After years and years of hard work, retirement is what most people look forward to. They look forward to relaxing with their families, travelling and enjoying a peaceful retirement. However, for Americans, reaching retirement seems to be getting a bit difficult. It takes years to save for financial security and in two states, the number of years required to save, goes above 70 years.
The study examined the average retirement age in each state and calculated how many years of saving it would take for someone earning an average wage to afford retirement.
Two States Where Retirement Feels Nearly Impossible
The states that stand out is California and Massachusetts, whereby in both states, the years required to retire comfortably stretch to about 71 years.
There are also other states that face similar but not as extreme, challenges. In Hawaii, someone who is earning an average wage cannot retire at all if they don’t have sufficient savings. The increase in cost of living has contributed to these results.
What the Numbers Look Like Across the Country
- Alabama: Average retirement age is 62; years to retire: 34
- Alaska: Average retirement age 61; years to retire: 56
- Arizona: Average retirement age 63; years to retire: 48
- Arkansas: Average retirement age 62; years to retire: 38
- California: Average retirement age 64; years to retire: 71
- Massachusetts: Average retirement age 65; years to retire: 71
- Vermont: Average retirement age 65; years to retire: 55
- Hawaii: Average retirement age 65; years to retire: Not achievable on average wage
The other states come somewhere in between. States such as Georgia, Illinois and Minnesota require about 26 to 27 years of saving, whereas places such as Maine and Montana still require over 50 years of saving.
What This Means for Americans
These results show how difficult and challenging it is for people to plan for retirement. There are many Americans who believe that saving consistently throughout their work life would be enough, however, there are factors such as the increase in the cost of living impact how far your savings go.
The disparities suggest that retirees in high-cost states may need to either:
- Consider saving more of their income,
- Delay retirement significantly, or
- Consider relocating to a state with a lower cost of living.
The Role of Housing and Living Costs
The cost of housing is also a major factor. In states such as California and Massachusetts, the cost of housing is much higher as compared to the rest of the nation. This makes it difficult for people to save more money. Meanwhile, states with lower costs of living, such as Georgia or Illinois, allow residents to retire sooner on an average wage.
Planning Ahead Is More Important Than Ever
Given the challenges revealed in this study, Americans are being urged to plan more strategically. Experts suggest:
- If possible, start saving early. This will allow for your money to grow, and will in turn result in having a little more during your retirement years.
- If possible, wait a few years longer before retiring.
- Look at the area that you live in, consider the cost of living and see whether it’s in your budget or not.
- Don’t rely solely on Social Security; consider pensions, 401(k)s, IRAs, and other investments.
The Bottom Line
For many Americans, retirement may take longer, but the key factor is planning in advance. Planning for retirement isn’t just about putting money aside, it’s about understanding the cost of living and being realistic about your finances.
At the end of the day, the goal is a peaceful retirement. Americans must plan early and make proactive decisions now to ensure financial stability. Consult with a financial advisor if you require assistance with making financial decisions.