States – Hawaii


Great weather, sunny beaches with cool ocean breezes, and a relaxed lifestyle. Hawaii has all of those, which makes it many people’s vision of the ideal retirement destination. Certainly it’s hard to argue with a tantalizing vision of soft white and regal black sand beaches and swaying palm trees surrounded by endless, sapphire-blue seas. But living is Hawaii is different from vacationing there, and retiring in “paradise” may be different from one might think.

First, there’s the cost. Hawaii has the highest cost of living in the country. About 90% of grocery items have to be transported from the mainland, which drives the cost of many products up. The average grocery cost is 66% higher than in the continental United States. American staples like frozen pizza and boxed cereal can cost several times as elsewhere in the U.S. A typical breakfast costs about twice as much in Hawaii as in Washington, D.C. or Orlando. Additionally, driving can become expensive: gasoline can cost a dollar more per gallon than on the U.S. mainland.

Housing is also expensive. The median home price in 2015 was $538,500 which is over twice the national median. Residents age 60 and older spend an average of $2,118 per month if they have a mortgage and $539 per month if not. Rent is an average of $953 per month. The median cost of an assisted living facility is $3,815 per month.

Prices vary considerably by location. The Big Island of Hawaii has the lowest priced homes, with an average home price of $242,500 and average condo price of $225,900. In downtown Honolulu, the average rent for a one-bedroom apartment is $1,561, comparable to the rent in downtown Los Angeles. For a three-bedroom unit, the price is about $3,200. Outside of Honolulu city, the one-bedroom price is around $1,361. In Hilo on the Big Island, rents are about 41% to 67% lower than in Honolulu.

Still, the vast majority of retirees who move to Hawaii from the U.S. mainland aren’t superrich, and don’t have to be. Working part-time, as many retirees plan to do, can help offset some of these costs. Hawaii’s unemployment rate in 2015 was 4.1%, much lower than the U.S. average. Residents can also save by buying items produced locally. A plate of sushi and pineapple can cost less than a bowl of Frosted Flakes with milk.

Another issue is the remoteness. The Aloha State consists of a few islands (actually 137 islands, most of which are uninhabited). To visit friends or family in another state, or just for a change of scenery, requires a several-hour, and several-hundred-dollar, plane ride. Even to visit another island requires getting on a plane.

Also, Hawaii has a mix of many cultures and has the highest percentage of Asian Americans and multiracial Americans (and the only state where Asian Americans are the largest ethnic group), and the lowest percentage of Caucasians of any state. Many retirees who move from the continental U.S. suddenly find themselves in the minority, which can require some adjustment.

According to the Tax Foundation, Hawaii residents pay $4,396 per capita in state and local taxes, making Hawaii’s tax burden the 14th highest in the country. The income tax rate ranges from 1.4% to 11%. Social Security benefits are exempt from tax, as are military and federal pensions, state and local, out of state government, and some private pensions. The state sales tax is 4%.

Property is assessed at 100% of fair market value. The rates are different by island, highest on Hawaii and lower on Kauai. There is a homestead exemption, which is increased for homeowners age 65 or over. There is an estate tax on estates over $3.5 million. ranked Hawaii as the best state for retirees in 2012, based on several criteria including taxes, unemployment, crime rate, and life expectancy for seniors.

Here are a few more affordable places to consider as retirement locations.


The largest city on the Big Island with 43,000 people, Hilo is one of the most affordable places in Hawaii. Hilo is located on the east side, on Hilo Bay, and is surrounded by outstanding scenery and a diverse landscape. The Hawaii Volcanoes National Park has over 150 miles of hiking trails that pass by former lava flows and rock formations left behind from early volcanoes. Go in another direction, and there’s a rainforest and waterfalls.

Hilo also has several cultural attractions and museums. The East Hawaii Cultural Center houses regular art exhibits and holds workshops and classes. The 12-acre Panaʻewa Rainforest Zoo is the only U.S. zoo located in a rainforest, and is home to 60 species of animals and more than 40 different species of plants, flowers, and trees.

Hilo has several shopping centers, cafes, movie theaters, hotels, and the Hilo Farmers Market. Those interested in science and education can partake of the offerings at the University of Hawaii at Hilo and the exhibits and tours at the Imiloa Astronomy Center of Hawaii. The Pacific Tsunami Museum commemorates the 1946 and 1960 tsunamis that swept the east side of the island. Each spring Hilo hosts the Merrie Monarch Festival, which is a week-long celebration of the ancient Hawaiian hula dance.

With a tropical rainforest climate, Hilo is one of the wettest places on earth. Between 1981 and 2010, Hilo received an average of around 126 inches of rain annually with 275 days of the year receiving some rain.


Also known as Kailua-Kona, this town of 12,000 is on the west side of the Big Island and was once the capital of the Kingdom of Hawaii.

Kona hosts several well-known events. Kailua Pier is the starting and finishing point for the Ironman World Championship Triathlon in October. It is also the site of the annual Kona Coffee Festival, and the Hawaiian International Billfish Tournament.

Nearby the pier is the Kamakahonu royal residence and several other palaces formerly used by members of the Hawaiian royal family. Ali’i Drive, the oceanfront city street, has been given designated as a Hawaii Scenic Byway and called the “Royal Footsteps Along the Kona Coast”. It passes by historical sites including the Historic Kona Inn, and several churches including Mokuaikaua Church, Hawaiʻi’s first Christian church dating to 1820.

Other nearby natural attractions include Laʻaloa Bay famous for its white sands beaches, and Kahaluʻu Bay, which offers some of Hawaii’s best snorkeling. There are also ten golf courses including some of the most well-regarded courses in the nation. World-famous Kona coffee is grown on the hillsides outside the city.


On the north shore of Oahu, with just 4,000 people, Haleiwa was picked as Hawaii’s favorite small town by Hawaii Magazine. People come from all over the world during the winter to ride the giant waves, and the town is teeming with tourist restaurants, souvenir shops, and surfing supply stores.

Like everywhere else in Hawaii, Haleiwa has beautiful scenery, and several places to enjoy it include Haleiwa Alii Beach Park, Laniakea Beach Park and Sunset Beach. These are also good places to swim in the warm water. Sunset Beach is where beginning surfers learn on the smaller waves in the protected cove, and others come at sunset to admire the changing colors of the sky.

Waimea Valley is a park once inhabited by ancient Hawaiians and has gardens with exotic plants and a waterfall. Sunset Ranch Hawaii is an idyllic place to hike and picnic in a countryside setting. Haleiwa Art Gallery and Wyland Galleries have exhibits of works by local artists for sale. There’s also a farmers’ market and country market to buy local produce and food.

For more information about retirement in Hawaii:

State overview in facts and figures

State taxes

State services for senior residents

Profiles of major cities

Retirement communities