Americans Work Longer and Retire Later in These 3 States
Written by
Nicole Spector
Edited by
Chris Cluff
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Retiring in the U.S. is incredibly expensive — if you want to live comfortably in your golden years. Exactly how much does it cost? Alas, that’s an impossible question to answer with precision, as it depends on where you live and the scope of your needs and wants.
It also depends on how old you are when you retire — but a ballpark estimate of how much money you’ll need, according to a recent survey by Charles Schwab, is $1.8 million.
Increasingly, Americans are working longer (some past 75) in order to build up their nest eggs for retirement or, in some cases, simply because they’re living longer, healthier lives than in the past.
But it depends on where you live and what your life is like. Interestingly, there appears to be a locational pattern. According to new data from Annuity.org, folks in Hawaii, Massachusetts and South Dakota are working longer and retiring later, with 66 being the average age of retirement in these locales.
Why is this? Let’s find out some possible reasons and explore the cost of living in these areas, as well as look into whether or not people in these states should consider relocating to states where earlier retirement is more common.
Hawaii
Hawaii is hands down the most expensive state to retire in. It also boasts the highest cost of living in the U.S. — 84% higher than the national average, according to Payscale. Such steep costs seem to be the principal reason that residents of this state are working longer and retiring later.
“People in Hawaii are likely putting more of each paycheck towards their daily expenses than the average American, meaning there is less money left over for things like retirement savings,” said Jenn Schell, financial researcher and writer for Annuity.org. “No doubt Hawaii’s tropical weather makes it a fun place to retire, but many locals might find that retirement is getting further and further away as the high cost of living continues to eat away at their savings.”
Massachusetts
The cost of living in Massachusetts is also on the high end — 50% higher than the national average, according to RentCafe. The pressure to make ends meet and manage these steep costs is probably why people are working longer and retiring later.
“The state’s high cost of living is primarily attributed to expensive housing, particularly in metropolitan areas like Boston,” said Nathan Brunner, CEO at Salarship. “Healthcare costs in Massachusetts also surpass the national average, creating additional financial pressure for retirees.”
South Dakota
South Dakota is a tricky one when it comes to this discussion. Why is a state with a cost of living that is 6% lower than the national average, according to RentCafe, seeing its population working longer and retiring later? It could be a cultural thing.
“From what I understand, South Dakota has an especially hard-working culture,” said Todd Stearn, founder and CEO of The Money Manual. “It could be that residents enjoy working at their jobs more than the average person elsewhere.”
Mind you, inflation also could be playing a huge role — not just in South Dakota, but everywhere.
“Overall, in these three states and across the U.S., retirees are facing continued higher inflation that has lasted longer than anyone wanted,” said Maura Schauss, CFP, SVP and financial advisor at Wealth Enhancement Group. “As a result, people are watching their expenses stay high, trying to recover from an insufficient stock and bond market in 2022, and just overall worried about having to dip into their retirement assets sooner than planned to cover higher expenses. Throw in the current geopolitical issues, and nerves are even more rattled, leading people to work a little bit longer than planned.”
Should You Move If You Live in One of These 3 States?
One resounding question that you can take away from all this information is, “If you live in one of these states where retiring tends to happen later, should you relocate to a state that boasts earlier retirement stats?”
It’s a great question, but it’s not so simple to answer.
“In states like Alaska and West Virginia, with an average retirement age of 61, economic conditions, state benefits and the nature of predominant occupations could influence earlier retirements,” said Andrew Latham, CFP, managing editor at SuperMoney. “Those in Alaska may retire earlier due to the physically demanding nature of predominant jobs like fishing or logging. In West Virginia, the earlier retirement age could be influenced by the challenges of its coal-dependent economy and associated health issues.”
So, yes, you could move to a state where earlier retirement is more common, but you must bear in mind that every state has its “issues,” so to speak. Plus, determining where to retire isn’t solely a financial decision.
“Factors like family ties, personal preferences and healthcare needs play crucial roles,” Latham said. “Thus, while the age demographics offer a glimpse into regional trends, the individual choice of when and where to retire remains deeply personal.”
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