally ranked across multiple specialties. Kaiser Permanente operates extensively throughout the state and is a major Medicare Advantage provider. Medicare Advantage penetration is high at 48%, with extensive plan options in urban areas. Rural counties in Northern California and the Central Valley have fewer specialists and longer drive times to comprehensive care.
When evaluating healthcare for retirement, consider proximity to a hospital with emergency services, the availability of specialists you may need (cardiology, orthopedics, oncology), and the Medicare Advantage plan options in the county where you plan to live. Medicare Advantage plans can reduce out-of-pocket costs significantly, but network restrictions mean you need to verify that your preferred doctors and hospitals are in-network.
If you have a chronic condition or anticipate needing specialized care, prioritize cities near major medical centers. The cities listed above were selected partly for their healthcare access. Telehealth services have expanded across California, which helps retirees in smaller communities access specialists without traveling to metro areas for every appointment.
Prescription drug costs also vary by plan and pharmacy. Review Medicare Part D options during open enrollment each fall, and consider whether a Medigap (Medicare Supplement) policy fits your budget and healthcare usage patterns.
Cost of Living for Retirees in California
Retirement costs in California depend on where you live, whether you own your home outright, your healthcare needs, and your lifestyle. Below are estimated annual budgets for a single retiree and a retired couple living in a mid-cost area of the state with mortgage-free housing. Renters should add $8,000 to $18,000 per year depending on location and apartment size.
| Expense Category | Single Retiree | Retired Couple |
|---|---|---|
| Housing (taxes, insurance, maintenance) | $10,640/yr | $15,080/yr |
| Food & Groceries | $6,840/yr | $10,440/yr |
| Healthcare & Insurance | $8,360/yr | $12,760/yr |
| Transportation | $5,320/yr | $8,120/yr |
| Utilities, Entertainment, Other | $6,840/yr | $11,600/yr |
| Estimated Total | $38,000/yr | $58,000/yr |
These estimates reflect a modest but comfortable lifestyle. Adding travel, dining out, hobbies, or long-term care insurance increases the total. Healthcare costs are the most unpredictable category — a single major medical event can add $5,000 to $15,000 in out-of-pocket expenses even with Medicare coverage.
Housing costs vary dramatically within California. The cities with higher CoL indexes in the table above will cost more for property taxes, insurance, and maintenance. If you are considering buying, use our mortgage calculator to estimate monthly payments, and check homeowner insurance costs in California to build an accurate budget.
For couples deciding between California and another state, the difference in annual costs can be $5,000 to $20,000 per year depending on tax savings, housing costs, and healthcare expenses. Run the numbers for both states before committing.
Frequently Asked Questions
Does California tax Social Security benefits?
No. California does not tax Social Security benefits at the state level. Other retirement income, such as pensions and 401(k) distributions, may be subject to the state income tax, though deductions and exemptions can reduce the amount owed.
What is the best city to retire in California?
Palm Springs consistently ranks among the top retirement destinations in California, offering a cost of living index of 105, a median home price of $485,000, and solid community infrastructure for retirees. However, the best city for you depends on what matters most: proximity to family, healthcare access, outdoor recreation, walkability, or affordability. Retirees who prioritize affordability may prefer one of the lower-CoL options listed above, while those focused on healthcare access should look at cities near major hospital systems.
How is healthcare access for retirees in California?
Healthcare access varies by region within California. Metro areas have multiple hospital systems, specialist practices, and Medicare Advantage plan options. Smaller cities and rural areas may have a single community hospital and limited specialist availability, which means traveling to a larger city for certain procedures. Check Medicare Advantage plan availability in the specific county where you plan to live before finalizing your decision.
How much does it cost to retire in California?
A single retiree can expect to spend roughly $38,000 per year in California, while a couple should budget approximately $58,000 per year. These figures assume mortgage-free housing in a mid-cost area of the state. Costs range widely — resort towns, coastal areas, and college towns tend to run 20% to 50% higher, while rural communities and smaller cities may run 10% to 20% lower. Housing, healthcare, and taxes are the three biggest variables.
Are there property tax breaks for seniors in California?
California does offer property tax relief programs for seniors, though the specific exemptions, income thresholds, and application processes vary by county and municipality. Common programs include homestead exemptions, assessment freezes for seniors over 65, and circuit-breaker credits that cap property taxes relative to income. Contact your county assessor’s office for current programs and application deadlines. Our California real estate guide covers property taxes and homeownership costs in more detail.
Retirement in Nearby States
If you are comparing California with neighboring states, these guides cover the same topics — top cities, tax benefits, healthcare access, and cost of living:
- Retiring in Arizona: Taxes, Healthcare & Cost of Living (2026)
- Retiring in Nevada: Taxes, Healthcare & Cost of Living (2026)
- Retiring in Oregon: Taxes, Healthcare & Cost of Living (2026)
- Retiring in Washington: Taxes, Healthcare & Cost of Living (2026)
For more on the California housing market, explore our California real estate guide, review homeowner insurance options in California, or use our what can I afford? calculator to see what you can buy on a retirement budget. If you are planning a move, the payment calculator can help you estimate monthly payments on a new home.