This Well-Known Spot Is One of Florida’s Most Expensive Places To Retire. Is It Worth It?

The southernmost point in the U.S. promises to offer you a postcard-perfect retirement, with pastel-colored houses, world-famous beaches, and breathtaking sunsets. However, beyond these picturesque retirement perks, you will find that retiring in Key West comes with a hefty price tag. 

Here’s everything you need to know if you’re considering retirement in Key West. 

Understanding the Costs

Property Prices

Housing costs will be, by far, your highest and most shocking expense while living in Key West. The median home value in Monroe County is a staggering $723,800—more than double the national median of $303,400, and 76% higher than Florida’s median home price of $412,400 (as of May 2025). 

This premium stems from Key West’s limited geography, at only four miles long and two miles wide, which creates a natural scarcity in the housing market. Strict zoning laws and growth restrictions further constrain housing supply. As an “Area of Critical State Concern,” Monroe County must ensure the entire population can evacuate within 24 hours during hurricane warnings, effectively capping the number of residents.

The result is a housing market that heavily favors luxury properties, leaving very few affordable options for retirees on a fixed income. While the county maintains just over 700 affordable housing units, demand far exceeds supply.

Health Care Costs

Health care is another major consideration—and expense—for Key West retirees. While basic care is available locally, the island’s isolation often requires trips to Miami for specialized treatment or emergencies. 

With a health care access score of 59/100 and only five hospitals serving the entire county, retirees with complex medical needs may find Key West challenging. Although Community Health Systems (CHS) proposed a $350 million plan to upgrade medical facilities in the Keys, the plan remains in early stages. 

Insurance premiums add significant costs to retirement budgets. Florida ranks among the most expensive states for health insurance, where monthly premiums often exceed $600, well above the national average. Premiums are driven up due to the high cost of living, demand for specialized services for an older population, fewer participating insurers, and the state’s vulnerability to natural disasters. 

Local Taxes

Florida stands out as one of the most tax-friendly states for retirees, making it a major selling point for Key West living. The state imposes no income tax, leaving retirement income, Social Security benefits, and investment earnings untaxed at the state level. With no inheritance or estate taxes, plus several property tax breaks for seniors, Florida’s tax benefits are more than appealing.

Monroe County’s property tax rate of 0.54% actually falls below other Florida counties, with median annual property taxes of $3,943 in 2023. Sales tax averages 7% for combined state and local rates, though essential items like groceries and prescription medications are exempt. 

Unfortunately, these tax benefits are quickly overshadowed by Key West’s astronomical insurance costs. Monroe County residents face the state’s highest wind insurance premiums—a shocking 175% above median coastal rates. These premiums have doubled over the past decade, with most homes now insured through Citizens Property Insurance Company, a state-backed insurer, as most private insurers have abandoned the high-risk area. 

Daily Cost of Living Expenses

Beyond housing and health care, Key West’s everyday costs reflect island living challenges and tourist-inflated pricing. Understanding the median monthly expenses for basic necessities helps determine whether a paradise retirement fits your budget. 

• Housing: $1,800 
• Transportation: $1,316 
• Food: $836 

These figures explain why Key West is ranked as Florida’s second most expensive city. Transportation costs are especially noteworthy given limited public transit options and the reality that all goods must travel the single-route Overseas Highway into the Keys. As a result, groceries and essentials cost significantly more than mainland prices due to transportation surcharges and the tourism-focused economy. 

What Makes Key West So Expensive?

Island Scarcity and Resort-Like Demand

Key West faces permanent housing scarcity rather than typical market fluctuations as an island with severely limited developable land. This natural constraint meets exceptional demand, with a lot of the available housing dedicated to vacation rentals or seasonal homes. 

Since 2018, short-term vacation rentals have surged 36%, while seasonal homes have dropped 10%. Property owners increasingly find tourist rentals more profitable than long-term rentals for residents. 

With approximately 54,000 housing units across Monroe County, competition remains fierce for properties suitable for year-round residents and retirees.

Tourism-Driven Economy

Key West’s economy centers entirely on tourism, with roughly one-third of county jobs tied directly or indirectly to the industry. Approximately one in three people in Key West are visitors rather than residents on any given day. 

This tourism focus creates a dual-pricing economy where goods and services target vacationers rather than locals. Restaurants, shops, and service providers typically charge tourist rates, inflating the cost of everyday necessities for residents. 

Limited Infrastructure and Access

Key West’s position at the end of the Overseas Highway—a 113-mile route connecting the Keys to mainland Florida—creates logistical challenges that drive up costs across virtually all sectors. Transporting goods often requires long distances and specialized equipment, infrastructure is more costly to maintain due to the corrosive salt air, and having only one access route makes hurricane evacuations more difficult.

For older residents, these access limitations can become increasingly difficult to manage with age. Medical appointments in Miami could require overnight stays, home repairs often carry surcharges, and effective hurricane preparedness requires emergency planning and an additional financial investment. 

Retirement Considerations in Key West, FL

Despite the costs, Key West offers undeniable benefits that continue to draw retirees. 

Pros

• Natural beauty and climate: Few destinations match Key West’s stunning ocean views, tropical climate, and abundant outdoor activities—from fishing and boating to leisurely beach walks. 
• Tax advantages: Florida’s tax structure eliminates state income tax on retirement funds while offering property tax breaks for seniors. 
• Community and culture: Key West boasts a vibrant art scene, rich history, and a highly walkable downtown area perfect for an active lifestyle. 
• Lifestyle benefits: The famous laid-back “Keys disease” attitude permeates daily life, creating an ideal environment for a stress-free retirement. 

Cons

• Financial pressure: Housing costs, insurance premiums, and daily expenses can severely strain fixed retirement budgets. 
• Health Care limitations: Fewer providers, combined with limited specialized care options, can significantly compromise quality of life for those with complex medical needs. 
• Impact of tourism: Peak seasons bring crowded streets, noise, and competition with tourists for restaurant reservations and parking spaces. 
• Climate vulnerability: Hurricane risks and rising sea levels create ongoing financial and safety concerns for long-term residents. 

The Bottom Line

Key West offers an iconic retirement lifestyle for those who can afford it—but paradise doesn’t come cheap. This island paradise can provide an unmatched quality of life for retirees with substantial financial resources and relatively good health. 

However, those with a more modest nest egg or significant health care needs may find the financial and logistical challenges of living in Key West overwhelming. The island’s isolation contributes to its charm just as much as it imposes practical limitations for older residents. 

If your dream is to spend your retirement years in Key West, consider a trial period to see if the lifestyle is feasible for you, and consult with a financial advisor to see how this luxurious way of life fits into your retirement planning.