Retirement Planning in Los Angeles

Retirement in Los Angeles: a plan with several moving parts

According to the U.S. Census Bureau, 2020 to 2024 American Community Survey, 14.2% of Los Angeles residents are 65 or older and the median age is 37.2. The city skews younger than many in California, but a large group of long-time Angelenos is in or near retirement, and many of them own homes bought decades ago.

The Los Angeles version of retirement planning has a few features most places do not. Many workers earned a pension through a city, county or school district job. Many others built benefits through a union in film, television, music or the harbor. Housing costs are high enough that where you live in retirement is a financial decision as well as a lifestyle one. And California taxes most retirement income, so the order in which you draw from accounts matters.

Public pensions: city, county, schools and state

Los Angeles has several large public retirement systems, and each works differently.

Pension formulas usually depend on your years of service, your final or highest average pay and your age at retirement. Most systems offer several payout options, such as a larger monthly amount that ends at your death or a smaller amount that continues for a spouse. That choice is among the most important a retiree makes, and it cannot always be changed later.

If you hold a pension, request a current benefit estimate from the system and bring it to your planner.

Social Security and the Fairness Act

Teachers in many California districts and some other public employees do not pay Social Security tax on that work. For years, the Windfall Elimination Provision and the Government Pension Offset reduced benefits for people who also earned Social Security through other jobs or through a spouse. The Social Security Fairness Act, signed in January 2025, repealed both. If you retired before that, or if you are a spouse or survivor of a public worker, ask the Social Security Administration to review your benefit.

For everyone, the claiming age matters. Starting at 62 means a permanently smaller check, while waiting until 70 produces the largest one. A couple should look at both spouses together, since the higher earner’s decision also sets the survivor benefit. California does not tax Social Security benefits, but the federal government may tax up to a portion of them depending on your other income.

Entertainment industry retirement: union plans and the gaps between jobs

Many film, television, theater and music workers earn retirement credit through union-sponsored plans, such as those for actors, writers, directors and crew. These plans typically require a set amount of work or earnings in a period to earn pension credit and health coverage. A year with little work can mean lost credit or a lapse in health benefits.

Three habits help:

1. Track your hours and earnings against each plan’s thresholds every year.
2. Request a pension statement before you make a retirement date decision.
3. Add your own savings, using a 401(k) in the plan, an IRA or a loan-out company’s retirement plan, because union pensions alone rarely replace full earnings.

If you work through a loan-out company, a planner can help you choose between plan types and keep contributions regular in a year when income is uneven. Residual payments may continue in retirement, so build them into your income projection but do not assume the amounts will stay level.

The years between work and Medicare

Medicare begins at 65. If you retire at 60, you need coverage for five years. Options may include retiree health benefits from a public employer or union plan, a spouse’s coverage, COBRA for a limited period, or a policy through Covered California, the state marketplace. Premium subsidies depend on income, so the amount you pull from IRAs in those years can change your cost. A planner can set withdrawals that keep income at a level that makes sense for the plan you choose.

At 65, sort out Medicare Parts A, B and D and consider a supplement or Medicare Advantage plan. Compare the doctors and hospitals you use, such as the large academic and community systems around the city, with each plan’s network.

How California taxes retirement income

California does not tax Social Security but does tax pensions, annuities, IRA and 401(k) withdrawals and investment gains as ordinary income. For a retiree in Los Angeles, that can feel heavy next to states with no income tax. Our retirement planning guide explains the account types, and the tax planning guide covers withdrawal order.

A few strategies come up:

• Fill lower brackets with Roth conversions in early retirement years, weighing both state and federal tax.
• Time capital gains in years with lower income.
• Use qualified charitable distributions from an IRA after age 70 and a half to support causes without adding to taxable income.
• Review required minimum distributions well before they start.

Federal law generally bars a state from taxing certain retirement income of people who no longer live there. Retirees who plan to leave California should speak with a tax professional about timing and residency rules.

Your house is part of your retirement plan

A home bought long ago in Eagle Rock, Mar Vista or Sherman Oaks may be worth far more than its owners ever expected, with a low property tax thanks to Prop 13. Selling can unlock cash, but a replacement home is generally assessed at its current price. Prop 19 may let owners who are 55 or older keep their existing tax base when they move to a replacement home in California, within limits and for a limited number of transfers. Confirm current rules with the Los Angeles County Assessor.

Options to compare:

• Stay put and budget for rising insurance and upkeep
• Downsize within the city or county
• Move to a lower-cost part of California using the Prop 19 transfer
• Leave the state, which can lower taxes but also means leaving family and doctors
• Rent out a portion of the home or a backyard unit for income

A planner can build a side-by-side projection of each choice.

Wildfire, earthquake and the retirement budget

Insurance costs are a growing line for retirees in hillside areas. If your insurer does not renew, you may need the California FAIR Plan plus a separate policy for other risks, and those premiums can strain a fixed income. Earthquake coverage is optional and costly, and many retirees hold extra cash instead. Whatever you choose, include it in the monthly budget and choose the option on purpose.

Long-term care and family

Care costs in a large city can be very high, whether at home, in assisted living or in a nursing facility. Options include saving specifically for care, buying a long-term care policy or a hybrid life policy with a care rider, or planning to rely on family. Medicare covers little long-term custodial care. If you might later need Medi-Cal, speak with an elder law attorney well in advance, since planning ahead is more flexible than reacting to a crisis. Our estate planning guide covers powers of attorney and health care directives.

Wondering when you can retire?

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A sample timeline

Take a couple, both 62, who live in Highland Park. One is a LAUSD teacher, the other a freelance editor. A plan might have them: request a CalSTRS estimate and union plan statements this year; decide on spouse payout options; keep health coverage through Covered California until Medicare; draw from savings first while delaying Social Security on the higher earner’s record; do small Roth conversions while income is low; and revisit housing at 65. This is an illustration of the sequence and carries no promise about results.

Choosing a retirement advisor

Look for someone experienced with pensions and union plans as well as portfolios. Ask whether they are a fiduciary, how they are paid and whether they sell insurance or annuities. Check their record with the SEC Investment Adviser Public Disclosure site and FINRA BrokerCheck, and use the California Department of Financial Protection and Innovation for state-registered advisers. A Certified Financial Planner can be a helpful credential, and confirming it is easy.

What to gather before the first meeting

• Pension benefit estimates and survivor options
• Union plan statements and hours records
• Social Security statement from your online account
• 401(k), IRA and brokerage balances
• Mortgage, property tax and insurance bills
• A list of expected monthly spending in retirement

Where you retire inside the region

Los Angeles County is large, and the cost of living changes from one part of it to the next. Some retirees stay close to grandchildren in the Valley, others move to quieter parts of the South Bay or toward Santa Clarita, and some consider the Inland Empire or the Central Coast. Distance to a trusted doctor, hospital and family often matters more than a lower rent. A planner can model each choice with realistic assumptions about taxes, insurance, transportation and healthcare.

Part-time work and phased retirement

Many Angelenos do not stop all at once. A teacher may substitute, a crew member may take smaller jobs and an editor may keep a few clients. Earned income before full retirement age can temporarily reduce Social Security benefits, and extra income can raise Medicare premiums two years later. A planner can show how much work is worth doing in each year before you commit. Part-time income also lets you delay Social Security, which raises the lifetime check, and keeps your savings invested longer.

Frequently asked questions