That number can vary greatly depending on where you live. How does your state stack up?
Here’s How Much You Need in Your Savings Account to Retire in Every State
Published on Nov. 26, 2024
It’s frustrating that there’s no magic number to save for retirement. But nothing will be more frustrating than reaching retirement age and realizing that even with the Social Security cost-of-living increases, there’s a big gap between those checks and your financial needs. That’s why you need to take an honest look at your lifestyle and your bank account to figure out how much you really need for retirement. Of course, there are many factors that go into your ideal “number,” from how much you have saved up to the lifestyle you want to lead, but one of the biggest factors you need to consider is where you live.
Sure, we all know that cost of living and real-estate prices can vary widely across state lines, but it can still feel like every place is expensive these days. While that may be true to an extent, some places are much less expensive than others. And according to a new study by GoBankingRates, there are actually quite a few places in the United States where you can retire on less than $65,000 a year—and on a lot less than the overall nest-egg benchmark you might have in your mind.
Keep reading to see how you fare in your current state—and if a retirement move might make sense for you.
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How were these retirement numbers determined?
To determine the amount of savings needed to retire in each state, GoBankingRates first figured out the annual expenditures for a retired person in each one. They did this by using data from the U.S. Bureau of Labor Statistics’s 2022 Consumer Expenditure Survey and multiplying it by the cost-of-living index for each state. Then, to determine the amount of savings needed, they subtracted Social Security income from each state’s average annual expenditures and divided by 0.04 to assume a 4% yearly draw on savings. The data they used is current as of July 17, 2024.
Where can you retire with the least amount of savings?
You’ll need the least amount of retirement money in—drum roll, please—West Virginia, according to the GoBankingRates analysis. How much are we talking, exactly? Just $650,356. That’s largely because the total annual expenditures in that state are $48,451.48—which works out to only $26,014.24 more than the average yearly Social Security income.
Oklahoma is the only other state where a person can retire with less than $700,000 in savings. After that, the number creeps up. That said, although Kansas and Alabama require just slightly more than $700,000 to retire, the annual cost of living stays under $51,000 per year.
Which state will require the most savings?
It won’t surprise most readers to learn that Hawaii tops the list of the most expensive places to retire. “Hawaii is a desirable place because of its exceptional beauty, but everything is really expensive, from housing to groceries to utilities,” says Bobbi Rebell, CFP, a personal finance expert at BadCredit.org. “Let’s face it: Because it is an island state, many things have to be transported there, and shipping costs make things more expensive.”
Those extra costs add up quickly, and the annual cost of living in Hawaii is almost $108,000, which works out to a whopping $85,219.88 more than the average Social Security payment per year. The bottom line: You’ll need more than $2.1 million in savings to retire on one of the Hawaiian islands. (Sorry to be the bearer of that news!)
How much will you need to retire in each state?
Of course, there’s a lot more to the country than the handful of states we’ve mentioned above. Check out the list below for a breakdown of how much you’ll need to retire in each state, from the most affordable to the least affordable. Just keep in mind that this number can vary within each state because some cities and towns will be more costly.
- West Virginia: $650,356
- Oklahoma: $687,938
- Kansas: $700,947
- Alabama: $712,510
- Mississippi: $715,401
- Missouri: $718,292
- Arkansas: $718,292
- Iowa: $741,419
- Tennessee: $744,310
- Indiana: $744,310
- Georgia: $758,765
- Michigan: $765,992
- Louisiana: $770,328
- Texas: $774,665
- Kentucky: $777,556
- North Dakota: $780,447
- Illinois: $787,674
- Nebraska: $789,119
- South Dakota: $789,119
- New Mexico: $792,010
- Ohio: $797,792
- Montana: $806,465
- Minnesota: $809,356
- Wyoming: $813,692
- Pennsylvania: $820,919
- Wisconsin: $841,156
- South Carolina: $849,828
- North Carolina: $862,837
- Delaware: $897,528
- Idaho: $900,419
- Virginia: $903,310
- Colorado: $910,537
- Nevada: $923,546
- Utah: $926,437
- Florida: $929,328
- Arizona: $1,036,291
- Maine: $1,047,855
- Connecticut: $1,075,318
- Rhode Island: $1,078,209
- New Hampshire: $1,081,100
- New Jersey: $1,082,546
- Oregon: $1,088,327
- Vermont: $1,097,000
- Washington: $1,102,782
- Maryland: $1,102,782
- New York: $1,218,418
- Alaska: $1,247,327
- Massachusetts: $1,524,853
- California: $1,534,972
- Hawaii: $2,130,497
What should you do if you’re not close to these numbers?
“If you are not close to these numbers, don’t panic,” Rebell says. “You can always course-correct, although it will likely involve some compromises.”
Of course, one option is moving to a state with a lower cost of retirement. If that’s not feasible or of interest—or even if it is—check out the following retirement tips, which will help you catch up, courtesy of certified financial planner Tyler Meyer, founder of the website Retire to Abundance.
Adjust your budget now
Take a close look at your current spending and identify areas where you can cut back. Start by prioritizing essential expenses, and look for ways to reduce costs in discretionary areas. Every dollar saved today can go directly toward bolstering retirement savings, creating a more comfortable future.
Maximize savings contributions
Many retirement accounts, like IRAs and 401(k)s, offer catch-up contributions once you’re 50 or older, which allow you to invest additional money each year. For example, in 2024, those ages 50 or older can contribute an extra $7,500 to their 401(k) on top of the $22,500 annual limit, giving a major boost to their retirement accounts.
Delay retirement
If possible, consider working a few more years than initially planned. This will allow you more time to save, shorten the number of years you’ll need to fund in retirement and increase your Social Security benefits by delaying your claim.
Consider part-time work in retirement
Many retirees find satisfaction in part-time roles that supplement their income. This can reduce the strain on savings and allow for more flexibility in managing your finances, particularly in the early years of retirement. Plus, it can provide a sense of purpose and structure, which is beneficial beyond just finances.
Look at relocating to a more affordable area
Housing and general living costs can vary dramatically by state and even within states. For those open to relocating, moving to a state with a lower cost of living, or even downsizing within your current area, can make a significant impact when it comes to stretching retirement dollars.
Strategize Social Security timing
The age at which you start receiving Social Security can greatly impact your monthly benefit. While you can begin taking benefits at 62, each year you delay up to age 70 results in an increased monthly payout. For some, it may be worth it to delay Social Security to maximize those benefits, particularly if you expect to live a longer-than-average life or have other income sources in the interim.
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Sources:
- GoBankingRates: “The Minimum Savings You Need to Be Able to Retire in All 50 States”
- Bobbi Rebell, CFP, founder of Financial Wellness Strategies, author of Launching Financial Grownups and personal finance expert at BadCredit.org; email interview, October 2024
- Tyler Meyer, CFP, founder of Retire to Abundance and founder and president of Q.E.D Wealth Solutions; email interview, October 2024
