Planning for Retirement? These Are the Most & Least Expensive States to Retire In

Planning for retirement is a crucial step toward financial security. The amount you need to retire comfortably varies widely depending on your location, with key factors such as housing costs, healthcare, taxes, and general cost of living playing a role.

While some states allow retirees to live well with less than $700,000 in savings, others require well over $1 million to maintain a comfortable lifestyle.

National Averages & General Retirement Guidelines

A general rule of thumb suggests that retirees should aim to replace 70% to 80% of their pre-retirement income to maintain their standard of living.

This means that someone earning $70,000 per year before retirement would need around $49,000 to $56,000 per year post-retirement. However, this number fluctuates greatly depending on location.

The U.S. Bureau of Labor Statistics (BLS) reports that the average annual expenditures for retirees are around $50,220 per year, which includes housing, food, healthcare, transportation, and leisure.

The Most Expensive States for Retirement

If you plan to retire in one of these states, expect higher costs across the board:

1. Hawaii

• Estimated Retirement Savings Needed: Over $2 million
• Key Factors: High housing and food costs due to geographic isolation.

2. California

• Estimated Retirement Savings Needed: $1.5 million+
• Key Factors: High real estate prices, higher state taxes, expensive healthcare.

3. Massachusetts

• Estimated Retirement Savings Needed: $1.3 million+
• Key Factors: High healthcare costs, high taxes, expensive cost of living.

The Most Affordable States for Retirement

For retirees looking for affordability, these states offer lower costs without sacrificing quality of life:

1. Mississippi

• Estimated Retirement Savings Needed: $650,000
• Key Factors: Low housing costs, below-average healthcare costs, no Social Security tax.

2. Oklahoma

• Estimated Retirement Savings Needed: $680,000
• Key Factors: Low cost of living, affordable housing, mild taxes.

3. Kansas

• Estimated Retirement Savings Needed: $700,000
• Key Factors: Low property taxes, affordable healthcare, lower utility costs.

Key Factors Affecting Retirement Costs

1. Housing Costs

• Housing remains the largest expense for most retirees.
• States like California, Hawaii, and New York have much higher housing prices.
• States like Mississippi and Arkansas offer more affordable housing.

2. Healthcare Expenses

• Healthcare costs can consume 15-20% of retirement income.
• States like Alaska and Massachusetts have the highest healthcare costs.
• Missouri and North Dakota have some of the lowest healthcare costs.

3. Taxes on Retirement Income

• Some states tax Social Security benefits (e.g., California, Vermont).
• Some states do not tax pensions (e.g., Florida, Nevada, Texas).

4. General Cost of Living

• Food, transportation, and utilities vary widely.
• States like Hawaii and California have higher costs for everyday goods.
• Midwestern and Southern states tend to have lower costs.

How to Plan for a Comfortable Retirement

1. Assess Your Desired Lifestyle

Decide if you want to travel frequently, downsize your home, or relocate to a low-cost state.

2. Use Retirement Planning Tools

Leverage online calculators from the Social Security Administration (SSA Calculator) to estimate your benefits.

3. Consider State Tax Policies

Choose a state that aligns with your financial goals by checking tax rates on pensions and Social Security.

4. Account for Inflation

Ensure your savings adjust for inflation, which typically rises 2-3% annually.

5. Consult a Financial Advisor

Get expert guidance on investment strategies, Medicare options, and estate planning.

Conclusion

The amount needed for a comfortable retirement varies greatly based on where you live. States like Hawaii and California demand significant savings, while states like Mississippi and Kansas offer affordable retirement options.

Before retiring, consider cost of living, healthcare, taxes, and housing costs to make informed financial decisions. Use resources like the Social Security Administration and AARP for additional guidance.

By planning wisely, you can retire comfortably in the state that best suits your financial situation and lifestyle.

This article has been carefully fact-checked by our editorial team to ensure accuracy and eliminate any misleading information. We are committed to maintaining the highest standards of integrity in our content.