The standard financial barrier to aging is $1 million, but that number doesn’t apply in many parts of the country. These are some of the regions where you need less than a dollar in order to retire at 65 and live comfortably for decades.
“how many people have $1,000,000 in savings” is a question that was posed by the “US News & World Report”. The answer to this question is shown in the following infographic.
Note from the editor: This article’s material is solely based on the author’s own ideas and recommendations, and it is not meant to be a source of financial advice. Any of our network partners or the Investment business may not have approved, commissioned, or otherwise supported it.
It’s all about the location, location, location. It’s no surprise that where you reside has a significant impact on how much money you’ll need to retire. What’s fascinating/frightening/reassuring — choose your word — is how much of a savings account seniors need to retire in diverse locations.
MagnifyMoney analysts assessed how much money is needed to retire in each U.S. city based on typical yearly expenditure to offer additional data. Analysts discovered 28 metro areas, including 14 in sunny California, where seniors require at least $1 million to live comfortably.
Do you want to switch up your adjectives?
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How much money do you need in order to retire?
Are you putting aside enough money for retirement? The answer will mostly depend on where you want to retire and if the amount you should be saving is more in that location than in others.
There are 384 metros in the United States, and around 7% of them (28 total) need more than $1 million in savings to retire comfortably. And if that isn’t enough, you’ll have to save even more.
For this research, experts calculated the amount needed to retire based on the average annual spending of retirees in each metro. Based on federal and state taxes, researchers computed the amount of pretax income required to fulfill seniors’ typical yearly expenditure in these areas. The average yearly Social Security payments in that state were then reduced to determine how much annual income a person would need from their retirement fund to satisfy those spending criteria. The size of the nest egg was calculated using the 4 percent rule, which states that you should remove 4% of your total assets in the first year of retirement and then modify that amount each year depending on inflation.
San Francisco is at the top of the list. Based on a $62,019 yearly spending, retirees will require a staggering $1,564,760 to retire there. San Jose, at No. 2, and Santa Cruz, at No. 4, round out the top five metro regions in California. Honolulu ranks third, while New York closes out the top five, with an average retirement income of $1,339,932.
The arrangement makes sense, given that Hawaii, California, New Jersey, Massachusetts, and New York are the top five most expensive states in which to retire. Housing, food, transportation, Medicare, entertainment, and personal care are all more expensive in these states than elsewhere in the country, thus retiring there will take a large sum of money.
Other factors, such as state income tax rates, contribute to the need for much more or less money to retire in specific places. These may vary significantly across states, with communities in states with low or no income taxes often requiring less to retire. Taxes on other retirement programs, such as Social Security payouts, vary as well.
Suwanmanee99 / istockphoto contributed to this image.
Burlington, Vermont (#28)
- The average yearly expenditure of a retiree is $48,970.
- Estimated pre-tax requirement: $62,035
- $22,033 is the average social security income.
- $40,002 in more retirement money is required.
- $1,000,042 is the size of the nest egg.
Deposit Photos provided the image.
Corvallis, Oregon (#27)
- The average yearly expenditure of a retiree is $47,448.
- $61,413 in pre-tax needs
- $21,288 is the average social security income.
- $40,125 in more retirement money is required.
- The size of the nest egg is $1,003,128.
Dee / iStock / Dee / iStock / Dee / iStock /
Portland, Maine is number 26 on the list.
- The average yearly expenditure of a retiree is $47,817.
- Pre-tax requirement: $60,377
- Social Security retirement income averages $20,056.
- $40,321 in more retirement money is required.
- The size of the nest egg is $1,008,017.
Deposit Photos provided the image.
Miami, Florida is number 25.
- An average retiree spends $51,506 per year.
- Pre-tax requirement: $60,705
- Social Security retirement income averages $20,347.
- $40,358 in more retirement money is required.
- $1,008,941 is the size of the nest egg.
Deposit Photos provided the image.
Anchorage, Alaska is number 24 on the list.
- The average yearly expenditure of a retiree is $49,154.
- Estimated pre-tax requirement: $61,756
- Social Security retirement income averages $20,516.
- $41,240 in more retirement money is required.
- The size of the nest egg is $1,030,990.
Chilkoot/istockphoto/Chilkoot/istockphoto/Chilkoot/istockphoto/Chil
Fairbanks, Alaska (#23)
- The average yearly expenditure of a retiree is $49,247.
- Estimated pre-tax requirement: $61,897
- Social Security retirement income averages $20,516.
- $41,381 in more retirement money is required.
- Size of the nest egg: $1,034,516
Elizabeth M. Ruggiero / istockphoto contributed to this image.
Bridgeport, Connecticut is number 22.
- An average retiree spends $51,829 per year.
- Pre-tax requirement: $65,096
- $23,705 is the average Social Security retirement income.
- $41,391 in more retirement money is required.
- $1,034,764 in the nest egg
DepositPhotos.com is the source of this image.
Sacramento, California is number twenty-one.
- An average retiree spends $48,509 per year.
- $62,462 in pre-tax needs
- $21,010 is the average Social Security retirement income.
- $41,452 in more retirement money is required.
- The size of the nest egg is $1,036,310.
DepositPhotos.com is the source of this image.
Portland, Oregon is number 20.
- An average retiree spends $48,417 per year.
- Estimated pre-tax requirement: $62,940
- $21,288 is the average Social Security retirement income.
- $41,653 in more retirement money is required.
- The size of the nest egg is $1,041,314 dollars.
DepositPhotos.com is the source of this image.
Riverside, California is number 19 on the list.
- The average yearly expenditure of a retiree is $49,477.
- Estimated pre-tax requirement: $63,977
- $21,010 is the average Social Security retirement income.
- $42,967 in more retirement money is required.
- $1,074,185 in the nest egg
DepositPhotos.com is the source of this image.
Boston is number eighteen.
- The average yearly expenditure of a retiree is $53,258.
- $67,262 in pre-tax needs
- $22,517 is the average Social Security retirement income.
- $44,745 in more retirement money is required.
- $1,118,613 in the nest egg
DepositPhotos.com is the source of this image.
San Luis Obispo, California is number seventeen.
- An average retiree spends $50,814 per year.
- $66,069 in pre-tax needs
- $21,010 is the average Social Security retirement income.
- $45,060 in more retirement money is required.
- $1,126,489 in the nest egg
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Salinas, California is number sixteen.
- The average yearly expenditure of a retiree is $51,368.
- $66,935 in pre-tax needs
- $21,010 is the average Social Security retirement income.
- $45,925 in more retirement money is required.
- Size of the nest egg: $1,148,132
rightdx / iStock / iStock / iStock / iStock / I
Santa Maria, California is number fifteen.
- The average yearly expenditure of a retiree is $51,690.
- $67,440 in pre-tax needs
- $21,010 is the average Social Security retirement income.
- $46,430 in more retirement money is required.
- $1,160,757 in the nest egg
JulieHewitt / iStock / iStock / iStock / iStock / iS
Hawaii’s Kahului is number 14 on the list.
- An average retiree spends $52,244 per year.
- $68,528 in pre-tax needs
- $21,480 is the average Social Security retirement income.
- $47,049 in more retirement money is required.
- $1,176,223 in the nest egg
Image credit: iStock/joeygil
New York’s Poughkeepsie is number thirteen.
- The average yearly expenditure of a retiree is $54,688.
- $70,282 in pre-tax needs
- $21,696 is the average Social Security retirement income.
- $48,586 in more retirement money is required.
- $1,214,642 in the nest egg
Elisank79 / iStock / Elisank79 / iStock / Elisank79 / iStock
California’s Oxnard is number 12 on the list.
- The average yearly expenditure of a retiree is $53,950.
- $70,975 in pre-tax needs
- $21,010 is the average Social Security retirement income.
- $49,965 in more retirement money is required.
- The size of the nest egg is $1,249,133.
DepositPhotos.com is the source of this image.
Washington, D.C. is number eleven.
- The average yearly expenditure of a retiree is $54,134.
- Pre-tax requirement: $71,726
- $21,309 is the average Social Security retirement income.
- $50,418 in more retirement money is required.
- $1,260,445 in the nest egg
bboserup / istockphoto / bboserup / istockphoto / bboserup / istock
San Diego is number ten.
- An average retiree spends $54,365 per year.
- Pre-tax requirement: $71,624
- $21,010 is the average Social Security retirement income.
- $50,615 in more retirement money is required.
- The size of the nest egg is $1,265,365.
Jerry Uomala’s picture courtesy of istockphoto.
Vallejo, California (#9)
- The average yearly expenditure of a retiree is $54,549.
- Pre-tax requirement: $71,913
- $21,010 is the average Social Security retirement income.
- $50,903 in more retirement money is required.
- $1,272,580 is the size of the nest egg.
BackyardProduction / istockphoto is the source of this image.
Los Angeles, No. 8
- The average yearly expenditure of a retiree is $54,780.
- Pre-tax requirement: $72,274
- $21,010 is the average Social Security retirement income.
- $51,264 in more retirement money is required.
- The size of the nest egg is $1,281,598.
DepositPhotos.com is the source of this image.
Santa Rosa, California is number seven.
- The average yearly expenditure of a retiree is $55,610.
- Pre-tax requirement: $73,572
- $21,010 is the average Social Security retirement income.
- $52,562 in more retirement money is required.
- $1,314,062 in the nest egg
Bob Corson / istockphoto contributed to this image.
Napa, California is number six.
- An average retiree spends $55,702 per year.
- Pre-tax requirement: $73,716
- $21,010 is the average Social Security retirement income.
- $52,707 in more retirement money is required.
- $1,317,669 in the nest egg
Deposit Photos provided the image.
New York City is number five.
- The average yearly expenditure of a retiree is $57,962.
- Pre-tax requirement: $75,294
- $21,696 is the average Social Security retirement income.
- $53,597 in more retirement money is required.
- $1,339,932 is the size of the nest egg.
DepositPhotos.com is the source of this image.
Santa Cruz, California is number four.
- The average yearly expenditure of a retiree is $56,578.
- Pre-tax requirement: $75,087
- $21,010 is the average Social Security retirement income.
- $54,077 in more retirement money is required.
- $1,351,937 is the size of the nest egg.
Photo credit: Wiki Commons/photoquest7.
Honolulu is the third largest city in Hawaii.
- The average yearly expenditure of a retiree is $57,085
- Pre-tax requirement: $76,124
- $21,480 is the average Social Security retirement income.
- $54,645 in more retirement money is required.
- $1,366,116 is the size of the nest egg.
DepositPhotos.com is the source of this image.
San Jose, California is number two.
- An average retiree spends $58,423 per year.
- $77,973 in pre-tax needs
- $21,010 is the average Social Security retirement income.
- $56,963 in more retirement money is required.
- $1,424,081 is the size of the nest egg.
DepositPhotos.com is the source of this image.
San Francisco is number one.
- The average yearly expenditure of a retiree is $62,019
- Pre-tax requirement: $83,600
- $21,010 is the average Social Security retirement income.
- $62,590 in more retirement money is required.
- The size of the nest egg is $1,564,760.
DepositPhotos.com is the source of this image.
The most important discoveries
- In 28 of the 384 U.S. metros, you’ll need more than $1 million to retire comfortably. On average, a retiree in San Francisco requires $1,564,760 in savings – the largest amount in the country.
- California has 14 of the 28 metro areas where retirees require more than $1 million to retire. San Jose ($1,424,081) and Santa Cruz ($1,351,937) round out the top five metros in the United States.
- In only one metro, Jackson, Tennessee, you may retire with an average lifestyle for less than $500,000. At $495,942, this Tennessee metro narrowly misses the threshold. The nearest cities are Danville, Illinois ($510,202) and two Texas metros (McAllen and Brownsville, both $513,406).
- Locals may need significantly less money to sustain their lifestyles when they approach retirement age and begin receiving Social Security benefits. If you concentrate on median income of near-retirement age employees rather than average expenditure by retirees, inhabitants in only three metros — San Jose, California, San Francisco, and Washington, D.C. — would need more than $1 million to retire.
Tinpixels is the source of this image.
5 suggestions to help you increase your retirement savings
These mandatory retirement savings levels aren’t precise pronouncements of how much you should save. Several variables, including your definition of “comfortable,” might influence what you require in retirement. They do, however, give you a reasonable idea of how much money you’ll need to retire in specific places.
A financial adviser can assist you in better determining your objectives in light of your current situation.
But how can you achieve those objectives? MagnifyMoney senior content director Ismat Mangla gives the following advice.
- Start now: Mangla advises, “Don’t put off saving and investing for retirement.” “The sooner you start, the better, since you’ll have the advantage of compounding.” Also, until you’re debt-free, don’t put off saving and investing for retirement.” She advises individuals to create a budget that enables them to achieve both objectives, even if it isn’t as much as they would want in each area.
- Employer matching money: If your company provides matching funds for your 401(k), take advantage of it. “Keep in mind that employer matching is a part of your pay package, so if you don’t use it, you’re throwing money away,” she adds. The IRS has raised the 401(k) contribution maximum to $20,500 per year beginning in 2022. If you can’t contribute the whole amount, at least contribute enough to obtain the employer match — and then boost your contribution automatically every six months or year by half a percentage point or one percentage point. In addition, if you’re 50 or older, you may make catch-up payments to your retirement account.
- Put your money on autopilot: Automating your savings is a simple approach to ensure that you save. Before your paycheck reaches your checking account, you may transfer money from it to your retirement and other investment accounts. You won’t be able to miss it this way.
- Take a look at the following: If you’re a lower- or middle-income person, be sure you’re taking advantage of tax credits when it comes to retirement savings. A tax credit of up to 50% of your retirement contribution may be available to you.
- Take a look at health savings accounts (HSAs): Health savings accounts may be a useful tool for not just paying for medical bills now, but also for putting money aside for retirement. You may invest the monies in your HSA to grow for retirement if you can save and pay for those health expenditures out of pocket. The money you put into an HSA is pretax, and you may take it tax-free to pay for medical costs in retirement.
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Methodology
MagnifyMoney experts used independent formulas to determine how much money Americans would need to retire in each metropolitan statistical region (MSA):
- For the first, experts determined the pretax amount based on the projected yearly expenditures of retirees in each MSA. Researchers then deducted each state’s predicted average 2022 Social Security retirement payout to calculate how much money a retiree would need to maintain that level of spending on average. The 4 percent rule was used to determine the necessary assets to satisfy the average expenditure level by dividing that amount by 4 percent.
- For the second, researchers used the 4 percent rule to reduce the average Social Security payout in each state from the expected median wages for full-time employees between the ages of 55 and 65.
Analysts multiplied retirees’ average annual expenditures — obtained from the U.S. Bureau of Labor Statistics (BLS) 2020 Consumer Expenditure Survey — by the U.S. Bureau of Economic Analysis (BEA) 2019 Regional Price Parity for each MSA to estimate retirees’ average annual spending in the 384 U.S. metros. Both were the most recent statistics available.
The median annual wages of full-time employees between the ages of 55 and 65 were calculated using data from the U.S. Census Bureau’s 2019 American Community Survey, which is the most recent available. This was multiplied by the BLS’s ratio of full-time employees between the ages of 55 and 65’s median weekly salaries (annualized) in the second quarter of 2021 to all full-time workers’ median weekly wages (annualized) in the fourth quarter of 2019.
Analysts assumed that the retirees were single filers who claimed the usual federal deduction, as well as their customary state deductions and exemptions, but were otherwise taxed as ordinary income. According to the researchers, not all retirement income is subject to income taxation, and individuals and families may be eligible for extra credits and deductions. For state taxes, researchers utilized the top-line marginal rate for that income amount after standard deductions and exemptions, as provided by the Tax Foundation. Analysts used the rate of the first state indicated inside the metro for metros that straddle state boundaries.
Researchers used the average monthly payment for pensioners in each state in 2020, as provided by the US Social Security Administration, to forecast 2022 Social Security payouts for retirees. Analysts used a 1.3 percent cost-of-living adjustment (COLA) in 2021, followed by a 5.9 percent COLA in 2022. Finally, experts divided the result by 12 months to arrive at a final amount.
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