Hardly the news we were hoping for. New analysis indicates that Americans in nearly every state will fall far short in meeting their economic needs in retirement, according to the National Institute on Retirement Security.
The State Financial Security Scorecards research project gauges the retirement readiness of future retirees in each of the fifty states and the District of Columbia in three key areas: anticipated retirement income; major retirement costs like housing and healthcare; and labor market conditions for older workers.
The research finds that the lowest ranking states include:
- California due to low potential retirement income, low workplace retirement plan access and high retiree costs.
- Florida due to high retiree costs, low wages for older workers and low workplace retirement plan access.
- South Carolina due to low potential retirement income and low labor market scores.
The highest-ranking states include Wyoming, Alaska, Minnesota and North Dakota due to their relatively strong labor markets and lower retiree costs. However, each of these states with a favorable outlook is weak in terms of potential retirement income for retirees.
For example, North Dakotans have an average defined contribution retirement account balance of only $27,700 – nowhere near the level of accumulated savings required to ensure self-sufficiency through retirement.
The retirement savings shortfall has become increasingly important at the state level because policymakers know it can have a deep impact on strained state budgets,” said Diane Oakley, National Institute on Retirement Security executive director. “The largest source of retirement income for most Americans is Social Security, but this critical federal program typically provides only a part of the income working families need to be self-sufficient. State programs must fill the gap and help Americans meet their most basic needs for food, shelter and medicine. The good news is that some states like California and Illinois already have enacted legislation to reduce future retiree poverty by encouraging workers to save today.”
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