5 Least and Most Expensive States for ‘Retiring Comfortably’

Yet another iteration of “best and worst states to retire” is out, and this one focuses on ranking the states in terms of how expensive they are to “retire comfortably.”

As the cost of living and life expectancy vary considerably by state, 24/7 Wall Street used the average annual spending of Americans 65 and older—adjusted at the state level for cost of living and life expectancy—to calculate an estimate of what it will cost to retire comfortably in each state.

All data used in the ranking came from the Bureau of Economic Analysis, the Bureau of Labor Statistics, and the Institute for Health Metrics and Evaluation, an independent global health research center at the University of Washington.

Calculations are based on the average annual expenditure for U.S. residents 65 years and older in 2018—$50,860—according to the BLS Consumer Expenditure Survey. 24/7 Wall Street adjusted that figure by local cost of living, using state-level data on regional price parity in 2017 from the BEA, and multiplied the result by 115% in order to reflect greater financial stability and comfort in retirement.

Full methodology and a complete alphabetical listing for all 50 states can be found here.

Retirees might want to think twice about moving to one of those “most affordable” states, however, as a key reason they rank among the most affordable is a because those states suffer from residents having a shorter lifespan—which can translate to spending less in retirement.

The most expensive states for a comfortable retirement, conversely, have some of the highest life expectancies.

What follows are quick snapshots of the five least expensive states for a comfortable retirement, based on the 24/7 Wall Street rankings, followed by the five most expensive states for a comfortable retirement.

5 Least Expensive States

1. Mississippi

Est. total retirement spending: $885,290

Avg. cost of living: 14% less than avg. (2nd lowest)

Avg. monthly homeownership for seniors: $342 (3rd lowest)

With the nation’s second-lowest cost of living, and third lowest old-age life expectancy, Mississippi is the least expensive state in which to retire according to 24/7 Wall Street’s rankings. Life expectancy in Mississippi at age 65 is over 17 years to 82.6 years, and living comfortably over those years—based on average annual spending of 65-and-older households—will cost an estimated total of $885,290. Average housing costs for 65-and-older households with a mortgage in Mississippi are $968 a month, less than housing costs for the same age group without a mortgage in a more expensive state, like New Jersey.

2. Arkansas

Est. total retirement spending: $893,051

Avg. cost of living: 14.7% less than avg. (the lowest)

Avg. monthly homeownership for seniors: $355 (4th lowest)

Arkansas is one of only 13 states where residents can retire and live comfortably while spending less than $1 million. This is due to the state’s low cost of living and low life expectancy. Goods and services in Arkansas are 14.7% less expensive than they are nationwide, on average, and those who are 65 can expect to live to 82.9, on average, below the 84.4-year national average life expectancy at 65.

3. Alabama

Est. total retirement spending: $894,461

Avg. cost of living: 13.6% less than avg. (3rd lowest)

Avg. monthly homeownership for seniors: $357 (6th lowest)

In Alabama, residents need an average of about $894,000 to live out their retirement years in relative comfort—below the national average of about $1.1 million. Retirees in Alabama need less retirement savings because of both lower average life expectancy and lower cost of living.

Life expectancy at age 65 in the state is 17.7 years, nearly two years below the national average. Additionally, goods and services are about 14% less expensive on average in Alabama than they are nationwide.

4. West Virginia

Est. total retirement spending: $898,683

Avg. cost of living: 12.2% less than avg. (5th lowest)

Avg. monthly homeownership cost for seniors: $317 (the lowest)

While West Virginia and Kentucky actually tie—exactly—on total retirement spending and cost of living, 401k Specialist will give it the No. 4 spot over Kentucky based on the next criteria, being average monthly homeownership cost for seniors as West Virginia is the lowest in the country at a paltry $317.

A comfortable retirement in West Virginia will cost an estimated $898,683, well below the $1.1 million national average. The state’s low cost of living—12.2% less than the national average—partially explains why. Still, the lower total retirement cost is also attributable to West Virginia’s low life expectancy. Life expectancy for 65-year-old residents in the state is just 17.5 years to 82.5 years, about two years below the national average.

5. Kentucky

Est. total retirement spending: $898,683

Avg. cost of living: 12.2% less than avg. (5th lowest)

Avg. monthly homeownership cost for seniors: $372 (8th lowest)

Kentucky is one of only five states where a comfortable retirement costs an average of less than $900,000. In addition to the state’s relatively low cost of living, another reason retirement costs are low is due to a lower than average life expectancy. Kentucky residents are expected to live an average of about 17 and a half years past 65, about two years less than the national average.

5 Most Expensive States

1. Hawaii

Est. total retirement spending: $1,485,123

Avg. cost of living: 18.1% more than avg. (the highest)

Avg. monthly homeownership for seniors: $518 (16th highest)

While beautiful beaches and the warm climate make it an appealing state for many Americans to retire in, it is also widely known to be the most expensive state in the country for retirement. This is once again reaffirmed in 24/7 Wall Street’s rankings. Goods and services in Hawaii are 18.1% more expensive than they are nationwide, on average. Life expectancy at 65 is also longer than average in Hawaii. As a result, retirees in the state can expect to need nearly $1.5 million to live out their golden years in comfort, well above the $1.1 million national average.

2. New York

Est. total retirement spending: $1,402,473

Avg. cost of living: 16.4% more than avg. (2nd highest)

Avg. monthly homeownership for seniors: $768 (5th highest)

No surprise New York is one of the most expensive states to live in the country. It also has the third-longest life expectancy at 65. As a result, the state has the second-highest estimated total spending for a comfortable retirement, at nearly $1.4 million over 20.6 years.

3. California

Est. total retirement spending: $1,397,174

Avg. cost of living: 15.4% more than avg. (3rd highest)

Avg. monthly homeownership for senior citizens: $567 (11th highest)

California has one of the highest costs of living of any state in the country—as well as one of the highest life expectancies. Goods and services are 15.4% more expensive in California on average than they are nationwide, and average life expectancy at age 65 in the state is 85.7 years, nearly a year and a half longer than national average.

As a result, for a comfortable retirement in the state, residents would need an average of about $1.4 million in savings, more than in every other state apart from Hawaii and New York.

4. New Jersey

Est. total retirement spending: $1,367,800

Avg. cost of living: 15.2% more than avg. (4th highest)

Avg. monthly homeownership for senior citizens: $986 (the highest)

Life expectancy at age 65 in New Jersey is over 20 years to 85.3 years, nearly a year longer than average. Additionally, goods and services are about 15.2% more expensive than they are on average nationwide. As a result, retirement is expensive in the Garden State. New Jersey residents looking to live comfortably should expect to spend about $1.4 million after age 65, more than in all but three states.

The high costs likely help explain why so many retirement-age New Jersey residents continue to work. Among 65 and older households in the state, 42.1% are still earning salaries or wages, well above the national average of 38%.

5. Massachusetts

Est. total retirement spending: $1,276,832

Avg. cost of living: 9.7% more than avg. (5th highest)

Avg. monthly homeownership for senior citizens: $794 (3rd highest)

The higher expenses in retirement in Massachusetts are attributable in part to the higher cost of living in the state. Median homeownership costs in Massachusetts for 65 and older households without a mortgage are $794 and $1,842 with a mortgage, the third- and fourth-highest among states, respectively. Overall, goods and services are 9.7% more expensive across Massachusetts than they are, on average, nationwide.

MORE 2020 STATE RETIREMENT RANKINGS:

• Most and Least Expensive States for Retirement 2020
• Best and Worst State to Retire in 2020
• Got $1 Million for Retirement? Move Here, Not There