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Couples who’ve spent decades outside Boston often return to the same dilemma: the house is worth a lot, the grandkids live nearby, and Florida feels too far away. Instead, Worcester keeps coming up as the place to stay in Massachusetts without paying Boston prices. Given this consideration, here’s what retiring there at 67 on $1 million really looks like in this part of Massachusetts, starting with the money left over each month.
Monthly Budget for a Worcester Couple at 67
| Line item | Monthly |
|---|---|
| 4% withdrawal from $1 million | $3,333 |
| Social Security, average senior couple | $3,355 |
| Total income | $6,688 |
| Property tax, median single-family home | $521 |
| Medicare Part B, two people | $406 |
| Federal income tax (estimate) | $234 |
| Massachusetts income tax (estimate) | $167 |
| Left for everything else | $5,361 |
On the plus side, the budget leaves a monthly buffer. The table assumes they own the house outright, bought at Worcester’s median single-family sale price of $471,000 and taxed at the city’s residential rate of $13.28 per $1,000. Social Security uses the SSA’s estimated average for a senior couple after the 3.6% COLA for 2027. Part B is the standard $202.90 per person. The federal estimate uses only the $32,200 joint standard deduction, so the senior deduction added by the new tax law could lower it.
That leftover covers food, heat, Medigap and drug plans, insurance, a car, and repairs. For comparison, the average U.S. household spent $81,905 last year, and that figure includes rent and mortgage payments this couple doesn’t have. A 4% draw matches a plan that runs to about age 93, the horizon Fidelity uses in its retirement guidelines, though the 4% figure has recently drawn criticism (we laid out the income-first case against it in a free guide here). And 67 is full retirement age for most people retiring now. If either partner waits until 70, their check grows, which takes pressure off the portfolio.
Why Worcester Works When Boston Doesn’t
Boston’s median single-family price hit $1,032,500 this spring. Selling there and buying at Worcester’s median frees up significant equity. Worcester isn’t cheap, though. FHFA data shows metro prices up 43.81% over five years, and the state’s living costs index sits at 105.757, against a national average of 100.
In return, they get a real city. There’s the College of the Holy Cross and Union Station, the downtown rail hub. They also get New England winters. The state projected that most homes would spend 4% to 9% less on heating last winter, while homes with electric baseboard heat faced about a 6% increase. A colder-than-forecast winter can wipe out those savings. A lot of Worcester’s houses are old, too, so set aside part of that $5,361 for boilers and roofs.
How Massachusetts Taxes This Income
Social Security benefits are excluded from Massachusetts gross income. Federal and Massachusetts contributory government pensions aren’t taxed either. IRA and 401(k) withdrawals get the flat 5.0% rate, but contributions that were already taxed by Massachusetts come back out tax-free. The extra 4% surtax only hits income above $1,107,750 in 2026. Sales tax is 6.25%. We’ve also covered how Massachusetts handles retirees who live mostly on Social Security.
Don’t plan on the senior circuit breaker credit. It pays up to $2,820, but only when property taxes are more than 10% of income. For this couple, that line is $8,026, and their tax bill is $6,255. Local senior exemptions come with tight limits, around $30K of income and $55K of assets for married couples before adjustments.
Estate Threshold Most Couples Never Check
Another bit of good news is that Massachusetts doesn’t tax the first $2 million of an estate, and anything above that is taxed at rates from 0.8% to 16%. The federal exclusion is $15,000,000, so for this couple the state line is the only one that matters. Add the $1 million portfolio to the $471,000 house, and they’re $529,000 under it. That gap can shrink. Home values can rise, a 4% draw leaves the portfolio growing in good years, and any leftover money from the Boston-area sale counts too.
To make the plan work, buy near the median and own the house outright. Draw about 4% a year from the portfolio. Delay Social Security until 67 or later. Keep joint income below the $218,000 IRMAA line and pay for heat and repairs out of that $5,361. Then add up the house, the accounts, and any extra sale proceeds, and see whether the total could pass $2 million before the second partner dies. If it could, the time to plan for it is now, while both of you are healthy.
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