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Understanding Retirement Costs: How Much Will You Really Need?

Building up your retirement savings is essential, but the amount you’ll need can vary significantly depending on where you live. According to a recent analysis by GOBankingRates, the annual cost of living can differ by over $71,000 between states in the U.S.

This variation means that planning for retirement involves more than just saving a set amount; it’s crucial to consider the cost of living in your chosen state.

The Highest and Lowest Costs of Living for Retirement

When it comes to the highest average retirement expenses, Hawaii takes the lead, requiring an estimated $129,296 per year for a comfortable retirement. This figure is more than double the amount needed in West Virginia, where retirees average only $58,190 annually.

The analysis calculated these costs for Americans aged 65 and older by using estimates from the Bureau of Labor Statistics. They considered essential expenses like food, shelter, transportation, healthcare, and utilities. To ensure a comfortable lifestyle, they added a 20% cash buffer to the total expenses.

Why Are Costs So Different?

The significant differences in retirement costs across states largely stem from high housing prices. In states like Hawaii, California, and Massachusetts, where housing is scarce, the annual retirement expenses can exceed six figures. This reality highlights the importance of understanding your local market when planning for retirement.

Overall, the median annual cost of retiring comfortably in the U.S. is around $66,870. Fortunately, there are still 20 states where you can retire on or under $65,000 annually. These states are generally more rural and located in the South, where the cost of living is typically lower.

States Where You Can Retire on $65,000 or Less

Here’s a list of states where the annual retirement expenses are $65,000 or less, organized in alphabetical order:

Alabama

• Total expenditures:  $50,980
• 20% comfort buffer: $10,196
• Cost of a comfortable retirement annually: $61,176

Arkansas

• Total expenditures: $51,211
• 20% comfort buffer: $10,242
• Cost of a comfortable retirement annually: $61,454

Georgia

• Total expenditures: $52,832
• 20% comfort buffer: $10,566
• Cost of a comfortable retirement annually: $63,398

Illinois

• Total expenditures: $53,989
• 20% comfort buffer: $10,798
• Cost of a comfortable retirement annually: $64,787

Indiana

• Total expenditures: $52,253
• 20% comfort buffer: $10,451
• Cost of a comfortable retirement annually: $62,704

Iowa

• Total expenditures: $52,137
• 20% comfort buffer: $10,427
• Cost of a comfortable retirement annually: $62,565

Kansas

• Total expenditures: $50,517
• 20% comfort buffer: $10,103
• Cost of a comfortable retirement annually: $60,620

Kentucky

• Total expenditures: $53,584
• 20% comfort buffer: $10,717
• Cost of a comfortable retirement annually: $64,301

Louisiana

• Total expenditures: $53,295
• 20% comfort buffer: $10,659
• Cost of a comfortable retirement annually: $63,954

Michigan

• Total expenditures: $53,121
• 20% comfort buffer: $10,624
• Cost of a comfortable retirement annually: $63,745

Mississippi

• Total expenditures: $51,096
• 20% comfort buffer: $10,219
• Cost of a comfortable retirement annually: $61,315

Missouri

• Total expenditures: $51,211
• 20% comfort buffer: $10,242
• Cost of a comfortable retirement annually: $61,454

Nebraska

• Total expenditures: $54,047
• 20% comfort buffer: $10,809
• Cost of a comfortable retirement annually: $64,856

New Mexico

• Total expenditures: $54,163
• 20% comfort buffer: $10,833
• Cost of a comfortable retirement annually: $64,995

North Dakota

• Total expenditures: $53,700
• 20% comfort buffer: $10,740
• Cost of a comfortable retirement annually: $64,440

Oklahoma

• Total expenditures: $49,996
• 20% comfort buffer: $9,999
• Cost of a comfortable retirement annually: $59,995

South Dakota

• Total expenditures: $54,047
• 20% comfort buffer: $10,809
• Cost of a comfortable retirement annually: $64,856

Tennessee

• Total expenditures: $52,253
• 20% comfort buffer: $10,451
• Cost of a comfortable retirement annually: $62,704

Texas

• Total expenditures: $53,468
• 20% comfort buffer: $10,694
• Cost of a comfortable retirement annually: $64,162

West Virginia