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That's absurd. I retired, and I don't have anywhere near that amount. What I do have is SS and a good pension. I could easily live the rest of my life and not even touch my retirement portfolio. That 1.9 mil is super misleading, and it's unhelpful to even point out such stupid misleading articles.
I've always thought the same thing. A lot of people have passive income streams in retirement. Future money they can count on to live off of. But those future funds aren't in a location where they can be added up to determine their present value.
Which makes the $1.9M or whatever amount is deemed essential to retire comfortably misleading. A person could have a small savings of around $100,000.00 but with stout income streams, go years and not touch their initial nest egg.
Articles like this one that does a state by state comparison are useful for folks planning on relocating once they retire. There are a lot of factors to consider. This list may help someone make a more informed decision.
generally the way to determine what you may need is to subtract out income stream values .
so if i want a budget of 100k hypothetically .
i substract out pension and social security .
so if ss is 40k and pension 20k then 40k has to come from savings
a quick check in firecalc shows 1 million can provide 40K at over a 90% success rate using at least 35% equities ....
FIRECalc looked at the 122 possible 30 year periods in the available data, starting with a portfolio of $1,000,000 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 122 cycles. The lowest and highest portfolio balance at the end of your retirement was $-173,739 to $3,558,380, with an average at the end of $796,753. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)
For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 12 cycles failed, for a success rate of 90.2%.
however if i am using no equities and only using fixed income , to see a 90% success rate i need 1,350,000.
so i would need about 1/3 more money to not use equities .
FIRECalc looked at the 122 possible 30 year periods in the available data, starting with a portfolio of $1,350,000 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 122 cycles. The lowest and highest portfolio balance at the end of your retirement was $-185,022 to $4,083,963, with an average at the end of $847,714. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)
For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 10 cycles failed, for a success rate of 91.8%.
I live in a small city in northeast TN. There is no state income tax here. While sales tax is high, at 9.75% locally, I'm a mile from the Virginia line where food tax is 1% and sales tax around 5.2%. Smokes/alcohol are cheaper in VA. Weed is legal in VA.
Property in VA is usually cheaper than TN due to income tax difference. Maybe enough to make up for your monthly income tax bill.
It's not always as clear cut as guides make it out to be.
on the other hand new york city has both a state tax and a city income tax .
while it can be painfully high the reality is for retirees little may get taxed locally .
social security isnt taxed , my wifes pension isnt taxed , up to 20k in retirement money may not be taxed ,
our treasury interest isnt taxed .
despite a six figure income i cant pay enough in state and local taxes to take all of a 1600 tax credit i get for having a state partnership plan for long term care
because nyc has a personal income tax , real easte taxes are much lower then long island or westchester .
we are better off as retirees here in nyc then long island or westchester for that reason.
also lower income retirees can do well here with all the assistance and programs .
a side from low income housing , half of all rentals fall under some form of stabilization .
.
a senior may never pay another rent increase if the rent takes up more then 35% of their income .
there are utility bill assistance programs , health care coverage programs and so much more to help lower incomes.
with such an extensive public transportation system one may need no car and the expenses.
so how far the money goes really depends on individual circumstances
Last edited by mathjak107; 02-10-2023 at 07:58 AM..
I was surprised that Arizona was so high I would have thought more mid-pack.
As an aside, one could easily invest that million and average 5-10%/year average return (at least it was before Biden) and have an income of $50K-$100K.
1M for the healthy retired loner living in LCOL with almost no family will last forever especially if they are a renter in subsidized housing. No car? Just a bus pass? Eating on a 100 a month budget? Maybe 150 tops due to inflation.
There are a few who will die with a couple of million in the bank because their lifestyle is so minimal and live in LCOL areas.
Per article, which is about "cost of living", NOT investing or finances, and details COL in terms of food, housing, utilities, transportation, and health care.
Highest states for COL
1. Hawaii
2. New York
3. California
4. Massachussets
5. Alaska
6. Maryland
7. Oregon
8. Connecticut
9. New Hampshire
0. Vermont
Lowest states for COL
1. Mississippi
2. Oklahoma
3. Kansas
4. Alabama
5. Iowa
6. Georgia
7. Indiana
8. Tennessee
9. Arkansas
0. Michigan
Montana and North Dakota were higher than expected. I wonder why.
At $20k a year, $1,000,000 would last you 50 years.
Assuming you have inexpensive health problems, don't like to travel, have much of a social life, eat at home most of the time, a DIYF person, etc etc etc etc
Per article, which is about "cost of living", NOT investing or finances, and details COL in terms of food, housing, utilities, transportation, and health care.
Highest states for COL
1. Hawaii
2. New York
3. California
4. Massachussets
5. Alaska
6. Maryland
7. Oregon
8. Connecticut
9. New Hampshire
0. Vermont
Lowest states for COL
1. Mississippi
2. Oklahoma
3. Kansas
4. Alabama
5. Iowa
6. Georgia
7. Indiana
8. Tennessee
9. Arkansas
0. Michigan
Montana and North Dakota were higher than expected. I wonder why.
Montana and N Dakota are thriving with Montana having very high housing prices and North Dakota having oil and very thriving economy.
The average American needs about $1.9 million to retire comfortably. This number is way out of reach for many Americans, considering the average amount Americans have saved is a tick above $168,000. However, $1 million might be more doable.
To determine how far a $1 million nest egg will take retirees across the country for someone 65 or older, GOBankingRates analyzed data from the Bureau of Labor Statistics’ 2020 Consumer Expenditure Survey and factored in the state’s overall cost-of-living index score for 2021 from the Missouri Economic Research and Information Center.
Oh, I see. It is figuring on NO investment return.
For example, Hawaii adds up to $91,684.73 annual expenses. Divide $1M by $91,684.73, and you get a little over 10 years that the $1M would last. Which is what the site says that $1M will last.
So people shouldn't panic. If they invest in safe index funds in the stock market and emergency savings accounts/money markets, the person with $1M saved for retirement should be fine, assuming reasonable living expenses in an area that doesn't have a high cost of living (like Hawaii).
Also, don't forget that many people will also be getting Social Security, in addn to the $1M in retirement savings.
Also, retiring "comfortably" means different things to different people. Some want to travel a lot. That's expensive. My hobbies and lifestyle are modest, by comparison. But I want to live without worrying how to pay for a new a/c unit or big car repair.
Still, it's a very interesting article. Especially the comparison of costs of the states. Very interesting.
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