How Long $500K Will Last in Retirement in Each State
Can you get a whole retirement from half a million dollars?
How Long Will a $500K Retirement Nest Egg Last?
When you’re trying to gauge how long $500,000 will last you, where you choose to live is crucial due to the difference in cost-of-living expenses across the nation.
For example, as far as location goes, Mississippi ranks as the top choice for making $500,000 last as long as possible. According to the data, however, $500,000 in Mississippi will last only about three months longer than it would in Kansas, which is the second-best place to retire with $500,000.
If Hawaii, California or New York are your dream retirement destinations, $500,000 won’t last nearly as long. These states are considered some of the worst choices to retire in with that size of a nest egg as savings. For example, if you were to move to Hawaii instead of Mississippi, you would get about seven and a half fewer years, on average, out of your retirement savings.
But location isn’t the only thing to consider. You also need to decide how you’ll spend your money, and weigh that against the average cost-of-living expenses in your chosen state. Perhaps you plan on sharing a home with someone else who can afford to pay half of the expenses. Or maybe transportation costs aren’t an issue for you because you plan to use a free transit system.
Whatever the case, to make your $500,000 nest egg go the distance, it’s important to choose a retirement destination that will best serve your specific needs at the most affordable cost.
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Methodology: In order to find how long $500,000 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’ Consumer Expenditure Survey data covering July 2018 through June 2019. 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 Q1 of 2020 from the Missouri Economic Research and Information Center. Finally, GOBankingRates found (3) how many years $500,000 will last in each state by dividing $500,000 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 $500,000 will last the longest and No. 50 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. All data was collected on and up to date as of June 22, 2020.
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