Don’t Mind the Cold? Retire to Ann Arbor, Michigan!

If the Sunbelt doesn’t excite your older clients, this thriving college town might.

By Eleanor O'Sullivan

Ann Arbor, Mich. is an ideal fit for retirees who crave intellectual stimulation; cultural riches; the pleasures of a small, busy city set in the midst of a prestigious research university; and four seasons that showcase abundant natural settings.

Not to mention the friendly Ann Arbor residents.

U.S. News & World Report, which ranks Ann Arbor as No. 7 in its most recent best places to retire survey, reports that of the city’s 121,000 residents, 12.9% are 65 and older; 24.7% are under 20.

“There is a definite Midwest vibe to the city,’’ says Melissa Joy, CFP who founded wealth advisory firm Pearl Planning in 2018 in nearby Dexter Pearl Planning also has offices in Grosse Pointe, near Detroit.

“People are coming in and out based on jobs in the tech industries and the university (University of Michigan),” she says, “but I think people are also drawn by culture, intellectual appreciation, by the good economy and by the neighborhood feel. It feels like a small Midwest town, and it really has a sense of place.’’

Joy says the vibrancy of the city is a lure for older transplants, and that the city and its metro area of about 350,000 are home to many retired University of Michigan employees. The university also operates a hospital system that was ranked No. 11 nationwide by U.S. News & World Report.

Ranked No. 3 in national public universities by U.S. News & World Report, the University of Michigan, whose Central Campus is in the heart of Ann Arbor, is one of the state’s top five employers. It has a $12.9 billion endowment fund, one of the largest among the nation’s colleges and universities.

“The university offers a very generous retirement plan; it matches 10% for every 5% contribution made by employees,’’ says Joy.

She says the robust economy, fueled by the university and other industries, has contributed to a shortage of housing inventory and high housing costs.  And a drive to maintain the small town feel and charm of Ann Arbor has led to restricted development in the city, another cause of limited housing options.

Housing costs in Ann Arbor are 17% higher than the nationwide average, according to Payscale. Zillow reports that the typical middle price tier of an Ann Arbor home is $401,979, an increase of 4.5% in the last year. Joy adds that as housing costs continue to increase, retirees should expect to pay more than $1 million to live in the center of Ann Arbor.

“It’s not uncommon to find people living in Ann Arbor with net worths of $2 million to $5 million,” she adds.

Expect to pay at least $20,000 in property taxes for a $1 million home, says Joy, who notes that a home that recently sold in Ann Arbor for $1.8 million has an annual property tax bill of $25,000.

For those with a nest egg of $500,000, many housing options would be on the periphery of Ann Arbor’s hub in the communities north, south and west of the city, such as Joy’s home in Dexter, and in Saline, both about nine miles outside Ann Arbor.

“These communities have more of a small town feel and are between 15 to 30 minutes from Ann Arbor’s center by car,’’ she says.

“It’s a trade-off between proximity to the cool areas of the city versus the challenges of parking, limited space and higher taxes. In exchange, you get a real neighborhood and a community feel,’’ Joy said.

Rental apartments and condos are similarly expensive in the Ann Arbor hub. One to four bedroom apartments on South State Street, less than a mile from Burns Park, rent from $1700 to $3200 per month, according to The same Realtor lists a two-bedroom apartment for $1,800 monthly on West Liberty Street, an easy walk to Zingerman’s Roadhouse, an American cuisine eatery that is part of the city’s legendary Zingerman’s restaurant family.

But retirees need to closely scout out housing options if they want to avoid living next-door to noisy college students.

Average estimated monthly utility costs in Ann Arbor, according to Payscale, are $157 per month, about 6% lower than the national average. Joy said homeowners must plan for higher costs for heating in the winter.

Homeowners who paid in the $500,000 to $1 million range-should plan on spending from at least $1,000 to $2,000- per year on homeowners insurance. As for flood and storm damage, Joy said, most of Ann Arbor is not vulnerable to flooding. Her neighborhood in Dexter was hit by a tornado 10 years ago, she says, that is a rare occurrence.

“In general, Michigan may be better situated (to avoid) volatile or extreme storm damage as global warming continues to unfold than in other states,’’ she said.

Ann Arbor is about a 25 minute drive to Detroit Metro Airport, and the city is serviced by Amtrak, and a local bus company that runs between the Ann Arbor hub and Ypsilanti, a town with shopping, restaurants, galleries and outdoor recreation 11 miles south.

With all its perks, Ann Arbor does also boast a winter that lasts more than three months, and an annual snowfall that averages 43 inches, compared to 28 inches nationwide. In milder weather, the Ann Arbor area offers boating, fishing, swimming, hiking, kayaking and camping in recreation areas within a 30-minute drive and on lake tributaries and rivers. Lake Erie is 124 miles and Lake Huron is 200 miles from Ann Arbor. Detroit is 43 miles from Ann Arbor and Toronto is 280 miles.

Most of Joy’s clients who escape the winter cold go to second homes or monthly rentals in Florida, Arizona and South Carolina, she says. In the summer, some of her clients head for northern Michigan homes to cool off.

Joy has had a circuitous route to the Ann Arbor area: she was born in Texas and also lived in Kansas. She came to Ann Arbor to attend the University of Michigan. Before founding her own firm in Dexter, she commuted to work in metro Detroit. She and her husband have two children.

During the COVID pandemic, Ann Arbor and the surrounding areas have adhered to mask mandates and limited capacity regulations. Ann Arbor currently permits 50 percent capacity in its restaurants, but some institutions, such as the University of Michigan Natural History Museum; the Purple Rose Theatre, founded by actor Jeff Daniels; and the Gerald R. Ford Presidential Library are temporarily closed due to COVID precautions.

“I was just on the university campus and I saw that people are wearing masks outside as well as inside,” says Joy. “here’s more vigilance here because we have been more responsive to the precautions needed.’’

Operators of the long-standing Ann Arbor Street Art Fair, scheduled to run July 15-18, 2021 are “cautiously optimistic’’ that the festival will be held. The 59th annual Ann Arbor Film Festival was held online in March.

In a four-decade career in journalism, Eleanor O’Sullivan has reviewed many books on best practices for financial advisors, has written for Financial Advisor and the USA Today network, and was movie critic for the Asbury Park Press.


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