How Much Do I Have to Save to Retire in Dallas, Texas?

As a child, I watched ‘Dallas’ and that was my vision for my life for as long as I could remember.
–Will Smith

The real estate adage that seemingly everyone knows is “location, location, location.” The house in the swanky neighborhood is going to be more expensive than the run-down claptrap fixer-upper in a bad part of town.

The adage also applies in personal finance. Answering the question “how much do I need to retire” depends on where you’re going to retire. If you want to retire in New York City, it’s going to take a lot more than it would take to retire in Dubuque, Iowa.

The methodology we use to determine how much you need to save for retirement is based on the Trinity study from William Bengen, which states that you can spend 4% of your net worth each year in retirement lasting for a 30 year retirement. Research by Michael Kitces and Wade Pfau confirm that the rule is still a reasonable rule of thumb for figuring out how much you need to retire.

So, in this analysis, we will evaluate

  1. How much it costs to live in your city
  2. 25 times that amount to enable you to withdraw at a 4% “safe withdrawal rate

How Much Do I Need to Save to Retire in Dallas, Texas?

Cost of Living in Dallas, Texas

According to the website Numbeo, the cost of living for a four-person family without rent or a mortgage is $2,995.34 per month. Rent in a 3-bedroom apartment in the city center is $2,458.67 per month, and rent outside the city center is $1,731.38. That’s probably the difference between living in Uptown and living in Lower Greenville. So, we’ll split the difference and say that the average rent is $2,095.03 per month.

Therefore, the total estimated cost of living for a four-person family in Dallas, Texas is $5,090.37 per month. This translates into a $61,084.44 annual cost of living.

So, in order to retire in Dallas while renting an apartment and abiding by the safe withdrawal rate, you would need $1,527,111.

Cost of Housing in Dallas, Texas

Let’s assume that you want your own house and plot of land to let the dog run around in. White picket fences and 2.5 kids is the American dream, after all. How much does an average house cost in Dallas?

According to Zillow, which we use to grow and manage our real estate investments, the median home price for homes that are listed is $370,000.

However, you are going to have to exchange rent for insurance and property taxes, as well as allocating for maintenance and upkeep on your house. In Dallas, Texas, property taxes are 65.65 cents per $100 of value. Insurance is approximately $35 per month for every $100,000 of value. Home maintenance costs approximately 1% of your home value every year.

So, if you’re going to own a $370,000 home, you won’t have to pay the $2,095.03 per month in rent, but you will have the following expenses:

  • Property taxes: $2,429.05 per year
  • Insurance: $1,554 per year
  • Home maintenance: $3,700 per year
  • Total: $7,683.05 per year, or $640.25 per month

Therefore, your cost of living in Dallas, Texas, if you own a home will be $3,635.59 per month, or $43,627.13 per year. If you already own a house, then the amount you need to retire will be $1,090,678.25, and if you need to purchase the $370,000 home, then you will need $1,460,678.25.

All of these retirement planning numbers are estimates. If you live in Highland Park versus south Dallas, your numbers will vary. If you eat at Nick and Sam’s every night versus cooking at home all of the time, your numbers will vary. However, this should give you an idea of how much you need to be able to retire in Dallas.

Need help saving for retirement? You can find a financial planner in Dallas to get you started on that path.

About Jason Hull, CFP®

Jason Hull, CFP®, is the Managing Member of Broadtree Partners, a firm that acquires $1-5MM EBITDA companies.