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Florida is one of the best places to retire in America — here's how much a dream retirement costs

Business Insider Logo By Hillary Hoffower of Business Insider | Slide 1 of 4: A Florida retirement is paradise for many retirees, but just how much money do you need to save to retire in Florida?Mari Adam, certified financial planner and founder of Adam Financial Associates, helped Business Insider estimate how much is needed to retire in three Florida cities.You should have a $1.13 million nest egg if you want to retire in a more expensive area like Boca Raton, according to Adam's estimates. Florida is often called the best place to retire in America. What more could one ask for during their golden years than to bask under the sun, live among the palm trees, and not pay state income taxes? But enjoying such paradise involves a lot of planning. To find out just how much money you need to have to retire comfortably in Florida, Business Insider enlisted the help of Mari Adam, a certified financial planner based in Florida and the president and founder of financial planning and wealth management firm Adam Financial Associates. Florida lives up to its stereotype as a popular home for retirees, but how much you need to save to retire in the sunshine state depends on what Florida city you settle down in. Adam helped us estimate how much money a hypothetical 65-year-old couple - let's call them James and Ruth - need to retire comfortably in three major Florida cities with different costs of living: Jacksonville, Orlando, and Boca Raton, ranging from least expensive to most expensive. Income comes from Social Security and investments To estimate the typical income of retirees, Adam assumed Ruth and James receive  Social Security payments of $27,000 a year - $18,000 for James and $9,000 for Ruth (assuming that Ruth didn't work, and therefore gets half the amount of James' Social Security benefits). The average Social Security payment is roughly $1,360 a month, according to Adam, but she rounded it up to $1,500 assuming that more affluent recipients may have made higher wages while working, though it can vary, she says. Adam also assumed that Ruth and James don't receive a pension - only one-third of retirees do these days, she said. The couple's Social Security payments remain constant in the calculations for Jacksonville, Orlando, and Boca Raton. The rest of the couple's income comes from their investment portfolio, which Adam assumed is made up of half bond investments and half stock investments, which produce qualified dividends and long-term gains taxed at a lower rate (more on that later). In general, retirees can withdraw a maximum of 4% of their portfolio each year without being at risk of depleting their portfolio too early, so the total portfolio value needed to supplement Social Security income to cover expenses in each city is the variable in our calculation. Housing is the biggest expense in each city Adam found the typical spending amount for retirees in Jacksonville, Orlando, and Boca Raton. She included annual costs for healthcare, housing, transportation, miscellaneous expenses, like groceries and travel, as well as federal taxes, where applicable. Healthcare costs were based on Fidelity estimates and car payments were based on a lease for one car with an average monthly payment of $300. In every city, housing is the largest expense. "If the budget is in trouble, it's because of housing," Adam said. "You have maintenance, utilities, homeowner's insurance, etc." Monthly mortgage payments were based off of median home values in each city, assuming Ruth and James bought a home, put down $150,000 (cash saved from selling their last home), and have a 3.5% interest rate on their 30-year, fixed-rate mortgage. Homeowner's insurance was estimated to be about 1% of market value (Florida is the most expensive state for this in the US, says Adam), property taxes were estimated to be about 2% of market value, and house repairs and maintenance were estimated at 1% of market value. To calculate federal income taxes - there are no state taxes in Florida - Adam assumed that 50% of the couple's portfolio income is generated by bond investments and taxed as ordinary income, and 50% is qualified dividends/long-term gains generated by stock investments. Keep in mind that Adam excluded possible extras, such as golf or country club fees and long-term care expenses or insurance premiums, for the sake of simplicity. If any one of these factors is different for your personal situation, you may need more or less money in your portfolio than suggested."As long as you stick fairly close to the 4% withdrawal rate and invest in a mixed portfolio of stocks and bonds with a decent potential for growth, your nest egg should last 30 years," Adam said. Below is what retirement looks like in three Florida cities.

Three cities compared

Florida is often called the best place to retire in the U.S. What more could one ask for during their golden years than to bask under the sun, live among the palm trees, and not pay state income taxes?

But enjoying such paradise involves a lot of planning. To find out just how much money you need to have to retire comfortably in Florida, Business Insider enlisted the help of Mari Adam, a certified financial planner based in Florida who founded Adam Financial Associates, a financial-planning and wealth-management firm.

Florida lives up to its stereotype as a popular home for retirees, but how much you need to save to retire in the Sunshine State depends on what city you settle down in. Adam helped us estimate how much money a hypothetical 65-year-old couple, James and Ruth, would need to retire comfortably in three major Florida cities with different costs of living: Jacksonville, Orlando, and Boca Raton, ranging from least expensive to most expensive.

Income comes from Social Security and investments

To estimate the typical income of retirees, Adam assumed Ruth and James receive Social Security payments of $27,000 a year - $18,000 for James and $9,000 for Ruth, who didn't work and therefore gets half the amount of James' Social Security benefits.

The average Social Security payment is roughly $1,360 a month, according to Adam, but she rounded it up to $1,500, assuming that more affluent recipients may have made higher wages while working, though it can vary, she said.

Adam also assumed that Ruth and James don't receive a pension - only one-third of retirees do these days, she said.

The couple's Social Security payments remain constant in the calculations for Jacksonville, Orlando, and Boca Raton. The rest of their income comes from their investment portfolio, which Adam assumed is made up of half bond investments and half stock investments, which produce qualified dividends and long-term gains taxed at a lower rate (more on that later).

In general, retirees can withdraw a maximum of 4% of their portfolio each year without being at risk of depleting their portfolio too early, so the total portfolio value needed to supplement Social Security income to cover expenses in each city is the variable in our calculation.

Housing is the biggest expense in each city

Adam found the typical spending amount for retirees in Jacksonville, Orlando, and Boca Raton. She included annual costs for healthcare, housing, transportation, miscellaneous expenses like groceries and travel, as well as federal taxes where applicable. Healthcare costs were based on Fidelity estimates, and car payments were based on a lease for one car with an average monthly payment of $300.

In every city, housing is the largest expense.

"If the budget is in trouble, it's because of housing," Adam said. "You have maintenance, utilities, homeowner's insurance, etc."

Monthly mortgage payments were based on median home values in each city, assuming Ruth and James bought a home, put down $150,000 (cash saved from selling their last home), and have a 3.5% interest rate on their 30-year fixed-rate mortgage.

Homeowner's insurance was estimated to be about 1% of market value - Florida is the most expensive US state for this, Adam said - while property taxes were estimated to be about 2% and house repairs and maintenance were estimated at 1%.

To calculate federal income taxes - there are no state taxes in Florida - Adam assumed that 50% of the couple's portfolio income is generated by bond investments and taxed as ordinary income and 50% is qualified dividends/long-term gains generated by stock investments.

Keep in mind that for the sake of simplicity Adam excluded possible extras, such as golf or country-club fees, and long-term care expenses or insurance premiums. If any one of these factors is different for your situation, you may need more or less money in your portfolio than suggested.

"As long as you stick fairly close to the 4% withdrawal rate and invest in a mixed portfolio of stocks and bonds with a decent potential for growth, your nest egg should last 30 years," Adam said.

Click ahead to see what retirement looks like in three Florida cities.

© Mark Winfrey/Shutterstock

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