Many Americans work their entire lives with an eye on the retirement finish line, but what happens when it’s crossed? Deciding on a dream destination for the golden years should factor in that locale’s price tag, which can vary drastically.
MagnifyMoney researchers looked at the price to retire in every U.S. state, including costs for housing, food, transportation, Medicare Part B and Part C, entertainment and personal care. Researchers found Hawaii is the most expensive state to spend your retirement years, while Arkansas is the least expensive state.
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How older Americans spend their money
In general, people tend to spend less money as they get older. Peak spending years generally occur between ages 45 and 54 and decrease by 35% when people reach the 65-and-older range. Those 75 and older spend even less, with average spending that’s 44% lower than during those peak years.
As for what older Americans spend their money on, health care is a priority. In fact, those 65 and older spend 32% more annually, on average, on health care than all Americans.
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5 helpful retirement strategies
To help ensure your retirement dreams match up with your retirement reality, planning is vital. Whether you hire a financial advisor to help you map out a course or do the work on your own, it’s important to evaluate and use the tools that can help you plan for your best financial future.
1. Start saving early
One of the biggest mistakes people make is not starting saving and investing for retirement early enough. Ideally, people should start as soon as they enter the working world, even if the amount they start investing is small. That’s because they have the power of compound interest on their side and can take advantage of that.
“The best time to start saving for retirement is now,” says Ismat Mangla, senior director of content for MagnifyMoney. “If you haven’t started yet, don’t wait to start putting money away — even if it’s a small amount. It’s important to get into the habit, and you want time on your side. You’re not just saving for retirement, you are investing for retirement. Simply socking money away is not enough. You need to invest that money strategically for it to grow.”
2. Take advantage of employer-sponsored plans
Mangla urges people to take advantage of employer-sponsored plans, such as 401(k) accounts, which are tax-advantaged retirement accounts that allow employees to make contributions.
“Many 401(k) plans offer employer matching, which is a big part of your compensation,” she says. “Too many people don’t contribute enough money to their 401(k) accounts to at least earn the employer match, which means they are forfeiting a part of their income.”
3. Consider an individual retirement account (IRA)
If your employer doesn’t offer a retirement plan or you’ve maxed out your contributions to one, you may want to consider opening an IRA. While there are several types with various limits and rules, they offer a way to save for retirement with tax benefits.
“I especially like Roth IRAs because they offer a way to diversify your income in retirement,” Mangla says. “You’re putting after-tax money in a Roth IRA, but when you eventually withdraw the money in retirement, you won’t have to pay any taxes on it.”
4. Keep it simple
It may make sense to get help from a certified financial planner or financial advisor who can help you figure out the asset allocation you need to reach your goals. But there’s no need to over-complicate investing.
“I encourage investors to focus on low-fee index funds for their investments,” Mangla says. “There is a ton of research that shows these funds fare better in the long run than actively managed funds.
“I like a set-it-and-forget mentality. You don’t need to tinker too much with your retirement investments once you’ve allocated them properly. And don’t pay attention to the short-term ups and downs of the market. Keep your eye on the long game.”
5. Automate investments
Whether directly from your paycheck into an employer-sponsored plan or from your bank account into an online brokerage account, making automatic contributions to retirement savings can be a good way to ensure they get made. Instead of forgetting to make them or using those funds for something else (“Just this once!”), it’s a great way to keep you on track to meet your goals.
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Methodology
MagnifyMoney researchers used data from the U.S. Bureau of Labor Statistics (BLS), U.S. Bureau of Economic Analysis (BEA), U.S. Census Bureau and MedicareAdvantage.com to estimate various costs of retirement in every state.
We first used the 2019 Consumer Expenditure Survey from BLS to find out how much households aged 65 and older spend yearly, on average, on:
- Food
- Transportation (vehicle purchases, maintenance and repairs, vehicle insurance, etc.)
- Entertainment
- Personal care
We then multiplied those figures by BEA regional price parities from 2019, which calculate the difference in price levels for goods and services across each state. Next, we added each total to the 2019 U.S. Census Bureau one-year statewide estimates on housing costs for those with a mortgage, from mortgage payments to real estate taxes to utilities.
Finally, we added the average cost in 2021 of Medicare Part B and Part C (also known as a Medicare Advantage plan) across each state where available (Alaska doesn’t offer Medicare Part C). We used the standard Part B premium for 2021, while Part C data was compiled by MedicareAdvantage.com.
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Alabama
Housing: $1,172
Food: $472
Transportation: $536
Medicare Part B, Part C: $173
Entertainment: $170
Personal Care: $51
Image Credit: DepositPhotos.com.
Alaska
Housing: $1,882
Food: $578
Transportation: $656
Medicare Part B, Part C: $149*
Entertainment: $209
Personal Care: $63
*Medicare Part C isn’t available in Alaska.
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Arizona
Housing: $1,457
Food: $530
Transportation: $601
Medicare Part B, Part C: $165
Entertainment: $191
Personal Care: $57
Image Credit: DepositPhotos.com.
Arkansas
Housing: $1,094
Food: $466
Transportation: $529
Medicare Part B, Part C: $171
Entertainment: $168
Personal Care: $50
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California
Housing: $2,421
Food: $640
Transportation: $727
Medicare Part B, Part C: $169
Entertainment: $231
Personal Care: $69
Image Credit: DepositPhotos.com.
Colorado
Housing: $1,845
Food: $560
Transportation: $636
Medicare Part B, Part C: $172
Entertainment: $202
Personal Care: $61
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Connecticut
Housing: $2,087
Food: $577
Transportation: $656
Medicare Part B, Part C: $187
Entertainment: $208
Personal Care: $63
Image Credit: DenisTangneyJr.
Delaware
Housing: $1,557
Food: $547
Transportation: $621
Medicare Part B, Part C: $171
Entertainment: $197
Personal Care: $59
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Florida
Housing: $1,530
Food: $555
Transportation: $631
Medicare Part B, Part C: $162
Entertainment: $200
Personal Care: $60
Image Credit: DepositPhotos.com.
Georgia
Housing: $1,450
Food: $513
Transportation: $582
Medicare Part B, Part C: $166
Entertainment: $185
Personal Care: $56
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Hawaii
Housing: $2,472
Food: $656
Transportation: $745
Medicare Part B, Part C: $195
Entertainment: $237
Personal Care: $71
Image Credit: DepositPhotos.com.
Idaho
Housing: $1,306
Food: $507
Transportation: $576
Medicare Part B, Part C: $185
Entertainment: $183
Personal Care: $55
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Illinois
Housing: $1,688
Food: $536
Transportation: $608
Medicare Part B, Part C: $179
Entertainment: $193
Personal Care: $58
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Indiana
Housing: $1,146
Food: $488
Transportation: $554
Medicare Part B, Part C: $169
Entertainment: $176
Personal Care: $53
Image Credit: DepositPhotos.com.
Iowa
Housing: $1,266
Food: $489
Transportation: $556
Medicare Part B, Part C: $179
Entertainment: $177
Personal Care: $53
Image Credit: DepositPhotos.com.
Kansas
Housing: $1,387
Food: $491
Transportation: $557
Medicare Part B, Part C: $167
Entertainment: $177
Personal Care: $53
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Kentucky
Housing: $1,179
Food: $481
Transportation: $546
Medicare Part B, Part C: $168
Entertainment: $173
Personal Care: $52
Image Credit: DepositPhotos.com.
Louisiana
Housing: $1,279
Food: $483
Transportation: $549
Medicare Part B, Part C: $176
Entertainment: $174
Personal Care: $52
Image Credit: DepositPhotos.com.
Maine
Housing: $1,387
Food: $546
Transportation: $620
Medicare Part B, Part C: $174
Entertainment: $197
Personal Care: $59
Image Credit: DepositPhotos.com.
Maryland
Housing: $2,015
Food: $592
Transportation: $672
Medicare Part B, Part C: $213
Entertainment: $214
Personal Care: $64
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Massachusetts
Housing: $2,276
Food: $607
Transportation: $689
Medicare Part B, Part C: $222
Entertainment: $219
Personal Care: $66
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Michigan
Housing: $1,285
Food: $508
Transportation: $576
Medicare Part B, Part C: $206
Entertainment: $183
Personal Care: $55
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Minnesota
Housing: $1,595
Food: $539
Transportation: $612
Medicare Part B, Part C: $213
Entertainment: $194
Personal Care: $58
Image Credit: DepositPhotos.com.
Mississippi
Housing: $1,149
Food: $464
Transportation: $527
Medicare Part B, Part C: $166
Entertainment: $167
Personal Care: $50
Image Credit: Feverpitched / iStock.
Missouri
Housing: $1,271
Food: $488
Transportation: $554
Medicare Part B, Part C: $167
Entertainment: $176
Personal Care: $53
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Montana
Housing: $1,466
Food: $514
Transportation: $584
Medicare Part B, Part C: $195
Entertainment: $186
Personal Care: $56
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Nebraska
Housing: $1,427
Food: $492
Transportation: $559
Medicare Part B, Part C: $169
Entertainment: $178
Personal Care: $53
Image Credit: Pixabay.com.
Nevada
Housing: $1,589
Food: $536
Transportation: $608
Medicare Part B, Part C: $160
Entertainment: $193
Personal Care: $58
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New Hampshire
Housing: $1,963
Food: $586
Transportation: $665
Medicare Part B, Part C: $179
Entertainment: $211
Personal Care: $63
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New Jersey
Housing: $2,413
Food: $638
Transportation: $724
Medicare Part B, Part C: $174
Entertainment: $230
Personal Care: $69
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New Mexico
Housing: $1,269
Food: $501
Transportation: $569
Medicare Part B, Part C: $177
Entertainment: $181
Personal Care: $54
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New York
Housing: $2,156
Food: $640
Transportation: $726
Medicare Part B, Part C: $189
Entertainment: $231
Personal Care: $69
Image Credit: Frederic Prochasson.
North Carolina
Housing: $1,318
Food: $504
Transportation: $573
Medicare Part B, Part C: $168
Entertainment: $182
Personal Care: $55
Image Credit: DepositPhotos.com.
North Dakota
Housing: $1,430
Food: $491
Transportation: $558
Medicare Part B, Part C: $225
Entertainment: $177
Personal Care: $53
Image Credit: ChrisBoswell.
Ohio
Housing: $1,250
Food: $486
Transportation: $552
Medicare Part B, Part C: $194
Entertainment: $175
Personal Care: $53
Image Credit: Pixabay.com.
Oklahoma
Housing: $1,231
Food: $480
Transportation: $544
Medicare Part B, Part C: $170
Entertainment: $173
Personal Care: $52
Image Credit: Jamesbowyer.
Oregon
Housing: $1,750
Food: $562
Transportation: $638
Medicare Part B, Part C: $197
Entertainment: $203
Personal Care: $61
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Pennsylvania
Housing: $1,477
Food: $533
Transportation: $606
Medicare Part B, Part C: $201
Entertainment: $192
Personal Care: $58
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Rhode Island
Housing: $1,837
Food: $557
Transportation: $632
Medicare Part B, Part C: $191
Entertainment: $201
Personal Care: $60
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South Carolina
Housing: $1,250
Food: $503
Transportation: $571
Medicare Part B, Part C: $164
Entertainment: $182
Personal Care: $55
Image Credit: DepositPhotos.com.
South Dakota
Housing: $1,371
Food: $483
Transportation: $548
Medicare Part B, Part C: $219
Entertainment: $174
Personal Care: $52
Image Credit: DepositPhotos.com.
Tennessee
Housing: $1,264
Food: $493
Transportation: $560
Medicare Part B, Part C: $174
Entertainment: $178
Personal Care: $53
Image Credit: NathanMerrill.
Texas
Housing: $1,675
Food: $531
Transportation: $602
Medicare Part B, Part C: $170
Entertainment: $191
Personal Care: $57
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Utah
Housing: $1,605
Food: $531
Transportation: $602
Medicare Part B, Part C: $168
Entertainment: $191
Personal Care: $57
Image Credit: johnnya123.
Vermont
Housing: $1,606
Food: $567
Transportation: $644
Medicare Part B, Part C: $190
Entertainment: $205
Personal Care: $61
Image Credit: DenisTangneyJr.
Virginia
Housing: $1,792
Food: $557
Transportation: $632
Medicare Part B, Part C: $172
Entertainment: $201
Personal Care: $60
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Washington
Housing: $1,951
Food: $596
Transportation: $677
Medicare Part B, Part C: $190
Entertainment: $215
Personal Care: $65
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West Virginia
Housing: $1,052
Food: $479
Transportation: $544
Medicare Part B, Part C: $181
Entertainment: $173
Personal Care: $52
Image Credit: DepositPhotos.com.
Wisconsin
Housing: $1,412
Food: $505
Transportation: $574
Medicare Part B, Part C: $194
Entertainment: $182
Personal Care: $55
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Wyoming
Housing: $1,417
Food: $510
Transportation: $579
Medicare Part B, Part C: $201
Entertainment: $184
Personal Care: $55
This article originally appeared on MagnifyMoney.com and was syndicated by MediaFeed.org.
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