With inflation as a factor to take into consideration as time passes, it begs the question as to how much is enough when it comes to saving for retirement. Sure, $1 million sounds like a significant amount of money, but is it enough to cover your needs (and wants) for a potentially decades-long retirement? The real answer is, it depends on where you live. The cost of living varies from retirement locale to retirement locale, so in some places, $1 million will be enough to live on in retirement, while in others it won’t take you as far.
GOBankingRates studied all 50 states to see where $1 million will be enough to live on in retirement. The study found that depending on where you live, $1 million could last you anywhere from fewer than 12 years to more than 26 years.
Where $1 million falls short in terms of a retirement nest egg
States with higher costs of living are obviously the ones where $1 million may not be adequate to cover an entire retirement phase of life. Here are some of the findings from GOBankingRates:
- In Hawaii, a $1 million nest egg will last about 11 years and 11 months on average.
- In California, a $1 million nest egg will last about 16 years and five months on average.
- In Alaska, a $1 million nest egg will last about 17 years on average.
- In New York, a $1 million nest egg will last about 17 years and one month on average.
- In Massachusetts, a $1 million nest egg will last about 17 years and four months on average.
Factors like high costs for housing and consumer goods explain why $1 million could come up short as far as covering you for the duration of your retirement.
Where $1 million should be enough to retire
Conversely, states with lower costs of living allow $1 million to stretch over a much longer period of time. Here are a few of the results from the GOBankingRates study:
- In Mississippi, a $1 million nest egg will last about 26 years and four months on average.
- In Arkansas, a $1 million nest egg will last about 25 years and six months on average.
- In Oklahoma, a $1 million nest egg will last about 25 years and two months on average.
- In Michigan and Tennessee, a $1 million nest egg will last about 25 years on average.
Compared to places like Hawaii and New York, these states have lower housing costs and lower costs for consumer goods, allowing your dollar to last longer during the period of time when you no longer have regular income.
Regardless of where you plan to live in retirement, there are certain savings habits that you should uphold to make your money work well for you. Continue contributing to your retirement accounts even if and when you reach $1 million in savings. Assess the level of investment risk you are comfortable with, and move to lower-risk investments if that is what you want or need. Also, look for ways to supplement your income in retirement, such as through rental properties or a part-time job.
If you want your money in risk-protected investments, but you still want to enjoy stock market gains, the Ty J. Young Inc. team can help. Call us today at 877-912-1919, and continue to follow Ty J. Young Inc.’s Retirement You Earned blog!