Retirement in America now costs $1 million or more in 15 states, according to a new analysis by GOBankingRates. The study calculates annual living expenses for retirees using data from the Bureau of Labor Statistics and a local cost-of-living index for every state. To determine how much savings a retiree would need, the analysis considers annual living costs for states, minus Social Security income, and divides the remainder by 4%.
The priciest state is Hawaii, where you’ll need $2.2 million in savings, and can expect annual expenses of $110,921 for a comfortable retirement. On the other hand, the cheapest retirement state among those requiring less than $1 million is West Virginia, where you’ll need an estimated $712,913 in savings with an annual budget of $50,954. Many Americans consider $1 million in savings the new benchmark for a happy retirement.
A 2024 report from Schroders said the average saver believes they will need to retire comfortably. Northwestern Mutual’s data also suggests a similar expectation.
Retirement savings costs uptick in states
However, millions of Americans retire with little or no retirement savings, and many of them continue to work part-time jobs to make ends meet. The 4% rule suggests retirees should spend around 4% of their savings per year. Local living costs seem to be swaying some retirees as they decide where to retire.
According to recent data, Florida and South Carolina are the most popular destinations for retirees who move. Neither state requires a million dollars in retirement savings, according to the new analysis. Don’t have a million dollars?
Here are a few popular retirement states with lower costs:
Colorado: $981,803 to retire; $61,709 annual cost of living
Florida: $977,296 to retire; $61,529 annual cost of living
New Mexico: $834,590 to retire; $55,821 annual cost of living
North Carolina: $905,192 to retire; $58,645 annual cost of living
Virginia: $948,755 to retire; $60,387 annual cost of living
West Virginia: $712,913 to retire; $50,954 annual cost of living
These estimates provide a snapshot of how much you might need to save for retirement depending on where you plan to live in the United States. Before making any financial decisions, it’s important to consider your personal circumstances and consult with a financial advisor.