Many Americans spend their working life saving for retirement – but most remain woefully underprepared. The typical American between the ages of 55 and 64 has just $120,000 in a retirement savings account, according to analysis of Federal Reserve data by the accounting firm PwC. For those with no retirement savings, the average monthly Social Security payment is only $1,694 – not nearly enough to cover basic living expenses, let alone luxuries like travel and dining out.
Perhaps not surprisingly, Americans are increasingly likely to work past retirement age out of financial necessity. Data from the Bureau of Labor Statistics shows that more than 26% Americans between ages 65 to 74 were still working in 2020, and by 2030, that share is projected to rise to 32%. For comparison, only 17.5% of Americans that age were working in 1995, and the percentage was even lower before that.
For those who do not want to work past age 65 and still be financially secure, there is a certain amount of money they can expect to need. This amount should account for expenditures throughout retirement and can come from retirement savings or other sources of income. (These are the best places to retire in each state.)
Using data from the BLS, the Bureau of Economic Analysis, and the National Center for Health Statistics, 24/7 Wall St. determined estimated average expenditures throughout retirement in each state. We adjusted the BLS’s calculation of annual expenditures for 65 years and older residents in 2021 by the cost of living in each state and multiplied that figure by 18.5, the life expectancy at 65, to provide the amount of money the average retiree would spend throughout retirement. We also accounted for inflation and added 15% for a financial cushion.
The typical 65 year old American can expect to spend just over $1.3 million in retirement, based on these calculations. Due to differences in cost of living, however, this amount varies from $1.1 million to over $1.5 million, depending on the state. While some of these expenses are covered by Social Security, other income sources, such as investment income, a pension plan, or savings are necessary in every state.
In many Southern states, as well as several states in the Midwest, goods and services cost well below the national average – in some cases over 10% or more. Conversely, in certain states along the West Coast and in the Northeast, living expenses can be anywhere from 6% to 13% higher than the national average. (This is the most expensive city to live in in each state.)
Click here to see what it costs to retire comfortably in every state.
Click here to read our detailed methodology.
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