7 States Where a Comfortable Retirement Will Cost You Less Than $62K Annually

DenisTangneyJr / Getty Images/iStockphoto

Commitment to Our Readers

GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.

20 Years
Helping You Live Richer

Reviewed
by Experts

Trusted by
Millions of Readers

A “comfortable” retirement means different things to different people, depending on factors like preferred lifestyle and individual health needs. But as a general rule, retiring comfortably means being able to pay all your bills on time, with money left over for fun and additional savings.

The two main drivers of a comfortable retirement are the size of your nest egg and your location. If you’ve saved up at least $1 million for retirement — which puts you in pretty elite company, according to a CNBC survey — then you may be in a decent position to retire comfortably in some locations.

But if you’ve saved closer to the median of about $200,000 for Americans ages 65 to 74, then you’ll need an affordable retirement destination. For seniors who want to retire in the United States, that likely means settling down in the South or Midwest.

Here’s a look at seven states where a comfortable retirement will cost less than $62,000 annually.

Also see three states where you’ll need $100,000 per year to retire comfortably.

A Comfortable Retirement

A recent GOBankingRates analysis delved into the average retirement income you would need to live comfortably throughout the U.S. The analysis focused on how much money you can expect to spend on the following five items in all 50 states:

• Housing
• Groceries
• Utilities
• Healthcare
• Transportation.

Next, the annual retirement income needed to cover these living expenses was calculated, with an additional 20% to account for the “comfortable” aspect of retirement. In only seven of the 50 states was it determined that you could retire comfortably on less than $62,000 a year.

Here’s a look at those seven states and some of the key data, listed from least to most income needed.

West Virginia

• Total annual expenditures: $48,492
• 20% comfort buffer: $9,698
• Cost of a comfortable retirement annually: $58,190

Oklahoma

• Total annual expenditures: $49,996
• 20% comfort buffer: $9,999
• Cost of a comfortable retirement annually: $59,995

Kansas

• Total annual expenditures: $50,517
• 20% comfort buffer: $10,103
• Cost of a comfortable retirement annually: $60,620

Alabama

• Total annual expenditures: $50,980
• 20% comfort buffer: $10,196
• Cost of a comfortable retirement annually: $61,176

Mississippi

• Total annual expenditures: $51,096
• 20% comfort buffer: $10,219
• Cost of a comfortable retirement annually: $61,315

Arkansas

• Total annual expenditures: $51,211
• 20% comfort buffer: $10,242
• Cost of a comfortable retirement annually: $61,453

Missouri

• Total annual expenditures: $51,211
• 20% comfort buffer: $10,242
• Cost of a comfortable retirement annually: $61,453

Where To Avoid

For those who want to know what places to avoid if you don’t expect to have much retirement income, here are the five states where it costs the most to retire comfortably, ranked in order of annual costs.

• Hawaii: $129,296 a year needed to retire comfortably
• California: $100,687 a year needed to retire comfortably
• Massachusetts: $100,201 a year needed to retire comfortably
• Alaska: $86,868 a year needed to retire comfortably
• New York: $85,480 a year needed to retire comfortably

Methodology: GOBankingRates analyzed the following expenditures of Americans aged 65 and older, based on data sourced from the Bureau of Labor Statistics’ (BLS) most recent Consumer Expenditure Survey release for the full year of 2023: (1) annual spending on groceries, defined as “food at home”; (2) annual spending on housing, defined as “shelter”; (3) annual spending on transportation, defined as “gasoline, other fuels and motor oil” AND “other vehicle expenses”; (4) annual spending on healthcare; (5) annual spending on utilities, defined as “utilities, fuels, and public services”; and (6) overall average annual expenditures. Spending estimates were adjusted to the state level by multiplying each cost category by its corresponding cost of living index score in each state, sourced from the Missouri Economic Research and Information Center’s 2024 second quarter cost of living index data. After calculating total consumption expenditures, an additional (7) savings buffer was calculated by assuming that total expenditures consume 80% of one’s budget (50% for necessities and 30% for discretionary spending), with 20% left over for savings. GOBankingRates then combined factors (6) and (7) and factored it out by 20 (assuming 20 years of retirement) to give (8) retirement savings needed to live comfortably. All data was collected on and up to date as of Oct. 1, 2024.

Share This Article: