Blog #271 What You Need to Retire…by State (see listing)
How much do you need to retire? A state-by-state breakdown
Retirees on fixed incomes feel the strain most, with location playing a major role in financial comfort
Americans of all ages are facing affordability concerns, with retirees on fixed incomes in particular feeling the strain – though where they choose to live in their golden years has a bigimpact on their ability to live comfortably.
A study by MoneyLion analyzed the monthly savingsneeded to retire comfortably across states after accounting for the national average expenses for retired households, as well as whether the retiree would have Social Security income and when the retiree began saving for retirement.
The report found that the state with the highest annual cost of living for retirees was Hawaii, with an annual cost of $90,752 for necessities and $181,505 for a comfortable cost of living based on the analysis. After accounting for Social Security income, MoneyLion estimated the annual cost of living as a retiree in Hawaii was $156,610.
To save enough money to afford that cost of living in retirement, a person would have to save $5,800 a month over 45 years at age 20 before retiring at age 65, or $7,458 a month if they saved for 35 years starting at age 30, with Social Security income. Those figures rise to $6,722 and $8,643 a month, respectively, without Social Security.
RETIREMENT 'MAGIC NUMBER' JUMPS AS AMERICANS GROW ANXIOUS ABOUT THEIR FINANCIAL FUTURES
California had the second-highest annual cost of living, which MoneyLion estimated at $73,387 for necessities or $121,879 for the comfortable cost of living metric that accounts for Social Security income. The monthly savings would be $4,514 when starting at age 20 or $5,804 starting at age 30 with Social Security, while those would rise to $5,436 and $6,989 without Social Security.
"Two of the biggest expenses a retiree needs to look into are the state income taxesand real estate property taxes that will factor into your budget. It's also why so many people are moving out of places like California and New York, because, beyond the cost of living, it's very expensive from a taxation perspective," Ted Jenkin, managing partner at Exit Wealth Advisors, told FOX Business.
The lowest cost state analyzed in the report was West Virginia, which had an annual necessities cost of living of $29,059 with the comfortable cost of living at $58,117 per year, or $33,223 after accounting for Social Security income. The monthly savings target for West Virginia would start at $1,230 for those age 20 or $1,582 at age 30 with Social Security income, and those would rise to $2,152 and $2,767, respectively.
Other states that have been popular relocation destinations were the middle ground of the analysis in terms of cost of living.
Florida's was $44,170 for necessities or $88,339 for the comfortable cost of living, declining to $63,445 with Social Security income in the mix. Savings targets were $2,350 starting at 20 or $3,021 at 30, with Social Security to supplement those savings.
Tennessee and Texas were each slightly above the $38,300 mark for their necessities cost of living, with the comfortable cost of living just over $76,000 or more than $51,300 with Social Security.
"There's a reason beyond the weather for why retirees are moving from high-tax states," Thomas Aiello, National Taxpayers Union vice president of federal affairs, told FOX Business. "Places like Florida, Texas, and Tennessee offer no state income tax, no estate ("death") tax, relatively low property taxes, and a policy environment generally more favorable to taxpayers. That can result in thousands of dollars in annual tax savings compared to New York, California or Illinois."
Best and worst states for retirement affordability revealed | Fox Business
Necessities Cost of Living by State or Territory
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