The place where you live undoubtedly has a significant impact on how much money you can save for your retirement. While financial advisers will suggest saving around 10 to 20% of your income for your retirement, the reality is that these numbers practically vary for people living in some parts of the same country.
Personal Capital, an investing and budgeting application, took a closer look at the average retirement savings of about 2.8 million app users, and discovered that savers in certain parts of the US were more successful with their saving efforts as compared to other areas. For instance, people residing on the Eastern Coast seemed to have more of a money cushion for their non-working years as compared to those living on the West Coast. In fact, four out of five states with the highest retirement savings were all in the eastern part of the country.
The reason behind the big difference
The primary trigger behind the huge difference in retirement savings seem to be the economic factors that directly affect how much a person can save in one state versus the other. Such factors typically include the state’s median wages, tax burdens, and above all, the cost of living.
If we talk numbers, the residents of Connecticut have the highest retirement savings in comparison to the entire nation, with an estimated balance of $523,568 per household. Alaska ($489,070) and New Hampshire ($494,564) are the only western states on the list of most tax-friendly states in the US. As per a 2020 Statista report, these states with the most retirement savings also share the highest ratio of multi-million households per capita in the US, which automatically boosts the overall average of their savings.
On the other hand, Utah ($300,392), Oklahoma ($340,389), and Mississippi ($340,849) are states with the lowest average retirement savings due to low median wages. Therefore, savings for retirement is a far-fledged possibility for the families living here.
All in all
Amin Dabit, VP of Advisory Service at Personal Capital, states that there is so much emphasis placed on retirement savings in recent times that it’s difficult to completely ignore them. Yet, there’s no magic dollar amount for the state you call home or where you’d like to spend your golden years. In the end, it all comes down to individuality and the lifestyle you desire to live.
