How Long Will $500,000 in Retirement Savings Last in Your State?
Saving for retirement isn’t easy, and it’s tough to know how much you’ll need. The average American has a net worth of $79,952, according to a 2021 report by Credit Suisse.
Advisers often recommend that by age 65 you should have between eight times and 11 times your desired income in retirement savings. So, if you make $50,000 a year, you’ll need around $500,000. If that seems like a daunting task, you’re not alone. Some 75% of Americans fear they can not save enough money to retire.
What about Social Security? Will it be enough? Can you rely on it even being there when you retire? To add to the challenge, the money you withdraw from your retirement accounts is taxed, depending on the type of account. Inflation, too, can affect your retirement plans.
Is $500,000 enough? It depends on how much you spend, and that depends a lot on where you live. This list looks at how long a half million in savings will last in every state.
To determine how long $500,000 will last in each state, personal finance site GOBankingRates used Bureau of Labor Statistics’ 2020 Consumer Expenditure Survey data to find the national average annual expenditures for people 65 and older, then factored in each state’s cost of living index score for 2021 from the Missouri Economic Research and Information Center. Then they divided $500,000 by each state’s average annual expenditures estimate. They also factored in the average annual cost of groceries, housing, utilities, transportation, and healthcare for people 65 and older in each state using MERIC cost of living indexes.
The figures may seem depressing: $500,000 is a lot of money to most Americans and six or seven years isn’t very long to make it last. Financial planners often advise that you plan to live into your 90s—that’s easily 30 years if you retire at 65. That’s why they often recommend you invest the money, which will likely make it last longer. If you had a 4% annual investment return, you could withdraw $20,000 a year without much affecting your balance.
Here’s how long $500,000 will last in every state.
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