- A new study by personal finance website GOBankingRates highlights how retirement costs vary across the United States.
- The estimated total savings needed to retire at 65 can differ by as much as $1.46 million between the most and least expensive states.Â
- Hawaii ranked as the most expensive state for retirement, needing about $2.2 million in savings to cover basic living expense
Everyone dreams of retiring one day and spending life in peace and comfort after decades of hard work. However, turning that dream into reality depends heavily on financial preparedness, especially as the cost of everyday living continues to rise. From housing and healthcare to groceries and transportation, basic expenses can significantly impact how much money people need to save before leaving the workforce.
A new study by personal finance website GOBankingRates highlights how retirement costs vary across the United States. The estimated total savings needed to retire at 65 can differ by as much as $1.46 million between the most and least expensive states.
Using the latest spending data from the U.S. Bureau of Labor Statistics, the analysis estimated annual living costs for retirees aged 65 and older in each state. GOBankingRates then subtracted average Social Security payments and applied the widely used 4% withdrawal rule to calculate the minimum retirement savings required to cover essential expenses over 25 years.
Most and least expensive state
Hawaii ranked as the most expensive state for retirement, with retirees estimated to need about $2.2 million in savings to cover basic living expenses such as housing, food, transportation, utilities and healthcare. The state's average annual retirement living cost was estimated at $110,393.
Oklahoma was found to be the least expensive state for retirement, requiring an estimated $735,284 in savings. Mississippi and Alabama also ranked among the states with the lowest retirement savings requirements.
The report highlighted housing as the biggest contributor to retirement cost differences across states, with annual housing expenses varying by nearly $30,000. Healthcare and utility costs can differ by as much as $5,000 annually depending on location.
The estimates represent only baseline costs for essential living expenses and do not include discretionary spending such as travel, dining or entertainment. The analysis also does not account for inflation, unexpected medical bills or future lifestyle changes that could significantly affect retirement needs.
According to the study, annual retirement living costs and required savings in selected states are:
Hawaii: Hawaii is ranked as the most expensive state for retirement, with the state's average annual retirement living cost estimated at $110,393. Retirees need about $2.2 million in savings to cover basic living expenses.
California: California is the second most expensive state for retirees. The annual cost of living is $83,978, so a person needs roughly $1.54 million savings to retire.
Massachusetts: This state ranked third at about $1.76 million in required savings. The cost of living here is $92,639 annually.
New York: Retirees would need approximately $1.38 million in savings as the annual cost of living here is $77,773.
Arizona: People planning to retire in Arizona would require nearly $1.11 million in savings, with yearly living expenses estimated at about $66,838.
Florida: As for Florida, retirees would require about $967,190. The annual cost of living here is $61,125.
Texas: Texans would need an estimated $833,575 savings for a person to retire as the cost of living reaches around $55,780 annually here.
Washington: If you have around $1.19 million savings, you can retire in Washington state. The annual cost of living will be around $69,971.
Alaska: Retirees in Alaska would need an estimated $1.40 million in savings to retire comfortably, as the annual cost of living in the state stands at around $78,449.
Georgia: Retiring in Georgia would require approximately $848,933 in savings, while the yearly cost of living is estimated at $56,395.
Indiana: Residents looking to retire in Indiana may need close to $830,504 in savings, with annual living expenses averaging around $55,657.
Michigan: Retirees in Michigan are likely to require nearly $893,472 in savings, with the annual cost of living estimated at about $58,176.
Oklahoma: This remains the more affordable states for retirees, requiring an estimated $735,284 in savings.
Mississippi: Mississippi requires around $752,178 in savings to cover annual living costs of roughly $52,524.
New Jersey: To retire comfortably in New Jersey, individuals may need close to $1.19 million in savings as yearly living expenses stand at around $70,401.
Ohio: Ohio residents would require an estimated $864,291 in retirement savings, with annual living costs averaging about $57,009.
Rhode Island: Individuals planning retirement in Rhode Island would need approximately $1.18 million in savings, while annual living costs are estimated at $69,664.
Utah: Retirees in Utah are estimated to need around $961,047 in savings to cover yearly living expenses of roughly $60,879.
Virginia: People retiring in Virginia may require nearly $976,405 in savings, as the annual cost of living in the state is estimated at about $61,493.
