Retirement on $1 Million: Retirement planning is a critical part of financial well-being, and many Americans wonder if $1 million is enough to retire comfortably. The answer depends largely on where you live. The cost of living, healthcare expenses, and state taxes vary significantly, meaning that in some states, $1 million can last decades, while in others, it may run out sooner than expected.
To help you make informed decisions, we’ll break down how long $1 million will last in different U.S. states, provide expert advice on stretching retirement savings, discuss the best states for retirees on a budget, and explore alternative sources of retirement income.
Retirement on $1 Million
| Key Factor | Details |
|---|---|
| Average duration of $1 million in the U.S. | Approximately 17 years and 6 months |
| State with the longest-lasting $1 million | Mississippi – 22 years and 8 months |
| State with the shortest-lasting $1 million | Hawaii – 9 years and 7 months |
| Average monthly Social Security benefit (2024) | $1,924.35 |
| Recommended withdrawal rate | 3.7% per year |
| Alternative Income Sources | Part-time work, annuities, rental income, dividends |
While $1 million can provide a comfortable retirement, its longevity depends on where you live, healthcare costs, taxes, and lifestyle choices. States like Mississippi and Arkansas offer affordability, while states like Hawaii and California can drain savings quickly. By budgeting wisely, relocating, managing expenses, and diversifying income sources, retirees can make their savings last longer.
How Long Does $1 Million Last in Different States?
The Most Affordable States for Retirees
If you’re looking for a state where $1 million can stretch the longest, consider the following:
- Mississippi – 22 years, 8 months
- West Virginia – 21 years, 4 months
- Arkansas – 20 years, 6 months
- Oklahoma – 20 years, 3 months
- Kentucky – 20 years, 2 months
These states have low housing costs, affordable healthcare, and lower tax burdens—key factors that allow retirees to stretch their savings.
The Most Expensive States for Retirees
In contrast, $1 million runs out quickly in these high-cost states:
- Hawaii – 9 years, 7 months
- California – 13 years, 8 months
- New York – 14 years, 1 month
- Oregon – 15 years, 2 months
- Massachusetts – 15 years, 5 months
These states have higher housing prices, expensive healthcare, and higher tax rates, making it harder for retirees to sustain their savings.
Key Factors That Influence Retirement Savings Longevity
1. Cost of Living
The biggest factor that determines how long $1 million will last is the cost of living in a particular state. Housing, food, utilities, and transportation can vary significantly.
Example: The median home price in Mississippi is around $180,000, while in California, it exceeds $700,000. This means a retiree’s housing costs in California will be much higher, depleting savings faster.
2. Healthcare Expenses
Healthcare is often one of the largest expenses for retirees. States with lower healthcare costs will allow savings to last longer.
Example: According to a study by Fidelity, the average couple retiring in 2024 will need $315,000 for healthcare expenses alone.
3. State Taxes
Different states have different tax policies that can impact retirement income:
Tax-Friendly States: Florida, Nevada, Texas, and Tennessee have no state income tax.
High-Tax States: California, New York, and Oregon tax Social Security and retirement withdrawals, reducing retirees’ spending power.
4. Lifestyle Choices
Your retirement budget will also depend on your lifestyle and spending habits. If you enjoy traveling, dining out, or expensive hobbies, you’ll need more savings.
Alternative Sources of Retirement Income
Besides relying solely on savings, retirees can consider additional income streams to supplement their finances:
- Part-time Work – Consulting, freelancing, or remote work
- Annuities – Provide a steady income stream in retirement
- Rental Income – Investing in rental properties for passive income
- Dividends and Investments – Dividend-paying stocks and bonds
By combining these sources, retirees can extend their savings and maintain financial security.
How to Make $1 Million Last Longer in Retirement
1. Move to a Lower-Cost State
Relocating to an affordable state like Mississippi, Arkansas, or West Virginia can significantly reduce expenses.
2. Reduce Housing Costs
Consider downsizing to a smaller home or moving to an area with lower property taxes.
3. Budget Wisely
Use a 50/30/20 rule: 50% for necessities, 30% for lifestyle, and 20% for savings/investments.
4. Delay Social Security Benefits
If possible, wait until age 70 to claim Social Security to receive maximum monthly payments.
5. Invest Strategically
Diversify investments with low-risk bonds, annuities, and dividend stocks to generate passive income.
FAQs On Retirement on $1 Million
1. Is $1 million enough to retire comfortably?
It depends on where you live and your lifestyle. In low-cost states, it can last over 20 years, but in expensive states, it may only last 10 years.
2. What’s the best state for retirees on a budget?
Mississippi, West Virginia, and Arkansas offer the lowest living costs, making them great for retirees looking to stretch their savings.
3. How can I reduce my expenses in retirement?
Moving to a cheaper state, downsizing, budgeting, and delaying Social Security can help you reduce expenses.
4. What withdrawal rate should I use for my retirement savings?
Financial experts suggest a 3.7% annual withdrawal rate for long-term sustainability.
5. What are good alternative income sources in retirement?
Part-time work, rental income, annuities, and dividends are great ways to supplement retirement savings.
