Americans’ ability to save for retirement has gotten more difficult in the past few years. Inflation and high interest rates have strained wallets for many and left little to set aside. Meanwhile, some seniors have felt the need to go back to work — or unretire — to be able to get by. Yet, where you live also affects how much savings you will need. For instance, in Tennessee, while you will still need a sizable amount of money for your nest egg, the state is among the 10 cheapest to retire, according to a GOBankingRates study.
Consider this: Only 56% of Americans say they are actively saving for retirement, according to a TD Bank survey. Meanwhile, a startling 20% of Americans have returned to work because of high costs of living, and a third of retirees are considering returning back to work for one to three shifts per week, according to a recent Indeed Flex survey of 1,000 U.S. seniors.
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Yet, it’s notable that the amount of retirement savings you will need to live comfortably depends on where you live. Here’s why the amounts differ significantly and how much it takes to retire in Tennessee.
Also see the best and worst place to retire in every state.
Differences Among Locations
The difference in costs for retirement by location is mostly due to cost of living, which varies geographically.
The GOBankingRates study found that in Tennessee, for instance, you will need $744,310 to retire. This places the state in the ninth spot in terms of the least expensive states to live in retirement. In contrast, you will need the most money to retire in Hawaii, with more than $2 million needed. Alternatively, you will need the least in West Virginia, with $650,356.
On the other hand, some costs are lower in Tennessee than in West Virginia, such as utilities and groceries, according to the study.
According to Rene Lacad, an entrepreneur and content creator, the findings about Tennessee’s ranking for retirement savings requirements are “a pleasant surprise,” especially given the general perception of high retirement expenses.
“Tennessee offers a retirement that’s kinder to the wallet compared to states like Hawaii,” he said. For those who are considering retiring in Tennessee, he said, it is “an attractive choice for retirees who are mindful of their finances.”
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Costs in Tennessee
Here’s the breakdown of why you’ll need almost $750,000 plus Social Security to retire in Tennessee.
Annual Cost of Living
The annual cost of living in Tennessee is $52,210.
In contrast, the annual cost of living is $107,657 in Hawaii and $48,451 in West Virginia.
Cost of Living After Social Security Income
After accounting for an average annual Social Security income of $22,437, the cost of living in Tennessee is $29,772.
Alternatively, the cost of living after Social Security stands at $85,220 in Hawaii and $26,014 in West Virginia.
Annual Cost of Groceries
In Tennessee, you’ll spend about $4,658 per year in groceries.
You’ll spend even more in Hawaii and West Virginia, with groceries costing $5,953 and $4,778, respectively, per year.
Annual Cost of Healthcare
Healthcare costs will run you about $6,801 per year in Tennessee.
In Hawaii, the cost is $9,199 per year, and in West Virginia, it’s $7,638.
Annual Cost of Housing
You’ll spend $9,681 on housing in Tennessee per year.
Hawaii’s annual housing costs are significantly higher at $36,619, while they’re slightly lower in West Virginia at $6,711.
Annual Cost of Utilities
The cost of utilities for one year will run you about $3,753.
This stands at $7,472 in Hawaii and $4,003 in West Virginia.
Annual Cost of Transportation
The annual transportation cost in Tennessee is $4,404.
In Hawaii, it’s $6,861, and in West Virginia, it’s $4,587.
Methodology: In order to find out exactly how much you need to retire in your state, GOBankingRates found the annual cost of expenditures for a retired person in each state by multiplying the 65 year and older expenditures from the Bureau of Labor Statistics’ 2022 Consumer Expenditure Survey by the cost of living index for each state from the Missouri Economic Research and Information Center’s 2024 Q1 cost of living series. To find how much money a retired person would need to save, we divided each state’s annual expenditures, minus the annual Social Security income as sourced from the Social Security Administration’s Monthly Statistical Snapshot, June 2024, by .04, assuming drawing down savings by 4 percent each year to pay for living expenses. All data was collected and is up to date as of July 17, 2024.
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This article originally appeared on GOBankingRates.com: 7 Reasons You Need About $750K (Plus Social Security) To Retire in Tennessee
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