Alaska and Hawaii were once among America’s most expensive locations to buy a quarter pounder of cheese. This was mainly due to rising shipping costs, increasing the total cost of living in Alaska. Home prices, groceries, healthcare, utilities and transportation costs are well above the US national average.
However, Alaska is home to the highest concentration of millionaire households in the US. It also has some of the highest paying professions in the United States. The median salary in Alaska is about $65,265 per year. Keep reading if you’re planning to move to this state and wondering about the average Alaskan rent, transportation and utility costs, and other information about the cost of living in Alaska.
What you need to know before moving to Alaska
Some of the things that come to mind when you think of Alaska are the Northern Lights and glacier cruises. However, did you know that Alaskans are paid to live there? These residents receive a portion of this state’s oil royalties through Alaska’s Permanent Fund.
Alaska offers many job opportunities with a federal minimum wage of $10.34 per hour, which is higher than the national average.
However, because this state has seasonal jobs and an economy that can be unstable, high unemployment rates can be seen from time to time. If you like city life, consider Anchorage, Alaska’s largest city and home to approximately 300,000 people. Not only does this city have many jobs, but it is also the best place to live in Alaska if you like an urban environment.
If you prefer to live off-the-grid, you’ll find Alaska’s rural areas beautiful and rugged. Residents who choose this option prefer to grow their own food as finding supermarkets can be a difficult and expensive endeavor. If you prefer to live off the grid, you should know that this state is home to an abundance of wildlife, including grizzly bears, black bears, polar bears, moose, and bison.
You should also know that the cost of living in Alaska can be high. Food, fuel, utilities, transportation, rent, and healthcare cost more in this state than in many other states. However, you can save because residents do not pay income tax or sales tax.
What is the cost of living in Alaska?
The cost of living in Alaska is $48,739 per year. According to a report from the Bureau of Economic Analysis, Alaska residents spend $48,739 on personal consumption expenses per year, including food, lodging, recreational opportunities and health care.
Alaska’s cost of living index is 127.1, higher than the US national average, which is 100. This shows that Alaska is one of the most expensive states to live in. According to a report from the Missouri Economic Research and Information Center, Alaska’s cost of living index for 2021 was 127.1, which is significantly higher than Mississippi’s cost of living index of 83.3, being the cheapest able to live in.
How is the cost of living calculated?
The cost of living is calculated by tracking price changes over time or by comparing prices in two different states or cities. According to the state of Alaska, you can track inflation with a single measure using the consumer price index for urban Alaska. Or you can compare the prices of various items in Alaska with other states or cities.
If you’re looking for a more personalized report to help you estimate your costs, consider a cost-of-living calculator. Such markers help you compare the city or state you currently live in with the city you want to move to.
What contributes to the cost of living in Alaska?
Average Rent in Alaska
The median rent in Alaska is about $1,179, with residents paying a median rent of $1,172, $1,246 and $1,323 in Anchorage, Fairbanks North Star and Sitka, respectively. According to a report from the state of Alaska, about 40 percent of total household income is spent on housing costs.
If you think the average rent in Alaska is too high and you would rather buy a home, know that the average cost of a home in this region is about $371,671. However, Alaska housing costs fell 1.9 percent in 2020 following the COVID-19 outbreak.
Average Transportation Costs in Alaska
In Alaska, you spend about $2,086 on gas per year, although the price of gas often fluctuates. Energy costs have risen significantly in Alaska since 2021, driving up transportation costs and gas prices. Vehicle prices rose 14 percent from April 2020 to April 2021. You’ll also find used cars expensive, especially when compared to other states.
Residents prefer to use buses, trains, private transfers and cars. Renting a car is more expensive than using a train or bus. However, it is cheaper if you are more than three people. Public transportation will cost you about $665 per year. You also have the choice to use Uber, one of the best transportation companies, if you want to travel within a city.
Average Food Costs in Alaska
The state of Alaska has not yet released official information on the average cost of food and groceries. According to the U.S. Bureau of Labor Statistics (BLS), a household in a densely populated city like Anchorage spends about 14 percent of its annual income on food. This is estimated at about $1,000 per month. Due to Alaska’s location, regular food supplies and beverages have to be transported over long distances, ultimately contributing to the high cost of food.
Average Healthcare Costs in Alaska
The average cost of health care in Alaska is $673. Health care costs, especially health insurance premiums, are high in Alaska. According to the state of Alaska, this region has the highest public health insurance premiums after Wyoming. In addition, some of the best health care companies such as CVS and the UnitedHealth Group are available to Alaska residents.
Average Utility Costs in Alaska
Average utility costs in Alaska are slightly higher than in the rest of the US. In 2020, Alaska produced 31 percent of its electricity needs from renewable energy sources. The electricity price for Alaska residents was about $0.22 per kilowatt hour in January 2022, according to the U.S. Energy Information Administration, one of the highest in the country.
Given the cold winters in this state, utility bills with electricity and gas can be higher than the national average. In addition, Alaska is considered one of the most expensive states for cable television and the Internet. Alaskans pay $148 a month for their Internet connection and cable service, according to the US Cable and Internet Market Size and Household Spending Report 2021†
Other costs to consider in Alaska
Alaska is one of the most expensive places to live. Public transport isn’t great so most people don’t use it. Costs for groceries, gas, electricity and utilities are significantly higher than most places in the US. Snow removal is also an expense that adds to the total cost of living in Alaska, as this state experiences higher levels of snowfall than most locations in the United States.
Should I Buy or Rent in Alaska?
It depends on how long you plan to live in Alaska, your creditworthiness and your annual income. If you want to stay in Alaska for the long term, consider buying a home by taking out a mortgage. You can save a lot in interest and property taxes, so theoretically the average home price is more affordable than in other states.
If you buy a house as an investment and decide to sell it one day, you will make huge capital gains because you are exempt from sales tax. The median monthly rent in Alaska is $1,179, which is much higher than the national average. For such reasons, buying a home as an investment can be an idea worth considering. However, renting can be ideal if you are on a budget and plan to stay in Alaska for a short period of time.
What is the average salary in Alaska?
The median salary in Alaska is $61,760 per year, according to the US Bureau of Labor Statistics. This translates to an hourly rate of about $29.69. Below are the average salaries for some of the largest cities in this state.
Salary Comparison by City in Alaska
|City||Average salary per year|
What is a good salary?
A good salary will help you cover personal expenses in your area and motivate you to continue to provide the best value possible. How much you earn will depend on the location of the company you work for, the job you do, your qualifications and your years of experience.
The median salary in Alaska is $61,670 per year. Therefore, since Alaska residents spend about $48,739 a year on utilities, rent, food, and health care, this salary is considered very good for someone living in this state. According to the BLS, some of the highest paying professions in Alaska include management, legal, architecture and engineering and health care positions. However, there is always the choice of finding a high paying job while working remotely and living in Alaska.
Can You Afford the Average Cost of Living in Alaska?
Yes, you can afford the average cost of living in Alaska if you earn more than $48,739 per year. That said, Alaska is one of the most expensive states to live in. Data from the US News and World Report rankings shows that Alaska is one of the least affordable places to live in.
Housing costs, health care, energy, food, and utilities premiums are significantly higher in this state than most states in the US. Most people may not find this area affordable. In addition, if you have a family, you will need a significantly higher annual income to live comfortably in this region.
Frequently Asked Questions About Cost of Living in Alaska
To live comfortably in Alaska, you need to earn more than $48,739 per year. According to the Bureau of Economic Analysis, Alaskans spend an average of $48,739 a year on personal consumption expenses, including food, lodging, recreational activities and health care.
Yes, Alaska is one of the most expensive states to live in. Data from the Missouri Economic Research and Information Center shows that Alaska’s cost of living index for 2021 was 127.1, which is significantly higher than Mississippi, the cheapest state to live in. The US News and World Report also ranks this state as one of the least affordable states in the US as it ranks 47th out of 50 states.
Some of Alaska’s drawbacks include high real estate prices, high fuel costs, high gas prices, high health insurance premiums, remote location, earthquakes, and a harsh Alaskan winter. Food items are also expensive due to the remoteness of this state.
No, it is not difficult to find a job in Alaska. This state offers many jobs that pay more than the federal minimum wage. The Last Frontier provides employment in healthcare, oil, mining, transportation, timber and fishing, mostly through the government. However, many jobs are seasonal.
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