Samuel Stebbins, 24/7 Wall St. via The Center Square
The consumer price index surged by 7% in December of 2021, the fastest rate in four decades. Surging inflation is a troubling development for the millions of American retirees relying on fixed incomes and those whose savings are invested in equities markets – and it should serve as a wake-up call for the one in every four American adults with no retirement savings.
While budgeting for retirement can be difficult, it is essential for those who want financial security throughout their retirement. Including a small financial cushion for unforeseen expenditures and economic challenges, the average 65-year-old American can expect to spend about $1,067,000 throughout retirement. This takes into account estimated annual spending, a small financial cushion, and life expectancy at 65. Here are 19 things to do if you want to retire early.
Because cost of living and life expectancy differ from state to state, expected spending throughout retirement varies as well. States with higher retirement spending estimates tend to have either higher average cost of living, longer average life expectancy, or both – and vice versa.
In Pennsylvania, average retirement spending stands at an estimated $1,019,615 – the 22nd highest among states. Goods and services in the state are 2.4% less expensive than they are, on average, nationwide, and life expectancy at age 65 is 19.1 years to 84.1, compared to 19.5 years to 84.5 across the country as a whole.
Of course, estimated retirement spending is not synonymous with retirement savings. For example, once Americans reach age 62, they can start collecting Social Security retirement benefits, which amounts to an average monthly payment of $1,560 and can be as high as $3,240 per month. While this is not nearly enough to cover most spending, it is a significant source of income that should be considered when deciding on savings needs. Retirement spending and financial needs also vary considerably from one person to the next.
The calculation used to create total retirement spending is based on the average annual expenditure for U.S. residents 65 years and older in 2020 of $47,579, according to the Bureau of Labor Statistics. We adjusted that figure by local cost of living from the Bureau of Economic Analysis and average life expectancy in years at age 65 from the Centers for Disease Control and Prevention, and multiplied the result by 115% in order to reflect greater financial stability and comfort in retirement.
| Avg. cost of comfortable retirement ($) | Cost of living | Life expectancy at age 65 (years) | ||
|---|---|---|---|---|
| 1 | Hawaii | 1,292,872 | 12% more than avg. | 86.1 |
| 2 | California | 1,226,026 | 10.4% more than avg. | 85.3 |
| 3 | New York | 1,218,129 | 10.2% more than avg. | 85.2 |
| 4 | New Jersey | 1,210,393 | 11.2% more than avg. | 84.9 |
| 5 | Massachusetts | 1,169,877 | 7.4% more than avg. | 84.9 |
| 6 | Washington | 1,163,099 | 7.4% more than avg. | 84.8 |
| 7 | Connecticut | 1,148,930 | 3.4% more than avg. | 85.3 |
| 8 | Maryland | 1,130,187 | 6.5% more than avg. | 84.4 |
| 9 | Colorado | 1,125,680 | 2.9% more than avg. | 85.0 |
| 10 | New Hampshire | 1,106,575 | 3.7% more than avg. | 84.5 |
| 11 | Oregon | 1,106,165 | 2.6% more than avg. | 84.7 |
| 12 | Florida | 1,096,587 | 0.7% more than avg. | 84.9 |
| 13 | Rhode Island | 1,086,644 | 1.8% more than avg. | 84.5 |
| 14 | Alaska | 1,084,571 | 3.2% more than avg. | 84.2 |
| 15 | Minnesota | 1,079,270 | 1.4% less than avg. | 85.0 |
| 16 | Vermont | 1,076,299 | 0.7% less than avg. | 84.8 |
| 17 | Illinois | 1,066,540 | 0.5% more than avg. | 84.4 |
| 18 | Virginia | 1,066,344 | 1% more than avg. | 84.3 |
| 19 | Arizona | 1,062,468 | 0.9% less than avg. | 84.6 |
| 20 | Texas | 1,029,393 | 0.5% less than avg. | 83.9 |
| 21 | Delaware | 1,028,189 | 2.1% less than avg. | 84.2 |
| 22 | Pennsylvania | 1,019,615 | 2.4% less than avg. | 84.1 |
| 23 | Utah | 1,017,047 | 4.7% less than avg. | 84.5 |
| 24 | Maine | 1,011,380 | 3.2% less than avg. | 84.1 |
| 25 | Wisconsin | 994,278 | 6.8% less than avg. | 84.5 |
| 26 | Nevada | 993,064 | 2.9% less than avg. | 83.7 |
| 27 | North Dakota | 992,112 | 8% less than avg. | 84.7 |
| 28 | South Dakota | 986,475 | 8.5% less than avg. | 84.7 |
| 29 | Montana | 986,329 | 7.6% less than avg. | 84.5 |
| 30 | Nebraska | 980,933 | 7.1% less than avg. | 84.3 |
| 31 | New Mexico | 976,982 | 8.4% less than avg. | 84.5 |
| 32 | Michigan | 972,547 | 6% less than avg. | 83.9 |
| 33 | Idaho | 963,044 | 8.8% less than avg. | 84.3 |
| 34 | Iowa | 961,471 | 9% less than avg. | 84.3 |
| 35 | Wyoming | 959,105 | 7.7% less than avg. | 84.0 |
| 36 | Georgia | 951,812 | 5.5% less than avg. | 83.4 |
| 37 | Kansas | 950,110 | 7.6% less than avg. | 83.8 |
| 38 | North Carolina | 939,694 | 8.2% less than avg. | 83.7 |
| 39 | South Carolina | 932,705 | 8.4% less than avg. | 83.6 |
| 40 | Missouri | 931,203 | 7.5% less than avg. | 83.4 |
| 41 | Indiana | 926,213 | 7.5% less than avg. | 83.3 |
| 42 | Ohio | 923,109 | 8.3% less than avg. | 83.4 |
| 43 | Louisiana | 908,073 | 7.3% less than avg. | 82.9 |
| 44 | Tennessee | 902,530 | 7.8% less than avg. | 82.9 |
| 45 | Oklahoma | 879,430 | 8.7% less than avg. | 82.6 |
| 46 | Arkansas | 873,451 | 10.8% less than avg. | 82.9 |
| 47 | Kentucky | 859,649 | 10.2% less than avg. | 82.5 |
| 48 | Alabama | 859,496 | 10.7% less than avg. | 82.6 |
| 49 | West Virginia | 847,044 | 12% less than avg. | 82.6 |
| 50 | Mississippi | 840,470 | 12.2% less than avg. | 82.5 |