These affordable retirement states are worth checking out!
At this point in their lives, many people know exactly where they want to retire, maybe by their favorite golf course or somewhere they can be near their grandkids. But for those who don’t, the location is less important than finding affordable retirement states to live out their golden years and get the most bang for their buck, relieving some of the financial stress of retirement.
After all, the post-work years should be a relatively carefree and relaxing time. While most of us understand that money won’t buy happiness, being low on funds can lead to stressors that devalue our quality of life. With the cost of living seemingly permanently rising, Social Security probably isn’t enough to live on.
Yet, according to the U.S. Department of Labor, “only about half of Americans have calculated how much they need to save for retirement.” And even though most people spend about 20 years in retirement, only a quarter of private-industry workers contribute to 401(k) or other defined contribution plans.
So, the unfortunate fact is that retirement is more expensive than people think. Experts estimate that individuals need anywhere from 70% to 90% of their pre-retirement income to keep up with the same standard of living after they retire.
This means it’s more important than ever for seniors to settle down in areas of the country that won’t stress them financially. With that in mind, Easy Seniors Club determined the cost of a comfortable retirement in each state.
Read on to learn about 6 affordable retirement states that stack up in the cost of living and find the best places to retire for less than $65,000 a year in the United States.
Alabama
-Total expenditures: $50,980
-20% comfort buffer: $10,196
-Cost of a comfortable retirement annually: $61,176
Alabama has low living costs, tax rates, affordable housing, incredible food, a picturesque Gulf Coast, and an overall warm climate. On the other hand, the Heart of Dixie has a low quality of living, a constrained healthcare system, and dangerous animals.
Georgia
-Total expenditures: $52,832
-20% comfort buffer: $10,566
-Cost of a comfortable retirement annually: $63,398
Benefits of retiring in this affordable retirement state include:
-Relatively low cost of living.
-Favorable tax system, including exemptions on retirement income.
-Rich cultural heritage.
-Beautiful scenery and mild climate.
-Many outdoor activities and recreational opportunities.
-Access to world-class healthcare facilities.
Kentucky
-Total expenditures: $53,584
-20% comfort buffer: $10,717
-Cost of a comfortable retirement annually: $64,301
Social Security income is entirely exempt from taxation in this affordable retirement state. You’ll also pay relatively low sales and property taxes. People are friendly, and you get access to many fantastic outdoor activities. Most importantly, you have senior benefits such as Medicaid, Medicare, and home-delivered meals are the norm here!
North Dakota
-Total expenditures: $53,700
-20% comfort buffer: $10,740
-Cost of a comfortable retirement annually: $64,440
The pros of retiring in this affordable retirement state include outdoor activities, affordability, a peaceful environment, and quality healthcare. The cons include limited cultural scenes, harsh winters, and distance from family.
Tennessee
-Total expenditures: $52,253
-20% comfort buffer: $10,451
-Cost of a comfortable retirement annually: $62,704
Benefits of this affordable retirement state include:
-Low cost of living
-Low retirement taxes
-Delicious food
-Warm weather
-Gorgeous landscapes
-Southern hospitality
-Rich music scene that includes rock, folk, country, and bluegrass.
West Virginia
-Total expenditures: $48,492
-20% comfort buffer: $9,698
-Cost of a comfortable retirement annually: $58,190
Some reasons to consider this affordable retirement state include:
-Low crime rate: This affordable retirement state has a lower crime rate than others in the US, making it a peaceful place to live.
-Cultural scene: It has a rich cultural scene, with countless galleries, museums, and performing arts venues. The state also hosts several events yearly, including the Appalachian String Band Music Festival.
-Natural beauty: West Virginia is known for its astonishing natural scenery, including the Appalachian Mountains, lush forests, and numerous rivers and lakes. It also offers vast opportunities for outdoor recreation like fishing, hiking, and boating.
How did the study determine the most affordable retirement states?
To discover the states where you can retire comfortably for the least amount of money, here at Easy Seniors Club, we started by asking the most fundamental question: How much money do you need in retirement?
Because everyone has different needs, there isn’t a one-size-fits-all answer, but there are some ways to get a basic idea of how much you need to save before entering your golden years. We started with determining how much the average person spends in retirement.
We saw that experts examine data on individuals ages 65 and older, drawing from a US government survey. Conclusions are based on the Bureau of Labor Statistics’s Consumer Expenditure Survey.
The average consumer expenditures were adjusted by the Missouri Economic Research and Information Center’s quarter-two cost-of-living index for each state to calculate total consumption expenditures. The study showed that there were a few key areas of senior spending.
A certified financial planner explains that experts ranked spending in five categories to create a baseline for the cost of living in every state. To come to a conclusion on what a comfortable retirement income would be, each total was increased by 20% to account for added room in the budge.
The categories that were tracked were health care, housing, groceries, utilities, and transportation.
But… Affordability isn’t everything!
Even though it’s true that living within our means is crucial in our golden years, finding the most affordable retirement state to live doesn’t make sense for everyone because some folks are happier living with less, and if you stop to think about it, it really just comes down to balance.
You must take a couple of things into consideration, including the cost of living, but you should also make sure you’re picking a place where you can be happy.
There are many people who have retired with little to no income in high-cost locations and those who need a few million dollars to retire in a “lower” cost-of-living area because of their individual spending goals.
Don’t forget about taxes
Even though the studies we went through provide valuable information for retirees deciding where to live, there are some factors they didn’t take into consideration, such as taxes. The tax aspect of retirement income is often overlooked.
For instance, some states don’t tax pension income, Social Security, or retirement account withdrawals, which means your dollars go further even if things cost more in that state. A certified financial planner in Georgia agrees.
He says that if a majority of the assets used to pay for living expenses come from tax-deferred accounts like 401(k)s and IRAs, state income tax rates could make the difference in which affordable retirement state is actually worth your golden years.
Maximizing your Social Security payment
While choosing an affordable retirement state to live out your golden years is crucial, maximizing your Social Security benefits is another critical part of it.
Here are a few ways you can increase your monthly retirement income. Considering these factors and planning ahead allows you to enjoy a more financially stable and comfortable retirement, no matter where you choose to live:
-Years worked: The amount of Social Security depends on your work history. The more years you’re employed and pay payroll taxes, the loftier your benefits. Your highest 35 years of earnings are considered when calculating the payment.
-Salary during those years: Your monthly payment is calculated based on your highest salaries. Maximize your earnings during your working years to get a bigger pension.
-Retirement age: Delaying your retirement until you’re 70 can increase your payment each month by up to 8% for every extra year you work after age 62.
What are your thoughts on these affordable retirement states? Be sure to let us know in the comments section below.
And if you found this article helpful, you might also like: Are You Losing Your Medicaid Coverage? 6 Things to Know
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