Retirement Savings: A Growing Concern Across America
Based on the recent Northwestern Mutual Survey, the average amount that Americans believe is necessary for a comfortable retirement has surged to $1.46 million in 2024, a substantial increase from $951,000 in 2019. This growing expectation highlights the evolving financial landscape and the increasing burden on future retirees.
Despite these lofty goals, the same survey revealed that, on average, individuals have saved only $88,400 for retirement. This translates to a staggering gap of approximately $1.37 million between what people have saved and what they believe they will need.
State by State Review: The Impact of Social Security on Retirement Savings
A recent analysis by GobanKingrates provides insights into how the $1 million retirement savings benchmark is affected by Social Security benefits across different states. Utilizing data from the U.S. Census Community Survey and the Bureau of Labor Statistics, the study assessed the sustainability of retirement savings against each state’s cost of living.
Understanding the Research Methodology
GobanKingrates estimated living costs by analyzing essential expenses such as housing, food, transportation, and utilities. Notably, federal and state income taxes were excluded from these estimations. As of January 2024, the average monthly Social Security retirement benefit is reported to be $1,976.
States Where $1 Million in Retirement Savings Doesn’t Last Long
The analysis unveils that certain states, primarily known for their high cost of living, see a rapid depletion of a $1 million retirement nest egg. Here’s a look at the top states where retirement savings dwindle quickly:
- Hawaii: Average monthly expenses total $6,677, leaving a retirement fund lasting just 12.48 years.
- California: Residents pay an average of $2,269 per month, stretching savings to 16.29 years.
- Massachusetts: Monthly expenses average around $2,340, resulting in a lifespan of 19.35 years for savings.
- Washington: With monthly expenses of $2,096, a retirement nest egg lasts approximately 21.92 years.
- New Jersey: Average monthly costs are $3,442, making savings last 24.20 years.
- Colorado: Here, retirement savings sustain individuals for 25.15 years against average monthly expenses of $3,313.
States Where Retirement Savings Last the Longest
Conversely, several states offer a more favorable financial environment, allowing for a longer duration of savings. The following are states where retirement funds can last significantly longer:
- West Virginia: Average monthly expenses are just $1,833, enabling savings to last a remarkable 88.79 years.
- Mississippi: With expenses around $1,473, retirement funds can last up to 87.16 years.
- Arkansas: Average monthly expenses are $1,096, equating to a duration of 76.93 years.
- Louisiana: Average monthly spending of $1,082 allows savings to sustain for 76.54 years.
- Oklahoma: Here, expenses average $1,170, leading to a financial buffer of 71.18 years.
Conclusion
The findings from the Northwestern Mutual Survey and GobanKingrates analysis reveal stark realities about retirement savings in the United States. As expectations for retirement funds grow, so does the financial gap many Americans face. Planning for retirement has never been more critical, especially given the varying longevity of savings across different states.
For further details and insights, refer to the complete report by GobanKingrates.
