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Retirement in the USA: how much money do I have to save and which states cost the most?

Retirement is not cheap, although one is enjoying their golden years the bills won’t stop. Here’s where your retirement savings will go further.

Where and how to retire in comfort
Tracy WilcoxGetty

Exactly how much you need to have tucked away in order to retire in comfort is a much-debated issue. There are many formulas, but it comes down to how you want to spend your golden years and what the cost of living is where you choose to retire.

Getting an early start on your retirement fund can save you a last-minute scramble to secure the necessary nest egg that you will need to live on a fixed income. Currently though, around 26 percent of non-retirees have no retirement plan at all. Here’s a look at the present financial savings you’ll need.

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How much do you need to save for retirement?

Vital factors to consider when planning for retirement include cost of living, income and life expectancy when deciding how much to save. When setting out your savings plan you will also need to consider how old you are and when you plan to retire or are forced to do so due to circumstances beyond your control, think loss of job or declining health. For life expectancy and future health Merrill Edge recommends looking at your family history to give you a ballpark idea.

Those that plan to rely on their Social Security benefits accumulated over their years of work can expect them to replace around 40% of the of their pre-retirement earnings. Even if Congress manages to secure that benefits aren’t cut for future recipients, this will most likely be insufficient to live comfortably. Especially if you plan to take advantage of your extra time to do those things that you dreamed of doing but never had the time while working.

A word of caution for those that plan to continue working in retirement so that they can save less. Merrill Edge cites an annual survey from the Employee Benefit Research Institute which has consistently found far fewer American workers actually continue working in retirement than expect to. The latest from 2021 reported that 72 percent planned to do so while only 30 percent of retirees said they were.

Depending on where you retire savings will go further

A rough idea of what you will need to have saved to retire in 2022 to live comfortably in the US is around $905,000 on average according to World Population Review. However, affordability varies widely across the US meaning a little less than $618,000 will suffice in Mississippi but you’ll need almost three times as much to retire in Hawaii.

The analysis found that the five states where you will need the most to retire are Hawaii, California, New York, Alaska, and Oregon. At the other end of the spectrum were Mississippi, the cheapest, Tennessee, Alabama, Oklahoma and Arkansas

Least amount of savings needed for retirement


Highest amount of savings needed for retirement

3.New York$1.41m

With some slight differences this tracked well with what GOBankingRate estimates as the highest and lowest amounts you need upon retirement. However, other factors need to be taken into consideration besides how much you have saved. You will also want to consider the affordability of where you retire, the quality of life and access to healthcare.

WalletHub ranks the five best places on these factors as Florida, Virginia, Colorado, Delaware and Minnesota. Coming in as the worst places to retire are New Jersey, Mississippi, New York, Kentucky and Oklahoma.