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. 11 in its 2024 recent best places to retire survey, reports that the Ann Arbor metro area has 372,428 residents, 14.1% are 65 and older.
Why Does Ann Arbor Rank So Highly for Retirees?
“There is a definite Midwest vibe to the city,’’ says Melissa Joy, CFP who founded wealth financial 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 are home to many retired University of Michigan employees. U.S. News & World Report ranks Ann Arbor No. 17 for healthcare access and No. 5 based on its happiness index.
Ranked No. 3 in national public universities on the 2024 U.S. News & World Report best colleges list, the University of Michigan, whose Central Campus is in the heart of Ann Arbor, is one of the state’s top five employers.
Joy 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
According to Zillow, the average Ann Arbor home is now valued at $520,575, up 5.3% over 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. According to PayScale, the cost of living overall in Ann Arbor is 4% above the national average, but housing is 16% higher and groceries are 9% higher.
“It’s not uncommon to find people living in Ann Arbor with net worths of $2 million to $5 million,” she adds.
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.
According to Zillow, the median rent in Ann Arbor for all rental types is $2,300 a month. While the median rent dropped earlier this year, in July it crossed above the $2,100 it had been in July 2023.
But retirees need to closely scout out housing options if they want to avoid living next-door to noisy college students.
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.
Average estimated energy costs in Ann Arbor, according to Payscale, are $165.86 per month. Joy said homeowners must plan for higher costs for heating in the winter.
“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.
Proximity to Transportation
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.
Free-Time Activities
With all its perks, Ann Arbor does also boast a winter that lasts more than three months. 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 financial advisory clients head for northern Michigan homes to cool off.
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.