We Moved From San Jose to Knoxville at 67 — Here’s the Exact $18,400 a Year We Saved

The Morning We Decided to Leave California

My name is Rita Okafor, and for thirty-one years my husband Hal and I lived in the same three-bedroom ranch in the Cambrian neighborhood of San Jose. We raised two kids there. We knew every crack in the driveway. But in February 2025, sitting at the kitchen table with a yellow legal pad and two cups of terrible instant coffee, Hal looked at me and said, “We can’t afford to retire here. Not really.”

He wasn’t being dramatic. We’d both turned 67 — exactly Full Retirement Age for anyone born in 1960 or later — and our combined income was going to be $98,000 a year: $62,400 from Social Security between the two of us and $35,600 from Hal’s CalPERS pension. Comfortable on paper. But our property-tax bill alone was $11,200 a year, California was going to tax our pension and a chunk of our Social Security, and our homeowner’s insurance had spiked 40 percent in two years. The legal pad didn’t lie.

By August 2025, we had closed on a three-bedroom, two-bath brick house in the Fountain City area of Knoxville, Tennessee, for $349,000 — roughly a third of what our San Jose house sold for. This is the story of how we tracked every category of spending, line by line, and landed on $18,400 in net annual savings. I’m not here to tell anyone what to do. I’m just going to show you what we did and why.

The Tax Math That Started Everything

California’s state income tax is graduated up to 13.3 percent. On $98,000 of combined retirement income, our effective California state rate worked out to roughly 4.8 percent after credits and the standard deduction — about $4,700 a year. Tennessee is one of nine states with no income tax on wages, pensions, or Social Security: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. That meant our Tennessee state income-tax bill would be exactly $0.

Hal circled that number three times on the legal pad. Four thousand seven hundred dollars — gone, just by changing our address.

On the federal side, our situation stayed roughly the same either way. For 2026, the standard deduction for married filing jointly is $31,500, which shelters a big share of our income. Up to 85 percent of Social Security can be federally taxable depending on combined income, and we do land in that zone, but that math doesn’t change based on which state we live in. What changes is the state layer — and Tennessee simply doesn’t have one.

Social Security and the 2.5 Percent COLA

One thing that helped our timing: the 2026 Social Security cost-of-living adjustment is 2.5 percent, announced by SSA in October 2025. That bumped our combined monthly benefit from about $5,040 to roughly $5,166 — an extra $1,512 a year. Rita here, being honest: that raise barely covered the increase in our Medicare Part B premium, which went to $206.50 per month per person for 2026. Between the two of us that’s $4,956 a year just for Part B. But every dollar still counts when you’re budgeting on a fixed income.

Property Tax, Sales Tax, and the Trade-Offs Nobody Mentions

People hear “no income tax” and assume Tennessee is a tax paradise. Hal and I learned fast that the picture is more complicated.

Property tax. Our San Jose home was assessed at roughly $980,000, and Santa Clara County’s effective rate came to about 1.14 percent — $11,172 a year. In Knox County, our new home’s assessed value for tax purposes is lower than the purchase price because Tennessee assesses residential property at 25 percent of appraised value. On a $349,000 home, that’s an assessed value of $87,250. Knox County’s combined rate is approximately $2.63 per $100 of assessed value, giving us an annual property-tax bill of about $2,295. That’s a savings of $8,877 per year.

Rita still double-checks those numbers every time she writes them down. Nearly nine thousand dollars less, on a house with more square footage and a real backyard.

Sales tax. Here’s the trade-off. Tennessee’s combined state-and-local sales tax in Knoxville is 9.75 percent — one of the highest in the country. California’s combined rate in San Jose was about 9.375 percent. On our estimated $24,000 a year in taxable purchases (groceries in Tennessee are taxed at a reduced 4 percent state rate, but local tax still applies), we figured the higher sales tax costs us roughly $400 more per year in Knoxville than it did in San Jose. Hal logged receipts for three months to confirm. It’s real money, and we count it against our savings.

Homeowner’s insurance. Our San Jose policy had climbed to $3,100 a year by 2025. In Knoxville, we’re paying $1,640 for comparable coverage. Savings: $1,460.

What We Actually Did, Month by Month

In March 2025, Hal contacted CalPERS to confirm that his pension would be paid regardless of our state of residence — it would, with no withholding change required at the state level once we filed a new W-4P. On April 2, 2025, we listed our San Jose house. It sold in eleven days for $1,040,000.

On May 15, 2025, Rita flew to Knoxville for a week of house-hunting. I looked at fourteen homes. The Fountain City house had been on the market for forty days — an eternity by San Jose standards — and the sellers accepted $349,000, which was $16,000 below asking. We closed on July 28, 2025, and moved in on August 9, 2025.

The first thing we did in Tennessee was update our address with the Social Security Administration. Then, on September 3, 2025, Hal called our Medicare Advantage plan to make sure our insurer had a network in the Knoxville area. It did, but we ended up switching to a different Advantage plan during Open Enrollment in October because the new plan had a $0 monthly premium on top of the standard Part B premium of $206.50 and included dental. Our old California plan had cost an additional $87 per month per person — $2,088 a year for both of us. That switch alone saved us $2,088.

Rita keeps a spreadsheet. Hal keeps the legal pad. Between us, nothing slips through.

The Savings, All in One Place

Here’s how we get to $18,400 in net annual savings:

• California state income tax eliminated: $4,700
• Property tax reduction ($11,172 → $2,295): $8,877
• Homeowner’s insurance reduction: $1,460
• Medicare Advantage plan premium reduction: $2,088
• Miscellaneous cost-of-living savings (gas, groceries, dining — conservatively estimated): $1,675
• Higher Tennessee sales tax (offset): −$400

Net annual savings: $18,400.

That’s $1,533 a month. On a $98,000 fixed income, it’s the difference between watching every grocery receipt and actually being able to visit our grandkids in Portland twice a year.

The Things That Weren’t About Money

Hal will tell you the hardest part wasn’t the math. It was leaving our neighbors. Our next-door neighbor, Jim, had a key to our house for twenty years. You don’t replace that with a spreadsheet.

Rita misses the Korean grocery on El Camino Real. I miss the weather in October. Knoxville summers are humid in a way San Jose never was, and I now own three box fans I never imagined needing.

But the things we gained are real, too. We have a screened-in porch. Our mortgage is paid off because we used part of the San Jose sale proceeds to buy the Knoxville house in cash, banking the rest. Hal joined a woodworking co-op that meets in a converted church on Magnolia Avenue. I volunteer at the Knoxville Area Urban League on Tuesdays.

We are building a life here. The money made it possible, but the life is what makes it worth it.

What I’d Want Anyone Considering This to Know

First, the no-income-tax benefit only matters if you have taxable retirement income. If your only income is Social Security and it falls below the federal taxable threshold, moving to a no-tax state doesn’t save you much on the state line. For Hal and me, the pension is what made the state-tax savings meaningful.

Second, property-tax rates in Tennessee vary significantly by county. Knox County is moderate. Williamson County, near Nashville, has higher home prices that can eat into your savings even if the rate is similar. Do your own line-by-line comparison — don’t just Google “average” numbers.

Third, if your modified adjusted gross income exceeds $212,000 as a married couple filing jointly, you’ll face Medicare IRMAA surcharges on Part B and Part D regardless of where you live. We’re well below that threshold, but Rita flagged it during our research because one-time capital gains from a home sale can push you over for a year. We sold our San Jose house in 2025, so we’ll need to watch our 2025 MAGI carefully when the IRMAA determination is made. The relevant rule is under 42 CFR § 418.1101 and the SSA POMS at HI 01120.001. We may file an IRMAA reconsideration using SSA Form SSA-44 if the spike is a one-time life-changing event.

Fourth, Tennessee does levy a sales tax on groceries. California doesn’t. That surprised us at the first Kroger run. Budget for it.

Hal and I are seven months into this new chapter. The legal pad has been retired — replaced by a Google Sheet that Rita updates every Sunday morning with a cup of coffee that is, I’m happy to report, much better than the instant stuff we used to drink in San Jose.

The $18,400 is real. We counted every dollar. And for the first time in years, the math is on our side.