Having enough savings to afford a comfortable retirement has been an issue for a long time now. In fact, some economists have recently estimated that millennials will face even a harder challenge and should save almost half of their income if they wish to retire at 65. However, the good news is that some parts of the country are friendlier on the wallet than others when it comes to retirement. Our newest visualization shows the average amount that a person will need to retire comfortably in each state, as well as the average retirement age by state.
Use this visualization
- The average retirement age in the U.S. is 64 years old. At the state level, the average retirement age varies from 61 years old in Alaska and West Virginia to 67 years old in Washington, D.C.
- The average life expectancy nationwide is 78.6. Among the states, Mississippi has the lowest life expectancy at 74.5, and Hawaii has the highest life expectancy at 81.5.
- Nationwide, the average yearly expenses for someone over the age of 65 is $51,624. Mississippi has the lowest annual expenses at $44,758, while Hawaii has the highest annual expenses at $99,170.
- Taking into account life expectancy as well as yearly expenses, the average savings required for retirement in the U.S. is $904,452. States in the Northeast and the West require the highest savings for retirement, at over $1 million, while states in the South and the Midwest require the lowest savings.
The yearly figure needed for retirement comes from the Bureau of Labor Statistics 2018 Consumer Expenditure Survey. The expenditures considered were those of the age group “65 years or more,” since this is the usual age range for retirement. To account for a comfortable retirement, we added an extra 20% on those expenses, and then adjusted by each state’s cost of living index as published by the MERIC. To obtain the total amount required for a comfortable retirement, we used IHME-based life expectancy figures published by National Geographic. Then, by subtracting the average retirement year published on MoneyTalks to the previous figure and multiplying it by the state-adjusted yearly expenditures, we obtained the total amount required for a comfortable retirement.
The map of the U.S. synthesizes and illustrates all of the above data. Each state is colored a shade of pink, with darker shades corresponding to higher savings needed for retirement. Each state also has a purple circle with the average retirement age in that state, with larger circles corresponding to older retirement ages.
Top 5 Most Expensive States for Retirement
1. Hawaii: $1,844,556, average retirement at 66 years old
2. California: $1,456,286, average retirement at 64 years old
3. New York: $1,408,121, average retirement at 64 years old
4. Alaska: $1,341,805, average retirement at 61 years old
5. Oregon: $1,335,752, average retirement at 63 years old
Bottom 5 Least Expensive States for Retirement
1. Mississippi: $617,661, average retirement at 63 years old
2. Tennessee: $660,870, average retirement at 64 years old
3. Alabama: $712,832, average retirement at 62 years old
4. Oklahoma: $723,859, average retirement at 62 years old
5. Arkansas: $728,010, average retirement at 62 years old
Not surprisingly, states with higher life expectancies and higher costs of living (like Hawaii) require the highest retirement savings. However, regardless of where they live, most Americans are not saving enough in order to fund their retirement. Some think that the solution could be making saving mandatory, with the government stepping in to divert a certain percentage of an individual’s earnings to a savings or retirement account. Others believe taxing the rich more is the way to go in order to strengthen Social Security, which provides the primary source of retirement income for many Americans. In addition, focusing new policies on developing affordable housing for the elderly could alleviate financial pressures for retirees.
What steps are you taking to save for your retirement, and what policies do you think should be put in place to help Americans retire comfortably? Please let us know in the comments.