Saving for retirement isn’t easy, and it’s hard to know how much you’ll need. The average net worth of an American citizen is $79,952, according to a 2021 report by Credit Suisse.
Advisers often recommend that by age 65, you should have between eight and 11 times the desired income in retirement savings. So, if you were making $50,000 a year, you would need about $500,000. If this seems like a daunting task, you’re not alone. About 75% of Americans fear they can’t save enough money for retirement.
What about Social Security? is it enough? Can you count on it even when you retire? To add to the challenge, the money you withdraw from your retirement accounts is taxable, depending on the type of account. Inflation can also affect your retirement plans.
Is $500,000 enough? It depends on how much you spend, and it depends a lot on where you live. This list looks at how long it will last to save half a million in each state.
To determine how long $500,000 would take in each state, personal finance website GOBankingRates used data from the Bureau of Labor Statistics’ 2020 Consumer Expenditure Survey to find the national average annual spending for people 65 and older, then factored in a cost-of-living index score per state for 2021 from the Missouri Center for Economic Research and Information. They then divided $500,000 by estimating each state’s average annual expenses. They also factored in the average annual cost of groceries, housing, utilities, transportation, and health care for people 65 and older in each state using MERIC cost-of-living indices.
The numbers can seem depressing: $500,000 is a lot of money to most Americans and six or seven years isn’t too long to make it last. Financial planners often advise that you plan to live into your 90s – that easily means 30 if you retire at 65. That’s why they often recommend investing money, which will make it last longer. If you have a 4% annual ROI, you can withdraw $20,000 annually without affecting your balance much.
Here’s how long $500,000 will take in each state.
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Hawaii
5 years, 5 months and 8 days
Annual expenses: $91,970
New York
7 years, 1 month, 1 day
Annual expenses: $70,512
California
7 years, 4 months, 22 days
Annual expenses: $67,657
Massachusetts
7 years, 9 months, 11 days
Annual expenses: $64,232
Oregon
8 years, 0 months, 29 days
Annual expenses: $61,900
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Alaska
8 years, 3 months, 7 days
Annual expenses: $60,473
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Maryland
8 years 5 months and 19 days
Annual expenses: $58,998
Connecticut
8 years, 7 months and 20 days
Annual expenses: $57,856
Rhode Island
8 years, 11 months and 19 days
Annual expenses: $55,763
Vermont
8 years, 11 months and 4 days
Annual expenses: $55,667
>> Plus: How Long Will $1 Million in Retirement Savings Last in 50 US Cities
New Jersey
9 years, 1 month, 12 days
Annual expenses: $54,811
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9 years, 1 month, 19 days
Annual expenses: $54,716
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Washington
9 years, 5 months and 1 day
Annual expenses: $53,098
New Hampshire
9 years 6 months and 22 days
Annual expenses: $52,289
Delaware
9 years, 8 months and 26 days
Annual expenses: $51,338
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Nevada
9 years, 10 months, 20 days
Annual expenses: $50,576
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Colorado
9 years, 11 months and 23 days
Annual expenses: 101 50 dollars
Arizona
10 years, 2 months, 6 days
Annual expenses: $49 102
Pennsylvania
10 years, 2 months, 31 days
Annual expenses: $48,768
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Idaho
10 years, 3 months, 15 days
Annual expenses: $48,578
Virginia
10 years, 3 months, 26 days
Annual expenses: $48,435
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South Dakota
10 years, 4 months, 25 days
Annual expenses: $48,055
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Montana
10 years, 5 months and 9 days
Annual expenses: $47,912
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Florida
10 years, 5 months and 23 days
Annual expenses: $47,722
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Minnesota
10 years, 6 months, 4 days
Annual expenses: $47,579
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Utah
10 years, 7 months and 10 days
Annual expenses: 47 103 dollars
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North Dakota
10 years, 8 months and 12 days
Annual expenses: $46,723
Wisconsin
10 years, 10 months, 24 days
Annual expenses: $45,866
North Carolina
10 years, 11 months and 23 days
Annual expenses: $45,533
Illinois
11 years, 1 month, 19 days
Annual expenses: $44,867
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Wyoming
11 years, 1 month, 19 days
Annual expenses: $44,867
Nebraska
11 years, 2 months, 21 days
Annual expenses: $44,582
South Carolina
11 years, 2 months, 24 days
Annual expenses: $44,534
Kentucky
11 years, 3 months, 15 days
Annual expenses: $44,296
Louisiana
11 years, 3 months, 19 days
Annual expenses: $44,248
Texas
11 years, 4 months, 29 days
Annual expenses: $43,820
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Ohio
11 years, 6 months, 5 days
Annual expenses: $43,440
Michigan
11 years, 6 months, 5 days
Annual expenses: $43,440
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Arkansas
11 years, 6 months, 23 days
Annual expenses: $43,249
Indiana
11 years, 7 months, 6 days
Annual expenses: $43,107
West Virginia
11 years, 7 months, 10 days
Annual expenses: $43,059
Yes
11 years, 8 months, 8 days
Annual expenses: $42,774
Missouri
11 years, 8 months, 12 days
Annual expenses: $42,726
Tennessee
11 years, 9 months, 22 days
Annual expenses: $42,345
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Georgia
11 years, 9 months, 29 days
Annual expenses: 42,250 dollars
Alabama
11 years, 11 months and 16 days
Annual expenses: $41,822
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Oklahoma
11 years, 11 months and 16 days
Annual expenses: $41,822
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kansas
12 years, 1 month, 23 days
Annual expenses: 41,156 dollars
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Mississippi
12 years, 7 months, 13 days
Annual expenses: $39,633
See the detailed methodology for this list on GoBankingRates.com.
