Americans are retiring later than they did 30 years ago, but even so the average American retires when they reach 61 according to a 2022 Gallup poll. That is despite the fact that they can’t start claiming Social Security benefits until they’ve reached age 62, and doing so that young comes with a penalty.
Without a job to provide income, retirees will be relying on money put aside in savings, retirement accounts as well as Social Security benefits to maintain their lifestyle. And they should expect to have enough for well over a decade. The CDC reported in December that average life expectancy in the US was 76.4 years at the end of 2021.
Exactly how much you need to have tucked away in order to retire in comfort is a much-debated issue. There are many formulas, but it comes down to how you want to spend your golden years and what the cost of living is where you choose to retire.
This is how much money you need to retire in each US state in 2024
Vital factors to consider when planning for retirement include cost of living, income and life expectancy when deciding how much to save. When setting out your savings plan you will also need to consider how old you are and when you plan to retire or are forced to do so due to circumstances beyond your control, think loss of job or declining health. For life expectancy and future health Merrill Edge recommends looking at your family history to give you a ballpark idea.
Depending on where you live you will most likely need to have a bigger nest egg as the cost of living varies widely across the nation. An analysis by GOBankingRates using 2022 data from the Bureau of Labor Statistics on consumer expenditures and then indexed with 2023 third quarter data from the Missouri Economic Research and Information Center broke down what would be necessary on an annual basis in each state.
The calculation took into account the amount that those 65 and older would need to cover food, health care, housing, transportation and utilities. Those amounts ranged from less than $700,000 in West Virginia to over $2 million in Hawaii over a 25-year period. Here’s a look at the amount needed to retire in each state in 2024.
25 states with the lowest retirement savings needed
| State | Annual retirement expenditures | Minimum needed for 25 years of retirement | |
|---|---|---|---|
| 1 | West Virginia | $49,261 | $692,354 |
| 2 | Mississippi | $50,128 | $714,036 |
| 3 | Oklahoma | $50,186 | $715,482 |
| 4 | Kansas | $50,533 | $724,154 |
| 5 | Alabama | $50,995 | $735,718 |
| 6 | Missouri | $51,053 | $737,163 |
| 7 | Arkansas | $51,169 | $740,054 |
| 8 | Iowa | $51,978 | $760,291 |
| 9 | Tennessee | $52,267 | $767,518 |
| 10 | Louisiana | $52,441 | $771,854 |
| 11 | Georgia | $52,557 | $774,745 |
| 12 | Michigan | $52,614 | $776,191 |
| 13 | Nebraska | $52,614 | $776,191 |
| 14 | Indiana | $52,672 | $777,636 |
| 15 | Illinois | $53,077 | $787,754 |
| 16 | South Dakota | $53,077 | $787,754 |
| 17 | Ohio | $53,308 | $793,536 |
| 18 | Texas | $53,771 | $805,100 |
| 19 | Kentucky | $53,886 | $807,990 |
| 20 | Wyoming | $53,886 | $807,990 |
| 21 | New Mexico | $54,291 | $818,109 |
| 22 | North Dakota | $54,522 | $823,890 |
| 23 | South Carolina | $54,522 | $823,890 |
| 24 | Minnesota | $54,580 | $825,336 |
| 25 | Pennsylvania | $54,811 | $831,118 |
25 states with the most retirement savings needed
| State | Annual retirement expenditures | Minimum needed for 25 years of retirement | |
|---|---|---|---|
| 1 | Hawaii | $103,610 | $2,051,077 |
| 2 | Massachusetts | $85,571 | $1,600,097 |
| 3 | California | $78,864 | $1,432,425 |
| 4 | New York | $73,140 | $1,289,325 |
| 5 | Alaska | $73,082 | $1,287,880 |
| 6 | Washington | $66,895 | $1,133,217 |
| 7 | New Hampshire | $66,838 | $1,131,771 |
| 8 | Vermont | $66,433 | $1,121,653 |
| 9 | Maryland | $66,375 | $1,120,208 |
| 10 | Oregon | $66,317 | $1,118,762 |
| 11 | Connecticut | $65,855 | $1,107,199 |
| 12 | Rhode Island | $64,756 | $1,079,735 |
| 13 | Maine | $64,005 | $1,060,944 |
| 14 | New Jersey | : $63,773 | $1,055,162 |
| 15 | Arizona | $63,600 | $1,050,826 |
| 16 | Colorado | $61,807 | $1,006,017 |
| 17 | Utah | $60,420 | $971,326 |
| 18 | Montana | $59,610 | $951,090 |
| 19 | Virginia | $58,627 | $926,517 |
| 20 | Nevada | $58,454 | $922,181 |
| 21 | Florida | $58,396 | $920,736 |
| 22 | Delaware | $58,281 | $917,845 |
| 23 | Idaho | $57,240 | $891,827 |
| 24 | North Carolina | $55,621 | $851,354 |
| 25 | Wisconsin | $55,158 | $839,790 |
Social Security benefits will most likely be insufficient to cover all costs
Those that plan to rely on their Social Security benefits accumulated over their years of work can expect them to replace around 40% of the of their pre-retirement earnings. Even if Congress manages to secure that benefits aren’t cut for future recipients, this will most likely be insufficient to live comfortably. Especially if you plan to take advantage of your extra time to do those things that you dreamed of doing but never had the time while working.
A word of caution for those that plan to continue working in retirement so that they can save less. An annual survey from the Employee Benefit Research Institute has consistently found far fewer American workers actually continue working in retirement than expect to. The latest from 2023 reported that 73 percent planned to do so while only 30 percent of retirees said they were.
