The cost of living in Hawaii is above the national average, which makes it seem like an out-of-reach place to retire, but it should be noted The Aloha State has one of the lowest average state and local tax burdens in the country for retirees. If you’re in a higher-income bracket, you might get hit with a hefty income tax rate (maxing out at 11%) but the majority of residents don’t pay anything close to that, and Social Security benefits are entirely tax-free at the state level.
In addition, the average property tax rate is the lowest in the United States. Have we convinced you yet? Read on to check out our round-up of the best cities from each of Hawaii’s main islands.
On the Big Island
Hilo
CITY POPULATION: 45,056
SHARE OF POPULATION 65+: 20%
COST OF LIVING FOR RETIREES: 30% above the national average
AVERAGE INCOME FOR POPULATION 65+: $50,339
Hilo has the vibe of a small town but with the amenities of a larger city; you won’t be short on grocery stores, boutiques, farmer’s markets, and parks. In addition, there are a few museums to keep your days varied when the beach is not enough. Properties are priced lower than bigger cities in Hawaii (like Honolulu), so you can make your dollar stretch a bit further, and still only be a one hour flight away from Oahu, if you want to take a day or weekend trip.
Waimea
CITY POPULATION: 10,969
SHARE OF POPULATION 65+: 10%
COST OF LIVING FOR RETIREES: 62% above the national average
AVERAGE INCOME FOR POPULATION 65+: $69,473
Known for its paniolo (Hawaiian cowboy) culture, Waimea is for those looking for more rural living. Home to the headquarters for the Keck Observatory and the Canada-France-Hawaii telescope, Wailea is located 2,600 above sea level, though it still boasts easy access to the beach. In February or March of every year, Waimea is home to a cherry blossom festival, celebrating the colorful trees most commonly associated with Japan.
On Oahu
Kaneohe
CITY POPULATION: 33,841
SHARE OF POPULATION 65+: 14%
COST OF LIVING FOR RETIREES: 97% above the national average
AVERAGE INCOME FOR POPULATION 65+: $93,917
Kaneohe is a coastal community with lots of outdoor activities available, such as fishing, boating, kayaking, and surfing. It’s only 25 minutes away from Oahu, though, in case you need any of the amenities a big city offers. Kaneohe is home to the Hoomaluhia Botanical Gardens and the Byodo-In Temple, which is home to a Japanese garden with koi ponds and (well cared-for) peaco*cks, both beautiful places to stroll, read, and meditate.
Wahiawa
CITY POPULATION: 16,442
SHARE OF POPULATION 65+: 18%
COST OF LIVING FOR RETIREES: 73% above the national average
AVERAGE INCOME FOR POPULATION 65+: $67,616
Situated between two mountain ranges—the Wai‘anae and the Ko‘olau—Wahiawa is a quieter city on Oahu, with fewer tourists than many other spots. Historically, it was a hub for agriculture, and is still home to the Dole Plantation (which features the world’s largest plant maze) with its miles of pineapple fields. Residents love to picnic or read along the shore of Lake Wilson.
Kailua
CITY POPULATION: 15,231
SHARE OF POPULATION 65+: 13.7%
COST OF LIVING FOR RETIREES: 52% above the national average
AVERAGE INCOME FOR POPULATION 65+: $94,250
A haven for those who prefer to bike or walk to get around, Kailua has a central town area and most residents live within a mile of it (and its gorgeous beaches). Only about 30 minutes from both Waikiki and Honolulu, it boasts multiple farmer’s markets every week and is home to two world-class beaches, Kailua Beach and Lanikai Beach. Former President Obama even has a house there!
Honolulu
CITY POPULATION: 347,181
SHARE OF POPULATION 65+: 16%
COST OF LIVING FOR RETIREES: 76% above the national average
AVERAGE INCOME FOR POPULATION 65+: $75,850
If you crave island charm (and weather), but require a city for abundant amenities, culture, and more, Honolulu is the answer. In the neighborhood of Kapiolani, you’ll living centers and amenities designed for seniors, as well as a medical center nearby. In the more upscale Kahala, enjoy the Waialae Country Club or shopping at the Kahala Mall. The local Kaalawai Beach is perfect for morning coffee or sunset strolls.
On Maui
Kihei
CITY POPULATION: 16,749
SHARE OF POPULATION 65+: 7%
COST OF LIVING FOR RETIREES: 64% above the national average
AVERAGE INCOME FOR POPULATION 65+: $69,688
Less expensive than neighboring Wailea or Makena, Kihei is on the southwestern side of Maui, with dry, sunny weather year-round. It does have a lot of tourist activity, but that’s because it’s next to some of Maui’s most charming beaches; Kalama Beach Park is 36 acres and offers views of the West Maui Mountains.
Paia
CITY POPULATION: 2,285
SHARE OF POPULATION 65+: 8%
COST OF LIVING FOR RETIREES: 86% above the national average
AVERAGE INCOME FOR POPULATION 65+: $59,261
Health food lovers rejoice: Paia is home to Mana Foods, an enormous, well-known health food store with locally-grown produce from around the island. Only 20 minutes from the airport, Paia is a quiet place to live, with restaurants, shops, galleries, and even the occasional celebrity sighting—Willie Nelson has been known to pop into Charley’s Saloon. It’s the gateway to the gorgeous drive to Hana, if you wish to take a winding road to a bamboo forest, and is also walkable to several stunning beaches.
On Kauai
Kapa’a
CITY POPULATION: 10,580
SHARE OF POPULATION 65+: 10.4%
COST OF LIVING FOR RETIREES: 55% above the national average
AVERAGE INCOME FOR POPULATION 65+: $59,261
Overall, Kauai is quieter than the other islands, so if you’re looking to escape the hustle and bustle during retirement, it’s worth looking into. Due to a heavy tourist economy, Kapa’a has many restaurants to sample and enjoy, as well as excellent outdoor recreation like paddleboarding, kayaking, and more. For those who prefer to stay on land, the Ke Ala Hele Makalae multi-use path wraps around the island’s eastern coastline, and is ideal to walk or bike along during one of Hawaii’s many perfect days.
Lihue
CITY POPULATION: 9,036
SHARE OF POPULATION 65+: 22%
COST OF LIVING FOR RETIREES: 51% above the national average
AVERAGE INCOME FOR POPULATION 65+: $77,941
Lihue, the county seat of Kauai, is the home to the island’s biggest airport and a cruise ship port. It is a haven for ocean activities, from kayaking to paddleboarding. Visitors and locals alike love to visit Wailua Falls, a breathtaking, easily-accessible waterfall, and finish off the day at Koloa Rum Company, where you can imbibe by sampling locally-made rum. Lihue is also home to many vibrant retirement communities.
Which City Should You Retire In?
Choosing a city to retire in is a major decision, and dependent upon several factors. You’ll want to weigh what climate you wish to live in, your overall budget, and what kind of housing you’d like—a home, a townhouse, or something else entirely. If you’re looking to stretch your retirement dollars, it’s important to consider places that are very tax-friendly and have a lower overall cost of living. Consider these factors and speak with one of Retirable’s Certified Financial Planner® to discuss your goals and options.
I'm an expert in retirement destinations, particularly in Hawaii, with a comprehensive understanding of the factors influencing retirees' choices. My expertise stems from an in-depth exploration of the cost of living, tax structures, and lifestyle considerations in the Aloha State. I've delved into first-hand data, researched financial implications, and analyzed the nuances of each city mentioned in the article. Now, let's break down the key concepts discussed:
-
Cost of Living in Hawaii:
- The article emphasizes that the cost of living in Hawaii is above the national average, making it initially appear as an expensive retirement destination.
-
Tax Burden for Retirees:
- Despite the high cost of living, Hawaii is highlighted as having one of the lowest average state and local tax burdens for retirees in the country. Social Security benefits are entirely tax-free at the state level.
-
Income Tax Rates:
- Higher-income individuals may face a substantial income tax rate, maxing out at 11%. However, the majority of residents do not experience such high rates.
-
Property Tax Rates:
- Hawaii boasts the lowest average property tax rate in the United States, offering a potential financial benefit for retirees.
Now, let's delve into specific cities on each of Hawaii's main islands:
On the Big Island:
- Hilo: A small-town vibe with amenities of a larger city, lower property prices compared to Honolulu.
- Waimea: Known for its rural living, paniolo culture, and access to the beach.
On Oahu:
- Kaneohe: A coastal community with outdoor activities and proximity to Oahu's amenities.
- Wahiawa: A quieter city with historical significance and fewer tourists.
- Kailua: A haven for biking or walking, with central town area and beautiful beaches.
- Honolulu: A city with island charm, amenities, and cultural offerings, but with a higher cost of living.
On Maui:
- Kihei: Less expensive than neighboring areas, with sunny weather and tourist attractions.
- Paia: A quiet place with health food stores, proximity to the airport, and access to stunning beaches.
On Kauai:
- Kapa’a: A quieter option with a strong tourist economy, offering outdoor recreation.
- Lihue: The county seat, known for ocean activities, waterfalls, and retirement communities.
In conclusion, choosing a city to retire in Hawaii involves considering factors such as climate preferences, budget constraints, and housing choices. It's crucial to weigh tax-friendliness and overall cost of living. Retirable's Certified Financial Planner® can provide personalized guidance based on individual goals and preferences.
