Americans aim to save around $1.46 million before retiring, according to Northwestern Mutual’s 2024 Planning and Progress study. However, in states like Hawaii, the minimum retirement savings needed is much higher, at $2,051,077. This amount, along with Social Security benefits, is calculated to cover necessities such as groceries, housing, utilities, car expenses, discretionary spending, and savings over a 25-year retirement period. GOBankingRates determined these retirement savings requirements by examining yearly spending data for Americans 65 and older on essentials like groceries, transportation, housing, utilities, and healthcare, using information from the Bureau of Labor Statistics’ 2022 Consumer Expenditure Survey, as well as the cost of living index for each state based on Council for Community and Economic Research survey data.
The top 10 states where you’d need the most retirement savings, according to GOBankingRates, include Hawaii, Massachusetts, California, New York, Alaska, Washington, New Hampshire, Vermont, Maryland, and Oregon. Hawaii tops the list with a minimum retirement savings requirement of $2,051,077, due to its high cost of living. While the state offers attractive features such as stunning landscapes and beaches, the median home sale price is around $813,000, and $1 million in retirement savings would be depleted in about 10 years. Although income from Social Security is not taxed in Hawaii, retirement savings account income is fully taxed.
When planning for retirement, it’s crucial to remember that everyone has a different idea of what a comfortable retirement looks like. Setting clear savings goals can help individuals determine how much they need to save now to achieve their retirement dreams. CNBC Make It’s retirement calculator can assist in estimating needed savings based on factors like age, current income, and existing savings. While a location’s cost of living is a significant consideration in retirement planning, personal preferences such as proximity to family or budget for activities like travel also play a role in decision-making.
In addition to financial planning, earning passive income can be a way to supplement retirement savings. CNBC offers an online course on How to Earn Passive Income Online, covering common passive income streams, tips to get started, and real-life success stories. Subscribing to CNBC Make It’s newsletter provides further advice and strategies for achieving success in work, money management, and life overall. Ultimately, retirement planning is a personal journey that involves balancing financial considerations with individual preferences and goals.
