Retirees with $1 Million Savings May Run Out of Money Quicker in These States

Picture this: you’ve worked hard your entire life, diligently saving for retirement, and you’ve finally amassed that coveted $1 million nest egg. You’re ready to kick back, relax, and enjoy your golden years without a care in the world.

But hold on just a minute—a new study reveals that even a million bucks might not be enough to sustain you through retirement, depending on where you call home.¹

Let’s look at the details and see what this means for your retirement plans.

The States Where Your Savings Disappear Fastest

According to a recent study by GoBankingRates, retirees in certain states could see their $1 million savings evaporate faster than an ice cube in the Sahara. In Hawaii, for example, that impressive nest egg might only last about 9 years and 7 months.

California isn’t much better, with retirees potentially exhausting their funds in just 12 years and 8 months. Other states where retirement savings might not stretch as far include New York, the District of Columbia, and Massachusetts, with savings lasting between 11 and 13 years. 

The culprit? Sky-high living expenses, including housing, utilities, transportation, groceries, and healthcare costs. In Miami, Florida, for instance, the annual cost of living is $74,107.86, meaning $1 million would only last about 13.5 years.

Where Your Million Goes Further

But it’s not all doom and gloom. Retirees in states like Texas, Georgia, Alabama, and others in the Southeast and Midwest can breathe a bit easier. In these areas, $1 million could potentially last 17 to 20 years, thanks to more manageable living costs.

West Virginia takes the cake, with retirees’ savings estimated to last over 20 years. In Mississippi, essential costs total around $44,000 annually, allowing a $1 million nest egg to support an individual for nearly 23 years. 

So, if you’re looking to stretch your retirement dollars, you might want to consider trading in the bright lights of the big city for a more affordable locale.

What This Means for Your Retirement Planning

This study serves as a wake-up call for anyone planning their retirement. It’s not just about how much you save but also where you choose to spend your golden years. While $1 million might seem like a fortune, it’s clear that in some areas, it might not be enough to maintain your desired lifestyle for the long haul.

So what can you do? Start by taking a hard look at your retirement goals and crunching the numbers. Consider factors like cost of living, taxes, and healthcare expenses in your desired retirement destination. You might need to save more than you initially thought or even consider relocating to a more affordable area.

It’s also crucial to have a solid financial plan in place, one that accounts for inflation, market fluctuations, and unexpected expenses. Longevity can have an even greater impact on retirement funds than today’s record-high inflation.

Working with a financial advisor can help you navigate these complex waters and ensure your retirement savings last as long as needed.

What You Can Do

Some key strategies to maximize your retirement savings include:

1. Take advantage of employer-sponsored retirement plans and company matches
2. Utilize backdoor Roth IRAs to increase savings
3. Consider relocating to states with no income tax
4. Explore solo 401(k) or SEP plans if self-employed
5. Use Health Savings Accounts (HSAs) as supplemental retirement funds
6. Make catch-up contributions if over the age of 50
7. Diversify your retirement income sources to protect against risks

While $1 million is still a significant sum, it’s not a one-size-fits-all solution for retirement. By understanding the impact of location on your savings and planning accordingly, you can help ensure that your golden years are indeed golden, no matter where you call home.

Source:

1. GoBankingRates