Where you live plays a massive role in how far your retirement savings will stretch. Between varying tax rates, housing markets and cost-of-living differences, your location can either be a powerful wealth-building tool or a drain on your nest egg.
A recent analysis by GOBankingRates analyzed retirement readiness across the country to see which states are setting residents up for success and which are falling short.
To determine the rankings, researchers analyzed the average retirement savings balance in each state, which was given the heaviest weight in the scoring. They also factored in the average total annual cost of living, state and local tax rates and whether the state taxes Social Security benefits.
Here’s how the top states stack up, followed by the states ranking the worst.
The Top 5 States for Retirement Readiness
If you’re looking for a place where your savings might last longer, you might want to check out these states, according to the analysis:
- New Hampshire: The Granite State snagged the top spot thanks to a combination of high savings and low taxes. The average retirement savings balance here is impressive at over $512,000.
- Alaska: While the weather here might be cold, the financial climate is warm for retirees. Alaska ranks second with an average savings balance of roughly $503,000 and a low state and local tax rate.
- Delaware: Known for being tax-friendly, Delaware lands in third place. It boasts an average savings balance of about $454,000 and favorable tax conditions for retirees.
- Oregon: This Pacific Northwest state ranks fourth. Residents here have managed to stash away an average of $452,000 for their later years.
- Virginia: Rounding out the top five, Virginia residents have a strong average savings balance of nearly $493,000, helping offset a moderate cost of living.
The Bottom 5 States
On the other end of the spectrum, some states present a tougher financial challenge for retirees. High costs of living and lower average savings balances dragged these states down in the rankings.
Here are the bottom five:
- Rhode Island: This small state has big expenses. With a tax on Social Security and high living costs, Rhode Island lands in the bottom five at No. 46. The average retirement savings balance in the Ocean State is $393,000.
- North Dakota: Despite a lower cost of living, North Dakota ranks low due to a smaller average savings balance of about $319,000.
- New York: High taxes and living costs pushed New York to No. 48. The average retirement savings of $382,000 struggles to keep up with annual expenses.
- Hawaii: It may be paradise, but it comes with a hefty price tag. Hawaii has a high cost of living — over $104,000 annually for homeowners — which puts a strain on the average savings of $366,000.
- Utah: The Beehive State ranked dead last for retirement readiness. It has the lowest average retirement savings balance in the nation at just over $315,000 and is one of the states that taxes Social Security.
Check Your Own Readiness
Whether you live in a top-ranked state or one that requires a bit more budgeting, the most important factor is your own plan. Knowing the average costs and savings in your area can help you adjust your strategy to ensure you have the comfortable retirement you deserve.
