Another Top-10 List — How Long $1 Million Will Last in Retirement by State

Retirees are one of the top growth markets in the U.S. with 10,000 people turning 65 every day morphing away from the workspace.  Savings and investments will greatly influence their ultimate lifestyle in conjunction with where they live.  Cost of living plays a big part.

Perhaps the ultimate measure of the cost of living is how long savings will last in retirement.  After all, retirement includes housing, medical, recreation, food, taxes, utilities and transportation.  This is just opposite to building wealth where greater pay and salaries are important.    Lower salaries rule (lower cost of living) once the nest egg has been built in order to stretch savings.

The average American today retires at the age of 63 and has an expected lifespan to 85 – hence they spend an average 22 years in retirement.

How much do they need to retire?  What are the best states in which to retire based on the cost of living?  To answer that, looked at all 50 states from the prospective of how long $1 million would last in retirement.  Their methodology looked at the total expenses for people aged 65 and older.  These were then multiplied by the cost of living per state to calculate the average expenditures.  Costs in their rankings included:

  • Groceries
  • Housing
  • Utilities
  • Transportation
  • Healthcare

The following table lists all 50 states both alphabetically and also rankings on how many years $1 million would last.  Again out of curiosity, also included is a color coding on how the state voted in the last Presidential election.  The state in which $1 million lasts the longest for retires across basic expenses is Mississippi at 26.33 years.  In contrast, in Hawaii, $1 million lasts just 11.92 years.   For basic needs, retirees in Hawaii need $2.2 million to maintain the same standard of living as people in Mississippi having $1 million in savings assuming each lived to 89 years and change.    Note that red states occupied the top 21 states where $1 million goes the longest for retirees.   Blue states, on the other hand, made up all but two of the 19 states in which $1 million lasted the shortest time for retirees.

8-26-17 table

Are there some issues with the study?  You bet.  Here are a few of my questions:

  • I would assume the article is not dealing with $1 million in a 401(k) (or similar tax-deferred plans) but rather $1 million in actual cash on an after-tax basis.  If it is in the 401(k), have income taxes been taken away?  If in stocks not in the 401(k), what about capital gains tax costs?
  • Why no assumed investment return for the unused portions of the $1 million over time, and if there is, is it taxed?
  • Is Social Security at all considered?  That cannot be determined from reading the article.
  • What about income taxes on retirement and Social Security benefits?  Currently 13 states do not tax these.  Texas for example has no state income tax, but a high comparative property tax.  It is unclear if the other taxes, such as ad valorem property taxes are included.
  • What about some recreation expenses?

To read the entire study click

What I did like about this article was the pure financial approach (despite the tax questions above).  While I like warm weather, many dislike the heat and love the snow and mountains (yes I do read all the comments to the blog).   The same is true about things such as walkability (top importance to some, not meaningful at all to others), entertainment, cultural aspects (such as being near a university or museums) and around people with similar demographics.

Out of curiosity, did this study make you question where you might retire, or are other items such as proximity to family, climate, and geography (mountains, beaches, hills, lakes) more important?  Reply back if the study did make you question your future destination in retirement and the importance of non-financial factors in your choice.




  1. Liz

    Hi Dr Ted,
    I LOVED this post! VERY interesting.
    As long as my father and sister are still alive I will be staying here in Cleveland. I am happy that we have a low cost of living.

    Thanks for the info.

  2. Stacy

    I would much rather live 11 years in Hawaii than 26 in Mississippi!

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