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You need to be a millionaire just to cover basic pension costs in 15 US states, according to a new analysis from GOBankingRates.
The states with the highest retirement expenses also tend to have the highest housing costs, whether they are big city centers like New York and California, or Hawaii, where the natural beauty and mild climate attract many pensioners.
In fact, Hawaii is the most expensive state to retire. The cost of the essentials—housing, food, transportation, utilities and health care—over 25 years adds up to about $2.21 million. That’s significantly more than Massachusetts and California, where retirees need about $1.6 million each to make it.
The estimates come from the latest average cost of living data from the US Bureau of Labor Statistics. After subtracting the average Social Security income from the annual expenses, GOBankingRates divided the remaining amount by 4%, after a common rule to safely withdraw pension savings.
The totals represent the minimum required to withdraw without accounting for other factors such as rising inflation, discretionary spending or unexpected expenses.
Here’s a look at the 15 most expensive states to retire in, ranked by total savings needed:
1. Hawaii
- Annual cost of living: $110,921
- Savings you need to withdraw: $2,212,084
2. Massachusetts
- Annual cost of living: $88,268
- Savings you need to withdraw: $1,645,764
3. California
- Annual cost of living: $86,946
- Savings you need to withdraw: $1,612,716
4. Alaska
- Annual cost of living: $74,147
- Savings you need to withdraw: $1,292,753
5. New York
- Annual cost of living: $74,147
- Savings you need to withdraw: $1,292,753
6. New Jersey
- Annual cost of living: $68,980
- Savings you need to withdraw: $1,163,566
7. Vermont
- Annual cost of living: $68,559
- Savings you need to withdraw: $1,153,051
8. Washington
- Annual cost of living: $68,259
- Savings you need to withdraw: $1,145,540
9. Maine
- Annual cost of living: $68,199
- Savings you need to withdraw: $1,144,038
10. Arizona
- Annual cost of living: $67,778
- Savings you need to withdraw: $1,133,522
11. Rhode Island
- Annual cost of living: $67,538
- Savings you need to withdraw: $1,127,514
12. Connecticut
- Annual cost of living: $67,117
- Savings you need to withdraw: $1,116,998
13. New Hampshire
- Annual cost of living: $66,997
- Savings you need to withdraw: $1,113,994
14. Oregon
- Annual cost of living: $66,096
- Savings you need to withdraw: $1,091,462
15. Utah
- Annual cost of living: $65,795
- Savings you need to withdraw: $1,083,951
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