Unless you’ve built a retirement nest egg of at least a few million dollars, you’ll need to find an affordable location to retire comfortably in the United States. That’s the case for the vast majority of American retirees.
Only 16% of retirees say they have more than $1 million in savings and assets, according to a CNBC survey. Separate research from Guardian Life found that as of 2022, the median household retirement savings for Americans ages 65 to 74 is about $200,000.
With that kind of savings, you need to make prudent decisions about where to settle down in your golden years. On the other hand, if you have millions in savings and minimal debt, you can expand your list of retirement destinations to include the most expensive places.
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The good news is, in the vast majority of states you can retire comfortably on less than $100,000 a year, according to a recent GOBankingRates analysis.
The study focused on how much money you can expect to spend on the following five items in all 50 states: Housing, groceries, utilities, healthcare, and transportation. Next, the annual retirement income needed to cover these living expenses was calculated, with an additional 20% to account for the “comfortable” aspect of retirement.
In only three of the 50 states, it was determined that you need at least $100,000 a year to retire comfortably. Here’s a look at those three states and some of the key data, listed from least to most expensive.
If you’re looking to save some money in retirement, here are seven states where you a comfortable retirement will cost you less than $62,000 annually.
Massachusetts
- Total expenditures: $83,501
- 20% comfort buffer: $16,700
- Cost of a comfortable retirement annually: $100,201
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California
- Total expenditures: $83,906
- 20% comfort buffer: $16,781
- Cost of a comfortable retirement annually: $100,687
Hawaii
- Total expenditures: $107,746
- 20% comfort buffer: $21,549
- Cost of a comfortable retirement annually: $129,296
If you’re looking for a comfortable retirement at the lowest yearly cost, then you should consider settling down in West Virginia or Oklahoma. Those are the only two states in the GBR study where you can retire comfortably on less than $60,000 a year.
Methodology: GOBankingRates analyzed the following expenditures of Americans aged 65 and older, based on data sourced from the Bureau of Labor Statistics’ (BLS) most recent Consumer Expenditure Survey for retirees release for the full year of 2023: (1) annual spending on groceries, defined as “food at home;” (2) annual spending on housing, defined as “shelter;” (3) annual spending on transportation, defined as “gasoline, other fuels and motor oil” and “other vehicle expenses;” (4) annual spending on healthcare; (5) annual spending on utilities, defined as “utilities, fuels and public services;” and (6) overall average annual expenditures. Spending estimates were adjusted to the state level by multiplying each cost category by its corresponding cost of living index score in each state, sourced from the Missouri Economic Research and Information Center’s 2024 Q2 cost of living index data. After calculating total consumption expenditures, an additional (7) savings buffer was calculated by assuming that total expenditures consume 80% of ones budget, with 20% left over for savings. GOBankingRates then combined factors (6) and (7) and factored it out by 20 (assuming 20 years of retirement) to give retirement savings needed to live comfortably. All data was collected on and up to date as of Oct. 1st, 2024.
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This article originally appeared on GOBankingRates.com: 3 States Where a Comfortable Retirement Will Cost You More Than $100K Annually
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