Most and Least Expensive States for Retirement 2020

We here at 401k Specialist always at least mildly curious when somebody ranks cities, states or countries in terms of best or worst places to retire—particularly when it is focused on how far retirement savings will go compared to other places.

The latest ranking comes courtesy of howmuch.net, which mapped out how much is needed to retire comfortably in all 50 states and D.C. Naturally, we wondered what states the study found to be most expensive and least expensive, which is what we’ll focus on here.

Some parts of the country are obviously friendlier on the retirement savings budget than others, and we weren’t surprised by either their “most expensive” or “least expensive” state, compared to scores of other retirement affordability rankings we’ve seen.

But that doesn’t mean there weren’t at least a couple surprises near the top and bottom of howmuch.net’s rankings, which we’ll touch on just below the rankings.

5 Most Expensive States for Retirement

Hawaii Most Expensive states to retire — Hawaii tops the “most expensive” list.

Hawaii: $1,844,556, average retirement age: 66
California: $1,456,286, average retirement age: 64
New York: $1,408,121, average retirement age: 64
Alaska: $1,341,805, average retirement age: 61
Oregon: $1,335,752, average retirement age: 63

5 Least Expensive States for Retirement

Mississippi least expensive state for retirement — Mississippi is the least expensive state on the list.

Mississippi: $617,661, average retirement age: 63
Tennessee: $660,870, average retirement age: 64
Alabama: $712,832, average retirement age: 62
Oklahoma: $723,859, average retirement age: 62
Arkansas: $728,010, average retirement age: 62

As for the surprises, how about Oregon rounding out the top five most expensive states to retire, topping the likes of Connecticut, New Jersey, Massachusetts and its neighbor Washington?

And Tennessee coming in as the second least-expensive state to retire, well below its southern and northern neighbors Alabama and Kentucky?

As for traditional retirement destinations Arizona ($1 million) and Florida ($927,008), neither made the 10 most expensive, but they both made the top 20.

The averages

Here’s a look at some of the howmuch.net study’s other findings:

The average retirement age in the U.S. is 64 years old. At the state level, the average retirement age varies from 61 years old in Alaska and West Virginia to 67 years old in Washington, D.C.
The average life expectancy nationwide is 78.6. Among the states, Hawaii has the highest life expectancy at 81.5 while Mississippi has the lowest life expectancy at 74.5. Not coincidentally, that’s not the only time those states find themselves at top and the bottom of the study’s rankings.
Nationwide, the average yearly expenses for someone over the age of 65 is $51,624. Mississippi has the lowest annual expenses at $44,758, while Hawaii has the highest annual expenses at $99,170.
Taking into account life expectancy as well as yearly expenses, the average savings required for retirement in the U.S. is $904,452. States in the Northeast and the West require the highest savings for retirement, at over $1 million, while states in the South and the Midwest require the lowest savings.

The yearly figure needed for retirement comes from the Bureau of Labor Statistics 2018 Consumer Expenditure Survey. The expenditures considered were those of the age group “65 years or more,” since this is the usual age range for retirement.

To account for a comfortable retirement, howmuch.net added an extra 20% on those expenses, and then adjusted by each state’s cost of living index as published by the MERIC. To obtain the total amount required for a comfortable retirement, the study used IHME-based life expectancy figures published by National Geographic.

Then, the total amount required for a comfortable retirement was obtained by subtracting the average retirement year published on MoneyTalks News to the previous figure and multiplying it by the state-adjusted yearly expenditures.

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Brian Anderson

Editor-in-Chief at 401(k) Specialist | banderson@401kspecialist.com | + posts

Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.