As it turns out, $1 million may not be enough to support you in retirement in certain states.
Retirement can take 25 years or more after you retire, according to Fidelity Investments. But in a few states, $1 million in savings probably won’t last that long, according to recent data from personal finance site GOBankingRates.
In Hawaii, $1 million in retirement savings would only cover your living expenses for about 10 years. As the least affordable state to retire in 2022, you’d need about $2 million to retire there comfortably, according to Sam Dogen, CNBC Make It contributor and author of “Buy This, Not That: How to Spend Your Way to Wealth and Financial Freedom.”
It’s not just the Aloha state where $1 million probably won’t go as far as you hope. Here are the top 10 states where $1 million in retirement savings would run out the fastest.
To determine how long $1 million would last in each U.S. state, GOBankingRates first assumed a retirement age of 65 or older. It then analyzed each state’s cost of living, including expenses for housing, groceries, health care, transportation and utilities.
All data comes from the 2020 Consumer Expenditure Survey from the Bureau of Labor Statistics and the Missouri Economic Research and Information Center.
How much to save for retirement
While this data can give you an idea of how much certain places may cost, it’s important to remember that retirement looks different for everyone. The amount you need can vary widely depending on your desired retirement lifestyle.
CNBC’s retirement planning tool Make It can give you an idea of how much money you’ll need to retire comfortably, based on your age and income.
But regardless of how much you want to save for retirement, start by focusing on what you can do now to help you reach your goal, including understanding how much of your annual income you can spend on retirement savings, Julie Virta, a senior financial advisor with Vanguard Personal Advisor Services, tells CNBC Make It.
“We recommend that investors save between 12 and 15% of their salary,” she says, including employer contributions.
However, for many investors, it may not be possible to put away that much, especially those who are just starting out in their careers. If that’s you, try to contribute at least enough to an employer-sponsored retirement plan to earn your employer’s full match, says Virta.
From there, aim to increase your retirement contribution by 1% to 2% each year until you reach the target savings rate of 12% to 15%.
Plus, it’s smart for young investors to see if their employers offer financial education resources or advisory services as part of their benefits package. These services can help put you on track to reach your retirement savings goals, says Virta.
Most importantly, it’s critical to stay committed to your long-term financial goals, even in times of market volatility.
“For those who are just starting out, they may have more than 40 years to save for retirement,” says Virta. “Maintaining a savings rate of 12 to 15%, during times of market calm or volatility, over the course of more than four decades is one of the best ways to prepare for retirement.”
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Do not miss it: Americans Think You Need $1.7 Million to Retire Comfortably — Here’s How Much You Need to Save Every Month to Get There at 65