Asheville, North Carolina – When planning for retirement, one must consider their financial well-being. The cost of retiring comfortably can vary depending on location and age. Factors such as housing, groceries, utilities, transportation, and healthcare contribute to the amount needed for retirement savings. According to a recent study by GOBankingRates, the average amount required for a comfortable 25-year retirement range from about a million dollars to two million dollars across different states.
New data from the Bureau of Labor Statistics’ 2022 Consumer Expenditure Survey, the Social Security Administration, and the Missouri Economic Research and Information Center was reviewed in the study. The analysis factored in the costs of living across different states, providing insights into the financial implications of retirement.
The study found that in 16 states, the minimum amount needed for a 25-year retirement was $1 million. Hawaii had the highest requirement at over $2 million. Massachusetts followed with a retirement savings requirement of $1.6 million. Other states that require at least $1 million include California, New York, and Alaska.
Contrastingly, West Virginia was found to have the lowest requirement for retirement savings at just over $692,000. Additionally, the study found that differences in retirement costs can also exist at the city level. Retirees in San Jose and San Francisco, California would need nearly $2.5 million and $2.8 million, respectively, for a comfortable retirement. On the other hand, McAllen, Texas was ranked as the cheapest city for retirement, where a retiree needs slightly over $569,000 for a comfortable retirement.
Along with state and city differences, the study found that the rising inflation rate continues to pose challenges for retirement. The Annual Cost of Living report showed that overall prices rose 3.4% from the previous year, exceeding the 3.1% annual inflation rate in November. The report highlighted the continuing psychological and financial effects of inflation, with prices still rising and exceeding pre-inflation levels by 17%.
The disparities between living costs across states and cities have sparked conversations about retirement planning. Some economists and political analysts have expressed concern about the financial burdens, particularly as the United States aims to recover from significant economic disruptions. As people adjust to the changing economic landscape, the conversation around retirement savings continues to gain momentum.