- Financial advisors typically start with a recommendation that each person should save $1 million for retirement — but it’s much easier to save for retirement in some states than others.
- Thanks to cost-of-living differences, savings stretch much further in some cities — and some of these places don’t collect income taxes, either.
- According to influencer Amy Blacklock, plan out what you want to accomplish in retirement and then calculate how much you need to retire.
Retirement. A time of life many of us dream about and save for. Is our 401k and IRA funded annually? Is our debt paid off? Have we started writing our travel bucket lists? Are we taking golf lessons? Check, check, check and check.
In the midst of all our planning, however, many of us wonder if we are saving enough just to survive our retirement years, let alone be happy and fulfill all our retirement dreams.
The Magic Number
You’ve probably heard at least one financial advisor say $1 million is the magic number to have saved for retirement. According to a new GOBankingRates study, that same $1 million will last plenty long in retirement — or not nearly long enough. It will last you anywhere from 11 to 26 years, depending on the state you live in. For someone living in and retiring to Mississippi — the least expensive state — this is good news. For those in Hawaii — the most expensive state — not so much.
The annual cost of living for someone 65 and older range from $38,435 (Mississippi) to $85,243 (Hawaii), with a mean of $47,788. My home state of Michigan, ranking only two places behind Mississippi, appears to be a great state to retire in, with the annual cost of living coming in at $40,586.
A nest egg of $1 million should last 24 years, 7 months and 14 days in Michigan. But my husband and I are both still many years away from the age of 65. And we would like to retire well before we get there. Plus, we don’t plan on staying in Michigan year-round and might even relocate entirely.
While Michigan is a great state with four distinct seasons, we want to see the other 30 or so states we haven’t visited. And our retirement dreams include spending winter months in warmer states instead of shoveling snow and scraping ice off our windshields.
In the popular retirement state of Florida, $1 million will last us 22 years and 29 days when spent on housing, utilities, groceries, transportation and healthcare, according to the study. The same $1 million spent in Colorado, Nevada or California will only get us 21 years, 19.8 years or 15.5 years of retirement, respectively.
Planning for Splurges
But what about dreams of traveling to Australia, Europe or Asia? Buying that big beautiful boat to sail around the Caribbean? Taking those skydiving and golf lessons? Or booking the whale-watching Alaskan cruise for the whole family? And what about charitable missions or paying for our grandchildren’s educations?
For us, a $1 million nest egg, coupled with any Social Security benefits, would undoubtedly afford us a comfortable retirement starting in our mid-sixties. But it might not fulfill all our dreams of financial independence and early retirement by age 55, with years of both adventurous and slow travel, hours of fun on the water and the links, and contributions to our communities and families.
What about you? Do you know what it will take for you to be happy in your retirement years? How far will your nest egg go in your desired city or state? Take the time now to do your homework. Be sure to consider not only the basic cost of living, but also all the costs for your bucket-list items and retirement dreams.
Click through to learn about the cheapest places to retire.
More in Retirement Planning:
- Best and Worst States to Retire Rich
- What a Comfortable Retirement Will Cost You in Every State
- 12 Essential Money Tips for Every Phase of Life
Methodology: GOBankingRates found the number of years and months that $1 million will last during retirement by multiplying the annual expenditures for someone 65 and older from the Bureau of Labor Statistics by the cost of living for each state from the Missouri Economic Research and Information Center.