15 Cheapest States for a Comfortable Retirement

Start Slideshow

The amount of money that Americans will need to save in order to retire comfortably depends on various factors, not least where they plan to live, as the cost of living differs across the United States, according to a new report from GOBankingRates.

In some states, retirees can get by on a small nest egg; in others, $2 million will not suffice.

To pinpoint the average retirement income a person would need to live comfortably throughout the United States, GOBankingRates analyzed the following expenditures of Americans 65 and older in all 50 states and the District of Columbia, based on data from the Bureau of Labor Statistics’ most recent Consumer Expenditure Survey release for the full year of 2021: 

Annual spending on groceries
Annual spending on housing
Annual spending on transportation
Annual spending on health care
Annual spending on utilities
Overall average annual expenditures

Researchers adjusted spending estimates to the state level by multiplying each cost category by its corresponding cost-of-living index score in each state. They next calculated an additional savings buffer — to account for the “comfortable” aspect of retirement — by assuming that total expenditures consume 50% of one’s budget for necessities and 30% for discretionary spending, with 20% left over for savings (not including Social Security payouts, potential pension income or interest earned on savings). 

Researchers then combined the overall average annual expenditures and the savings buffer, and factored it out by 20 (assuming 20 years of retirement) to give the amount of retirement savings needed to live comfortably. The data was collected on Nov. 9.

See the accompanying gallery for the 15 states where retirees need the least money in order to live comfortably, according to GOBankingRates.

Start Slideshow