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Wednesday, January 22, 2020

How Does Your State Stack Up?

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An article on Yahoo Finance caught my eye yesterday. The topic was which state offered the best financial outlook for retirees. Yahoo Finance cited a study by GOBankingRates as the source of information to rate each of the 50 states. GOBankingRates based their ranking on how long $100,000 would last for a typical retiree, given the expected expenses for a person 65 or over and the cost of living in each state. The study took into account that each retiree would also be receiving Social Security income in addition to using their savings.

Just above the map are blue and green boxes with ascending number of months and years, from left to right, just below. These time spans provide rough estimates for how long that $100,000 of savings would last in their color-coordinating states. Upon finding your state on the map, look at the number. The higher the number, the lower the amount of time $100,000 of retirement savings will last. The lower the number, the greater the desirability.

I live in Washington state, with a teal blue fill and a ranking of 36. This means that out of 50 states, my state is 14 from the bottom on the list of best states in which to retire. The teal fill indicates that $100,000 would last a 65 year old in Washington state, on average, between 1 year 9 months and 2 years.

This study didn't address situations such as one part of a state having a significantly higher cost of living than another part of the same state. In addition, it's not clear what kind of spending habits this study forecasted for typical retirees for a $100,000 draw down of their savings. It's very possible that some folks in my state could go through $100,000 in much less time than 1 year 9 months, if they live in the Seattle metropolitan area and tend to live more extravagantly than others. Meanwhile, it's also very possible that other folks may take much longer than 2 years to draw down $100,000, if they live away from the urban center and have always made frugal choices for their life.

They say that the best predictor of future behavior is past behavior. I know several people who earn over $100,000 per year, yet they say they're living month to month with nothing left over to put into savings. And I also know some people who earn half that amount and still have enough left over to add a substantial amount to their savings each month. This knowledge gives me hope that we'll be able to make that $100,000 last much longer than the experts forecast. 

Part of that achievement will be in the provisions that we make now that will enable us to spend less in years to come, such as making our home more energy efficient, setting up easy-to-work raised vegetable garden areas in our yard, planting fruit trees now for harvest in the next decade, making sensible health choices today in order to use less medical care later, and creating streams of income to sustain us in post-retirement years. Or, we may just move to Mississippi.

How did your state stack up in this ranking? What kinds of provisions are you making now that will help you live frugally later?


  1. I live in Michigan which appears better than most for retirement but it's cold and nasty in the winter with a fair amount of shoveling. As I get older that doesn't appeal to me. Even moving 4 to 5 hours south is appealing due to winter being a bit mild but selling here and buying there when I'm in my late 60s or even early 70s doesn't sound wonderful either.

    Thankfully, I'm very frugal and wherever we are when we retire will also have frugality automatically built into our lifestyle.


  2. I don't listen to these kinds of things. We have friends that make a LOT more money then we do. They live above their means and live paycheck to paycheck. They have a ton of debt and very little invested in their future. Hubby has a good income and I work a very part time job. We are able to max out our 401Ks, invest in IRAs, save money for college and other items. We live below our means. I garden and cook from scratch, Hubby does home and car repairs. We will be much better off them most of the people we know because we already do the work. They just pay other's to do it for them. I know you would last much longer because of all the ways you stretch and save your money too.

  3. Hi Alice,
    Moving for retirement would definitely have its challenges. That's one of those things that I need to think through and wrap my mind around. I've known people who have done this successfully.
    You make a very good point -- living frugally builds in habits to live successfully later.

  4. Hi Marybeth,
    Yes, I could see some serious flaws in the study. It didn't take into account that in most states, there are substantially cheaper places to live compared to the main urban centers. And, as you highlight, living frugally can extend one's savings substantially. I believe you will do well in retirement, too.

  5. Maryland is not doing very well coming in at #45.

    I think there are very good points about people practicing a frugal life style before and after retirement. It can make a big difference in how far money will stretch. However, one thing to think about is as you age you, may not be able to do as many things for yourself and may be paying for more services. For instance, you mow you own lawn now, but may not be able to manage it later and will have to pay for that service. There are many more examples of things like this. So when thinking about a frugal lifestyle in retirement, you need to factor in expenses that may change as you do. This is something that became very clear to me as I watched my parents age.

  6. I live in PA and am 30. I'll let you know how it goes, my husband retired almost 2 years ago. Our high expense is healthcare for me. I am 7 years younger and at almost 62 have a couple years for Medicare.

  7. Hmm. Is that amount per person or per couple? There are so many variables that it seems hard to tease that kind of thing out. I do think that those of us frugalistas out there have a mindset that will help us in our retirement years .... but even with making good lifestyle choices, sometimes health crises still come which can completely blow your savings of many years. For me, personally, I try to make good choices and then trust that God has the details under control. Otherwise I'm an anxious mess!

  8. NC looks to be in better shape than many states with a score of 20. My husband and I live frugally,saving on smaller things that allows us to splurge on larger things. A lowered cost of living in NC helps, but because we live in a resort area, our cost of living for the state is higher comparatively. My husband has been retired for 12 yrs (he retired at 53!) so we have been practicing this for a bit. I must confess I was panicked in the beginning because we still had one child in college and the decrease in income was a big change. But we adjusted, made it through, have continued to save in IRAs and 401ks and paid off our house. I'm looking at retiring soon, sometime this year. But, though I'm sure we'll be okay, I am still very nervous with very mixed emotions about it.I have a job that I love and have done for many, many years (42 yrs and counting!). I am fortunate that I will receive a pension plus our savings, but the uncertainty keeps me awake at night. Change is a hard for me, so we'll see!

  9. Well, no surprise that my state is financially worst, yet ironically is one of the best states to live a long healthy life. We've been retired 4 years. We have kept our expenses very low. Aside from helping our grandson, our largest expense is medical insurance. We opted at 65 to enroll in Medigap Plan F, as a way to budget medical expenses. Also, we installed PV panels many years ago, so our electric bill is the base rate of $25. Also we are debt free. We live and shop very frugally, and continue to make sacrifices in order to help other members of our family in time of need. I think I still have an immigrant mindset, though I am 3rd generation.(sansei). My parents sacrificed a lot for my security so I cannot waste money frivolously. I feel I need to be a good steward of our money for the next generation. Times are becoming increasingly unstable, that thinking like this IMHO makes some sense.

    Have a great tomorrow,

  10. Hi Live and Learn,
    That's a very good point, about needing to hire help in later years. When my father reached the point that he no longer wanted to mow his own lawn or care for his flower beds, he sold his house and bought a condo. Downsizing to a more reasonably-size property, with less upkeep, hopefully lower costs, and perhaps within walking distance of shopping areas or medical office buildings is another way to help savings last in retirement and make life easier.
    Thanks for your thoughts, Live and Learn.

  11. Hi Cheryl,
    I think health care will be a big expense for many of us in our futures. Insurance is expensive, and then so are the co-pays and coinsurance. I wish you a life of good health!

  12. Hi Kris,
    I am assuming the figures were based on a single person. However, if that is so, 2 people living in the same home will incur fewer household related expenses per person than one person living on their own. So, yes -- another issue with this study and article. And you're right, even making all of the "right" choices for our health can sometimes not be enough. We have no control over our genetic heritage. But, I do believe that we will be better off taking care of our health now than not.
    You have a good attitude, Kris!


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