Affordability issues seem to be affecting Americans across different age groups, but retirees on fixed incomes are especially feeling the pressure. The location where they choose to spend their retirement years plays a significant role in their comfort level.
A study by MoneyLion examined the average spending patterns of retiree households nationwide, figuring out how much monthly savings are essential for a comfortable retirement in each state. This research also factored in whether retirees receive Social Security benefits and when they began saving for retirement.
The findings highlighted Hawaii as the state with the steepest annual living costs for retirees, reaching $90,752 for essentials and $181,505 for additional comforts. When including Social Security income, the estimated annual retirement cost in Hawaii is about $156,610.
In order to financially prepare for retirement expenses in Hawaii, one would need to save approximately $5,800 each month for 45 years, starting at age 20 and retiring at age 65. However, if one waits until age 30 and leverages Social Security, the monthly saving target would jump to about $7,458, which seems pretty daunting.
Without Social Security, those savings requirements increase to around $6,722 and $8,643 monthly, respectively.
California comes in second for high living costs, where essentials amount to about $73,387 and comforts cost around $121,879 annually, considering Social Security income. To retire comfortably there, the monthly savings would need to be about $4,514 starting at age 20, tapering to $5,804 starting at age 30. Without Social Security, these figures rise to $5,436 and $6,989.
Ted Jenkin, a managing partner at Exit Wealth Advisors, pointed out how crucial it is for retirees to think about state income and property taxes when budgeting. He mentioned that many people are leaving states like California and New York not just because of living costs, but also due to high tax burdens.
On the other end of the spectrum, West Virginia stands out as the least expensive state for retirees, with an annual cost of $29,059 for essentials and $58,117 for additional comforts. When factoring in Social Security, the total is approximately $33,223.
Those planning to retire in West Virginia will find the monthly savings requirements manageable, starting at around $1,230 for a 20-year-old with Social Security and $1,582 for a 30-year-old. These figures increase to $2,152 and $2,767, respectively, without Social Security.
Meanwhile, popular states for retirees like Florida and Texas fall somewhere in the middle. In Florida, for example, essential living costs around $44,170, rising to $88,339 for comfortable living, or about $63,445 adjusted for Social Security. Personally, I had a savings goal of $2,350 at age 20 and $3,021 at age 30, which seems doable with Social Security.
As for Tennessee and Texas, their living expenses hover just above $38,300 for essentials, while overall living costs exceed $76,000, or slightly above $51,300 with Social Security.
Thomas Aiello from the National Taxpayers Union mentioned that many retirees are drawn to states like Florida and Texas because of their tax structures. These locations generally do not impose a state or estate tax, leading to substantial annual savings compared to places like New York or California.
Cost of Living for Essentials by State
- Alabama $32,898
- Alaska $51,363
- Arizona $46,768
- Arkansas $31,352
- California $73,387
- Colorado $54,908
- Connecticut $51,261
- Delaware $45,339
- District of Columbia $68,709
- Florida $44,170
- Georgia $40,122
- Hawaii $90,752
- Idaho $48,727
- Illinois $37,350
- Indiana $34,510
- Iowa $32,977
- Kansas $34,426
- Kentucky $32,559
- Louisiana $31,232
- Maine $47,028
- Maryland $49,007
- Massachusetts $68,020
- Michigan $34,160
- Minnesota $41,513
- Mississippi $30,012
- Missouri $34,659
- Montana $48,500
- Nebraska $35,802
- Nevada $47,750
- New Hampshire $53,835
- New Jersey $57,702
- New Mexico $38,999
- New York $51,337
- North Carolina $40,995
- North Dakota $37,327
- Ohio $34,404
- Oklahoma $32,090
- Oregon $53,486
- Pennsylvania $36,964
- Rhode Island $53,169
- South Carolina $37,995
- South Dakota $39,301
- Tennessee $38,314
- Texas $38,124
- Utah $52,736
- Vermont $46,067
- Virginia $46,086
- Washington $59,997
- West Virginia $29,059
- Wisconsin $39,851
- Wyoming $41,527
