The old adage of “Location, Location, Location” applies to more than just real estate apparently. According to a report from GOBankingRates and a recent article from Bloomberg News, location can have a big impact on your retirement. More specifically, where you live has a big impact on the health of your retirement nest egg.
The GOBankingRates report analyzed and projected how long a hypothetical one million dollar retirement nest egg would last for retirees for each of the fifty states. The analysis looked at a variety of factors including tax climate, healthcare costs, average social security benefits, and living expenses. Living expenses tracked annual spending on housing, food, transportation and utilities.
Favorable climates, unfavorable retirement conditions
When many people think about their dream retirement, especially those of us in the northern or Midwestern states, they may envision spending their golden years in locales with more comfortable climates. While the weather may be more comfortable than what we experience, two popular retirement states are very inhospitable to seniors’ comfortable retirements. Hawaii and California rank last and next to last in GOBankRates report for how long the hypothetical one million dollar retirement nest egg would endure. Retirees in Hawaii would see their nest egg depleted in a mere 11.9 years. Californians would fare slightly better, seeing their nest eggs exhausted after 16.4 years.
The eastern seaboard also seems to be particularly unfriendly for long retirements. According the to the report, one million dollars only last 17.1 years in New York, while retirees in both Connecticut and Massachusetts see their nest eggs depleted in 17.3 years.
Where your retirement dollars go further
So where does your retirement nest egg last longer? While they never seem to be on anyone’s short list of travel destinations in the months of January or February, Ohio and Michigan actually fare quite well in retirement affordability. Delaware ranks number one in the list of states for retirement affordability. Michigan ranked number two in the study, and has the second lowest average healthcare insurance premium among all fifty states: an important consideration for retirees.
While it did not crack the top ten among all fifty states, Ohio fared better than average with a ranking of eighteen. Notable for Ohio was that it tied with Kentucky for the lowest average healthcare insurance premiums in the country. One of the factors that gave Ohio a lower ranking than Michigan was a lower average Social Security income benefit received by retirees.
While the GOBankingRates report looked at a hypothetical one million dollar retirement nest egg in its analysis of affordable retirement states, the findings apply to any size nest egg. Some states are simply more “retirement-friendly” in terms of their affordability for retirees, although not necessarily for their winter weather conditions. With retirement lasting longer for many Americans, affordability becomes even more critical to maintaining a comfortable retirement, and retirees in Ohio and Michigan fare much better than most other states.
Sources: Bloomberg News and GOBankingRates