A comfortable retirement doesn’t come cheap.
While you may hear stories of people retiring on as little as $2,000 a month, the reality for most of us is likely to be much different. Indeed, according to data from the Bureau of Labor Statistics, the average over-65 household will spend nearly $50,000 a year. The biggest chunk of that is on housing at more than $16,000 a year, but health care is high on the list too (about $6,600), as is transportation ($7,500) and groceries ($3,815). (Of course, people who have paid off their mortgage can dramatically slash this amount, and there are other ways to save as well.)
What’s more, the annual spending for the over-65 set in some states is likely to be far higher, according to an analysis by personal finance site GoBankingRates.com. The analysis looked at consumption expenditures of Americans aged 65 and older for items like groceries, housing (includes utilities and housekeeping), transportation, health care and more; it then adjusted those figures to every state’s itemized cost of living index, and added an additional 20% savings buffer (so you can retire comfortably).
Hawaii topped the list of the most expensive states: To retire comfortably there, you will need to spend upwards of $117,000 a year, the analysis found. That means you’ll want to have socked away more than $2.3 million, assuming you’re retired for roughly two decades, the analysis revealed. Hawaii topped the list because nearly everything — from food to transportation to health care to utilities — is expensive there; it typically ranks in the top 10 most expensive states for each of these things. Retiring in Washington, D.C. won’t come cheap either — especially considering its high housing and grocery costs — with a price-tag of more than $100,000 a year.
Meanwhile, people hoping to spend their golden years in many parts of the South and Midwest can retire well on about $55,000 or less a year. Mississippi is the cheapest place to retire comfortably at about $53,000 a year, thanks in part to having the cheapest housing and groceries of any state; here you can live well with a nest egg of about $1 million. You’ll also be able to retire comfortably in Oklahoma, Arkansas and Missouri on less than $55,000 a year.
Annual spending to ensure a comfortable retirement
District of Columbia: $100,879.90
New Hampshire: $67,686.76
New Jersey: $75,861.18
New Mexico: $57,468.72
New York: $84,035.62
North Carolina: $58,211.85
North Dakota: $61,122.44
Rhode Island: $75,861.19
South Carolina: $60,874.73
South Dakota: $60,998.59
West Virginia: $58,645.34
Of course, these are statewide figures, so it may be that certain cities in the state where it’s pricier to retire in than others. For example, someone looking to retire in San Francisco is probably going to spend more than a person in other spots in the state (you can look up the cost of living for different cities here.)