Jan 24, 2024
Saving for retirement can be a stressful process, especially if the dream destination for your golden years comes with sky-high costs.
Even $1 million in the bank may no longer be enough to ensure a comfortable retirement. That amount of money can run out fast, according to a recent study conducted by GoBankingRates. In some U.S. states, it might not even last 15 years.
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The personal finance publication analyzed data from the Bureau of Labor Statistics’ 2020 Consumer Expenditure Survey and 2021 data from the Missouri Economic Research and Information Center to assess costs for groceries, utilities, transportation and health care.
States were then ranked by how long $1 million in savings could last for residents. The results showed that this kind of safety net could last for decades in some states — and far fewer years in others.
Here are the top five states with super high costs you should probably avoid when seeking a retirement destination.
Alaska
How long $1 million will last: 15 years 3 months 12 days
Alaska is not the most popular state to retire in — it’s frigid, snowy and also located on the other side of Canada. This isolated lifestyle is precisely what makes The Last Frontier so costly.
Groceries, which are mostly transported into the state over long distances, will cost you a pretty penny, at $5,927 a year. Although house prices hover around the national average, with the average value in the state at roughly $346,800, according to Zillow, you’ll cough up significantly more for utilities at around $5,425 anually.
To make matters worse, Alaska comes with some of the highest health-care costs in the country due to a limited number of physicians and health-care providers.
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New York
How long $1 million will last: 14 years 1 month 15 days
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You’ll uncover some pretty towering expenses if you decide to retire in the Empire State, even if you’re not opting for New York City’s cramped and costly apartments.
Housing costs stretch over $20,000 a year, with the average home value across the state at just over $450,000, according to Zillow — and it’s even leading the super wealthy to flee to cheaper states in droves.
New York also comes with a hefty tax burden. Income taxes range from 4% to 10.9% depending on income, but you’ll also have to pay additional local taxes if you reside in the Big Apple or Yonkers.
California
How long $1 million will last: 13 years 9 months 29 days
California is the most populated state in the U.S. and it’s easy to see why — gloriously sunny weather and excellent proximity to beaches. It’s home to plenty of active retirement communities as well.
But like New York, the Golden State comes with incredibly expensive housing costs. California boasts some of the highest income tax rates in the country, pushing some of the ultra-wealthy to cheaper states as well.
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In total, a retiree would spend about $72,300 a year on basic living expenses, according to GoBankingRates — which means $1 million in savings wouldn’t stretch very far at all.
Read More: Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
Massachusetts
How long $1 million will last: 12 years 9 months 14 days
This New England state is the seventh-smallest state in the country, but includes massive costs for retirees.
In Massachusetts, housing costs add up to over $22,500 each year, with the average price of a home in the state being over $585,000, according to Zillow.
You’ll also shell out around $8,000 annually for health care expenses, per GoBankingRates.
Hawaii
How long $1 million will last: 10 years 3 months 22 days
In Hawaii, a $1 million nest egg will last you little more than a decade due to its exorbitant cost-of-living expenses — adding up to a whopping $96,982 a year.
Obtaining groceries in the faraway island state may cost even more than they would in Alaska at $6,678 a year, since many resources come from the mainland. Housing costs come close to $32,000 annually, while the average home is valued at nearly $832,000, according to Zillow.
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Serah Louis is a reporter with Moneywise.com. She enjoys tackling topical personal finance issues for young people and women and covering the latest in financial news.
