Is $1 million the new benchmark for a comfortable retirement?
The term “millionaire” used to apply exclusively to the rich. Lately, though, Americans increasingly opine that anyone who hopes to retire in comfort will need at least $1 million in savings.
In one 2023 survey, from the global investment firm Schroders, older workers predicted they would need $1.1 million to retire comfortably. A survey from Northwestern Mutual put the figure at $1.27 million. In a 2024 poll by Charles Schwab, 401(k) participants said they’d need $1.9 million to retire. A New York Life survey set the bar at a staggering $4.3 million.
Not a millionaire? Don’t despair. Many Americans retire on a shoestring
If you aren’t a millionaire, don’t despair: Most of us don’t have anywhere near that much in retirement savings.
According to the 2022 federal Survey of Consumer Finances, the median household in the 55-64 age group holds about $185,000 in retirement savings. Among all families, the median retirement balance is $87,000.
Is that enough?
In a new analysis, the personal finance site GOBankingRates identified 16 states where, by their math, you’ll need at least $1 million in savings to fund 25 years of retirement.
The report considers annual expenses for a retired person in each state, drawing from Labor Department statistics, the local cost of living index, and Social Security data.
First, some good news: The two most popular retirement states, Florida and South Carolina, are not on the million-dollar list. Those states rank 1 and 2 for inbound retirees in a recent report from AARP.
But New Jersey and Washington State, third and fifth on the AARP list, do require a $1 million retirement fund, according to the GOBankingRate analysis.
Here are the 16 million-dollar retirement states
Here are snapshots of the 16 million-dollar retirement states:
Colorado
Annual retirement expenses: $61,807
Minimum savings for 25 years’ retirement: $1 million
Arizona
Annual retirement expenses: $63,600
Minimum savings for 25 years’ retirement: $1.05 million
New Jersey
Annual retirement expenses: $63,773
Minimum savings for 25 years’ retirement: $1.06 million
Maine
Annual retirement expenses: $64,004
Minimum savings for 25 years’ retirement: $1.06 million
Rhode Island
Annual retirement expenses: $64,756
Minimum savings for 25 years’ retirement: $1.08 million
Connecticut
Annual retirement expenses: $65,855
Minimum savings for 25 years’ retirement: $1.11 million
Oregon
Annual retirement expenses: $66,317
Minimum savings for 25 years’ retirement: $1.12 million
Maryland
Annual retirement expenses: $66,375
Minimum savings for 25 years’ retirement: $1.12 million
Vermont
Annual retirement expenses: $66,433
Minimum savings for 25 years’ retirement: $1.12 million
New Hampshire
Annual retirement expenses: $66,838
Minimum savings for 25 years’ retirement: $1.13 million
Washington
Annual retirement expenses: $66,895
Minimum savings for 25 years’ retirement: $1.13 million
Alaska
Annual retirement expenses: $73,082
Minimum savings for 25 years’ retirement: $1.29 million
New York
Annual retirement expenses: $73,140
Minimum savings for 25 years’ retirement: $1.29 million
California
Annual retirement expenses: $78,864
Minimum savings for 25 years’ retirement: $1.43 million
Massachusetts
Annual retirement expenses: $85,571
Minimum savings for 25 years’ retirement: $1.6 million
Hawaii
Annual retirement expenses: $103,610
Minimum savings for 25 years’ retirement: $2.05 million
$1 million is just a number, advisers say
The notion that Americans need $1 million in the bank to retire has become ingrained, teased in hundreds of personal-finance headlines.
But $1 million is just a number, financial advisors say, and a deceptively simple one.
“I think it’s easy to explain concepts by using that number, and it’s more realistic than using a $100,000 or $10 million,” Colin Exelby, a certified financial planner in Towson, Maryland, said in an AARP report that sought to calm fears about a million-dollar retirement. “But other than that, I don’t think it’s really helpful and can probably cause anxiety and stress if you’re not hitting that number.”
In the real world, a family might need more than $1 million to fund their retirement. Another household might need less.
“Each person is very different,” said Michelle Crumm, a certified financial planner in Ann Arbor, Michigan.
Crumm has a client who is retiring this year with a net worth of $180,000.
“She has a pension and Social Security and doesn’t own a home,” Crumm said. “Her budget is balanced,” with an annual vacation fund. “I am not worried about her successfully retiring with the strategy that we have developed.”
Crumm has another client, a married couple in their 50s with a net worth of $2.2 million, five years retired.
“They have a mortgage, credit card debt, and spend beyond their means,” she said. “We have a plan built, but they are not sticking to it. I am very concerned about their retirement.”
Does retirement last 25 years?
Likewise, 25 years is only a ballpark estimate of how long the average retirement will last.
It’s a tricky calculation. Average life expectancy falls between 70 and 80. Yet, once you have made it to 65, you’re likely to live well past 80.
How long does retirement last? Most American men don’t seem to know
Twenty-five years of retirement is a reasonable benchmark, advisers say, if you retire after 60. But, again, it doesn’t cover everyone.
“A lot of high-income earners desire escaping the stress of their job well before 65, usually around 55,” said Christopher Lyman, a certified financial planner in Newtown, Pennsylvania. “This obviously lengthens that timeframe.”
Older Americans with healthy lifestyles can live well past their mid-80s, Lyman said. People with chronic diseases may never reach 80.
Photo gallery: From Colorado to Hawaii, states where you need at least $1 million to retire
If the list of million-dollar retirement states hasn’t sobered you, we will leave you with another GOBankingRates report to digest: 10 cities where you’ll need more than $1 million to retire.
This article originally appeared on USA TODAY: Retirement on a shoestring? In these places you’ll need more than $1M
EMEA Tribune is not involved in this news article, it is taken from our partners and or from the News Agencies. Copyright and Credit go to the News Agencies, email [email protected] Follow our WhatsApp verified Channel
