The Average 401(k) Is Worth $300K at Retirement Age — How Long It Would Last in These 10 States
Although many financial advisors suggest that Americans should shoot for a $1 million nest egg, the truth is that the average 401(k) is only worth about $300,000 at retirement. Even in the most inexpensive states, this is only enough to last only about six years. But what’s important to remember is that this doesn’t take into account investment gains after retirement, or the assistance of Social Security. By investing that $300,000, the money would likely last longer, while the average Social Security check of $1,792.37 would also extend savings. But in terms of simply spending down the money, GOBankingRates used data from the Bureau of Labor Statistics’ 2021 Consumer Expenditure Survey and the Missouri Economic Research and Information Center to determine states where $300,000 would last the longest. Results are presented here in reverse order.
10. Tennessee
- # of years, months and days $300,000 will last: 6 years, 4 months, 10 days
Annual housing expenses of $8,590.05 are relatively high in terms of the top 10 states on this list but with total annual expenditures averaging just $47,135.46 — about 10% less than the national average — Tennessee ranks low enough to crack the top 10.
9. Arkansas
- # of years, months and days $300,000 will last: 6 years, 4 months, 21 days
The combination of annual grocery expenses of just $4,231.68 and transportation costs of $3,705.01 per year help keep total annual expenditures low in Arkansas. Overall, state residents pay about 10% less per year for all of their costs than other Americans.
8. Missouri
- # of years, months and days $300,000 will last: 6 years, 4 months, 25 days
Housing expenditures run a bit hot in Missouri when compared with other low-cost states, but overall, residents still pay more than 10% less than average Americans in terms of total expenditures.
7. Iowa
- # of years, months and days $300,000 will last: 6 years, 4 months, 25 days
Iowa is yet another state that owes its low total costs primarily to inexpensive housing, which runs about 73% of the national average at just $7,624.06 annually. However, costs in all other basic categories, from transportation and healthcare to utilities and groceries, all still come in at less than their respective national averages.
6. West Virginia
- # of years, months and days $300,000 will last: 6 years, 5 months, 9 days
West Virginia has the lowest average annual housing expenditure in the United States, at just $7,198.19 per year. That’s more than 30% below the national average of $10,387. Overall, costs in the state are just about 89% of the national average.
5. Georgia
- # of years, months and days $300,000 will last: 6 years, 5 months, 9 days
Overall, costs in Georgia run about 89% of the national average, the same as in West Virginia, but those expenses are distributed differently. Georgia benefits in particular from low costs for utilities and transportation, although housing is also just 76.5% of the national average.
4. Alabama
- # of years, months and days $300,000 will last: 6 years, 6 months, 8 days
Alabama is another low-cost state in which housing runs about 30% below the national average. But retirees in the state also benefit from low transportation expenditures, which are almost 10% below national norms.
3. Kansas
- # of years, months and days $300,000 will last: 6 years, 7 months, 6 days
Both housing and grocery expenses are particularly low in Kansas, running 30% and 5% below national averages, respectively. In fact, the average annual housing expense of just $7,270.90 is among the very lowest in the entire nation.
2. Oklahoma
- # of years, months and days $300,000 will last: 6 years, 7 months, 13 days
Annual expenses average just $45,310.53 in Oklahoma, nearly $7,000 below the U.S. average. Not factoring in other variables, the average 65-year-old can expect a $300,000 nest egg to last until age 72.
1. Mississippi
- # of years, months and days $300,000 will last: 6 years, 8 months, 8 days
By many measures, Mississippi is the lowest-cost state in America, so there’s no surprise that it’s the one in which $300,000 will last the longest. The cost of everything from utilities to housing to transportation and groceries helps stretch retirement nest eggs, although healthcare expenditures aren’t the lowest in the country.
Methodology: In order to find where $300,000 in a 401(k) will last across the country, GOBankingRates first found (1) the national average annual expenditures for people 65 and older, sourced from the Bureau of Labor Statistics’ 2021 Consumer Expenditure Survey data. Then, GOBankingRates created (2) state-level annual expenditure estimates by multiplying the national figure by each state’s overall cost of living index score for the 2Q 2023 from the Missouri Economic Research and Information Center. Finally, GOBankingRates found (3) how many years $300,000 will last in each state by dividing $300,000 by each state’s average annual expenditures estimate. All 50 states and the District of Columbia were then ranked with No. 1 being the state where $300,000 will last the longest and No. 51 being the state where it will run out most quickly. GOBankingRates provided supplemental information on the average annual cost of groceries, housing, utilities, transportation, and healthcare for people 65 and older in each state by again using MERIC’s cost of living indices for each category to factor out national estimates from the CES. This study assumes the $300,000 in the 401(k) is the retirees only form of retirement income/savings. All data was collected on and up to date as of September 6, 2023.
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