Retirees need a savings exceeding $1 million in these states to cover minimum living costs
Pedestrians in the North Beach neighborhood of San Francisco, California, US, on Thursday, June 20, 2024. The bull market in US stocks has fattened retirement accounts for millions of older Americans, with many at the top of the income ladder having
OAKLAND, Calif. - With uncertainties tied to the future of Social Security and a volatile stock market hitting 401(k)s, concerns are growing among many Americans who fear they won't have enough money to survive on their retirement savings.
A new survey may not allay some of those concerns, as figures suggest you need to be a millionaire in 15 states to get by as a retiree.
And for those who want to live out their golden years in the Golden State, not surprisingly, it will cost you more to retire in California than in most other states.
The findings by personal finance website GOBankingRates ranked California as the third most expensive state to retire in.
By the numbers:
Researchers calculated the minimum savings needed in each state and found that the cost of living for a retiree over 25 years in California adds up to almost $1.6 million, only slightly behind Massachusetts.
Hawaii was ranked the most expensive, with more than $2.2 million needed for retirees to get by.
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GoBankingRates said that the concern about meeting retirement needs is particularly severe among those over the age of 50.
Cost factors
The site's finance experts also stressed that costs fluctuate widely, and location is a major factor.
"How much you should have saved for retirement depends on a few key factors, including your location," GOBankingRates researchers said, adding, "Where you choose to spend your golden years is critical. Living in California will look drastically different to your wallet than, say, living in Kansas will."
Kansas vs. California:
GOBankingRates found retirees in Kansas would need a minimum of about $727,532 saved, with an annual cost of living estimated at about $52,276. After Social Security, it's about $29,101.
That’s compared with California's cost of living of $87,006. After Social Security, the annual cost is estimated to be $63,832.
Basic retirement costs
The minimum savings retirees would need were based on costs for basic essentials like housing, food, transportation, and healthcare.
GOBankingRates came up with its figures by using data from the U.S. Bureau of Labor Statistics to identify each state’s annual cost of expenditures for a retired person, aged 65 and older, and multiplying the expenditures by the cost-of-living index in each state.
To determine the amount a retired person would need to save, researchers then divided each state’s annual expenditures (minus the annual average Social Security income) by 4%, the percentage widely used as the guideline for how much retirees should draw down their savings each year to pay for living expenses.
States where retirees need minimum savings exceeding $1M
- Hawaii $2,228,205
- Massachusetts $1,612,313
- California $1,595,789
- Alaska $1,280,333
- New York $1,272,822
- Maryland $1,152,648
- New Jersey $1,142,133
- Vermont $1,139,128
- Washington $1,136,124
- New Hampshire $1,112,089
- Connecticut $1,107,583
- Rhode Island $1,106,080
- Maine $1,104,578
- Oregon $1,103,076
- Arizona $1,095,565
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