Financial Advisor magazine is doing a series on what advisors say it costs to retire in many locations. See the end of this article for links to previous articles in the series.

Anyone who has spent a day in New York City knows how quickly its high prices and enticing venues can burn holes in pockets. Its cost of living is at least 68.8 percent higher than the national average and more than double the national average for those residing in Manhattan, according to SmartAsset.

But retiring comfortably in the Big Apple can be doable for many people as long as they have a plan and understand how to live within their means, said Justin Winters, a CFP and a member of the wealth management group at midtown Manhattan-based Treasury Partners, the largest independent team within HighTower Advisors.

“We’ve seen clients who live on Social Security and a pension and they never actually touch their portfolio at all,” he said, noting that a rent stabilized two-bedroom apartment in the city can cost a couple of thousand dollars a month.

A couple retiring with a salary of $100,000 could collect $3,500 a month net in Social Security (this figure can be impacted by many variables) and maybe $2,000 to 4,000 a month from a pension, said Winters. Many retired New York City public employees (including teachers, police and firefighters) still receive traditional pensions, he said.

“On the other hand, you can have someone living in a three-bedroom apartment costing $13,000 a month and they spend $10,000 a month on life,” he said, including food, health care, entertainment, household items, travel and “a $100,000 summer rental.” In this case, “You probably need a portfolio in the $10 million range if you really want to maintain your assets,” he said -- or $6 million to $7 million if leaving money to your kids isn’t a concern.

Let’s say a retired New York City couple without a pension collects $3,500 a month in Social Security and withdraws $2,000 a month from their $500,000 nest egg. The $2,000 should cover food, health care (after Medicare) and entertainment, said Winters, and this conservative drawdown can provide a cushion and might leave some inheritance for their kids. If their nest egg earns 3 percent a year net of fees, it should last 33 years and if it earns 4 percent net, 45 years, he said.

This couple would need to have a rent-stabilized apartment or already own an apartment, he said. According to Rent Jungle, the average monthly market rate for New York City apartments in June was $3,585.

“Having a car in New York is a luxury,” added Winters, a Manhattan resident who rents one when needed. A garage parking space typically costs hundreds to rent each month or may have a six-figure price tag.

Combined city and state income taxes are also high (10 percent to 11 percent). For individuals receiving Form 1099 compensation, which doesn’t withhold income tax, “You really have to move money to the side, out of their world,” he said, “so they don’t think that they have that extra money to spend.”

First « 1 2 » Next