Imagine you’re fortunate enough to have amassed a $1 million nest egg by the time you retire: Would you rather live where your savings will last for 12 years, or somewhere they will last 26 years?
It seems a no-brainer. However, many folks choose their retirement destination based largely on nonfinancial factors, like proximity to family or climate. If you don’t want to outlive savings, you must consider the cost of living where you retire.
A recent GOBankingRates analysis starkly illustrates how much location can impact retirement savings for better or worse. The average life expectancy of a 65-year-old is now 84.3 years for men, and 86.6 years for women, according to the Social Security Administration.
Based on those numbers, a man who retires today at age 65 will need his savings to last 19.3 years. A woman will need hers to last 21.6 years. GOBankingRates found several states where such retirees would outlive a $1 million nest egg.
For its analysis, the site examined each state’s cost of living and the average total expenditures of people age 65 and older. These include:
- Health care
Mississippi is the only state in which $1 million would last a retiree more than 26 years. Retirees in that state spend $37,964 a year to get by, making it the cheapest state overall. It also has the cheapest housing cost in the nation at $11,134 a year.
Mississippi is one of only 12 states where $1 million will last a retiree at least about a quarter-century:
- Mississippi: $1 million will last a retiree 26 years, four months
- Arkansas: 25 years, six months
- Oklahoma: 25 years, two months
- Michigan: 25 years
- Tennessee: 25 years
- Georgia: 24 years, 11 months
- Missouri: 24 years, 10 months
- Texas: 24 years, nine months
- Indiana: 24 years, nine months
- Alabama: 24 years, nine months
- Idaho: 24 years, eight months
- Kansas: 24 years, seven months
At the other end of the spectrum is the seemingly ideal retirement destination of Hawaii, where $1 million will buy you only 11 years and 11 months of retirement. Housing costs alone there will run you $46,478 a year.
Of course, your cost of living in retirement depends on more than just your state. Even within a single state, costs of living can vary dramatically. For example, as we recently reported, there are plenty of U.S. cities in which retirees can find housing for less than Mississippi’s average housing cost of $11,134 a year.
And then there are other countries to consider if you really want to make savings last as long as possible. To learn more, check out “This Is the Best Place to Retire Abroad in 2017.”
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