Close this search box.

Location: Cost of Living and its Impact On Your FI Number


Does where you live impact how long it takes you to retire?

Where you live does affect your journey to financial independence. Your expenses go down in places with a lower cost of living and your expenses go up in places with a higher cost of living, but you can manage your cost of living by strategically considering which part of the country you live (or will live) in.

Are you considering a move, or retiring at your dream location? If so, you’re going to want to know the impact it’ll have on your financial independence number. It may add (or subtract!) weeks, months, or years to hit your savings target. Our goal is to help you manage your costs so that you can retire safely and end up wherever you want to call “home”.

Cost of Living and Financial Independence

Cost of Living

First, we need to break down cost of living. Granted, you just did by reading that last sentence. Cost of living = the cost it takes to live.  That’s different for everyone of course. But it’s also a means of translating your current standard of living to another location. You can look at this a few different ways. Either by your expenses in sum, or in a more detailed breakdown analysis.

If you have a working knowledge of your current expenses, you can get a solid idea of how much it would cost to live somewhere else. Consider this a multiplier approach. It’s efficient when you need to get a rough idea of how much it would cost to live somewhere. This you can find with the power of your favorite search engine. 

Look for a cost of living calculator. Review several to get a general consensus for the location you’re considering. Note that some are higher than others. And be sure to check the factors they analyze to see what aligns best for your situation. For our example, we’ll use NerdWallet’s cost of living calculator.

Current City: Salt Lake City

Cost of Living: $50,000

Comparison City: Boston

Cost of Living: $73,941

Cost comparison: 48% increase

$73,941 / $50,000 – 1 = 0.47882 (48%)

Multiplier: 1.48

$73,941 / $50,000 = 1.47882

For this example, it’d cost you about 1.48 times more to live in Boston than Salt Lake City. 

This back-of-the-napkin math can be retirement saving. You can use a cost of living multiplier to get an estimate of your expenses if you plan to move or relocate. This can be helpful when considering a new job in a different state. Or even when planning ahead for retirement at your dream location. Below are a list of some additional cities and the cost of living multiplier for each. Make your own list to consider important locations in your life.

Effects on Your FI Number

Let’s break this down in regards to your financial independence. We’ll do our calculations with the same methodology used when calculating your financial independence number

Now, B and I have an affinity for New York City and would love to live there some day. As calculated in the chart above, the difference in cost of living from Salt Lake City to New York is 2.51x. That means it would cost us 2.5 times more to live there! We’re ambitious, so this still intrigues us. Let’s break it down. 

Current Expenses (SLC): $50,000

Withdrawal Rate: 4% (which is 4 / 100, or 0.04)

Financial Independence Number: $1,250,000 ($50,000 / 0.04)

Cost of Living Multiplier: 2.51

Estimated Expenses (NYC): $125,500 ($50,000 x 2.51)

Withdrawal Rate: 4%

Estimated Financial Independence Number: $3,137,500 ($125,500 / 0.04)

(This is the same as taking the current FI number and applying the multiplier: $1,250,000 x 2.51 = $3,137,500. We broke it down for teaching purposes.)

That’s an extra $1,887,500 to save if we were to relocate to New York! The difference alone is 50% more than the initial FI number of $1,250,000!  

You can easily do this for your own financial independence number calculations. Simply take your current expenses and multiply them by your cost of living multiplier. This increased (or decreased) estimate will be your new FI number that you’ll want to target. Doing this can help you plan for your future accordingly, without taking your eye off the prize. 

Keep in mind that your move may not be permanent. Wherever you are, remember that cost of living will affect your overall expenses, which in turn affect your FI number calculations. It’s normal (and necessary) to adjust your FI number as you navigate life. 

Strategically Calculating Your Journey to FI

Let’s look at these adjustments strategically. Imagine you’re relocating for a new job opportunity. We’ll use a cost of living multiplier as a rule of thumb to consider the scenario of moving from SLC to NYC.

If you plan for your expenses to go up 2.51x, is your income increasing as much along with it? 

Annual Income: $75,000 

Annual Expenses: $50,000

Annual Savings: $25,000

Savings Rate: 33% 

($25,000 / $75,000)

To maintain the same savings rate, you’d want your new income to go up by your cost of living multiplier as well. (2.51 x $75,000 = $188,250) 

Adjusted Income: $188,250 

Adjusted Expenses: $125,500

Annual Savings: $62,750

Savings Rate: 33% 

($62,750 / $188,250)

If your new job doesn’t account for this kind of an increase, you may want to consider things more closely. It may take you longer to reach your FI number because you won’t have as much left over to save and invest each year. 

However, you can use this knowledge to your advantage. If a move is inevitable, you can try to find ways to cut expenses and maintain your savings rate. You might consider living with roommates, or moving outside the city and commuting to help cut down on housing. 

Let’s say your new income is actually less than your multiplier. But let’s imagine you still wanted to target the same savings rate. We can use similar math to figure out what your new savings and expenses targets.

Adjusted Income: $125,000

Expenses Target: ?

Savings Target: ?

Savings Rate: 33% 

To get your savings target, multiply your savings rate by your income: 0.33333 x $125,000 = $41,666. 

Savings Target: $41,666

To find your expense target for each year, subtract your savings target from your income: $125,000 – $41,666 = $83,334.

Expenses Target: $83,334 

Now you have a breakdown of your adjusted income and a targeted budget for your relocation. This can help you maintain your current pace toward reaching FI. 

Adjusted Income: $125,000

Expenses Target: $83,334

Savings Target: $41,666

Savings Rate: 33%

Remember that these are only estimates and examples. Their purpose is to provide you with the critical thinking you need to make major life decisions. You can’t always know what’s going to come your way, that’s life. But now you’re equipped with the technique and know-how you need to plan ahead as best as you can.


For us, maybe we end up in New York City. Perhaps that’s only for a season. Perhaps it’s for a decade. Maybe even a lifetime. But maybe we get around to settling into our dream location, just outside of Spokane, at a lake tucked away near Coeur d’Alene, where the cost of living is a little less than we experience it today. Lowering our costs means adjusting our FI number. And just like that, we might need less to retire than we thought. That might be the same for you.

Remember that retirement isn’t just about making more or spending less. The over-arching goal is to live more, and to live more abundantly. That doesn’t equate to simply spending more. It means experiencing life with your friends and loved ones, cherishing moments and memories. Perhaps that means settling down near family in a higher cost of living area. But to you, it’s worth every penny. Or perhaps it’s finally getting that R&R you’ve worked hard for. Feeling the sweet breeze rustle through your hair. Experiencing the sun kiss your face, bathing you in its warmth. Feeling the cool chill of a gentle wave reach your toes as they play in the sand. 

You can feel it now, and so can we. The mountain may seem arduous at times, but you’ll get there.

Climb on, FinBase. ????


Picture of John


John is a personal finance writer, editor, and a fellow FinBase climber. Tech worker by day, design owl by night, he is the co-founder and creator behind The Financial Basecamp.
Join the Climb

Subscribe for tips on your journey towards financial independence.

Reach Your Summit