By Sarah Max
May 12, 2018

Location, location, location. It’s the battle hymn for buying real estate and – it turns out – a huge factor for retirees looking to make their savings last.

How big? All things being equal, $1 million in savings will last nearly twice as long in “low-cost” states such as Arkansas or Kansas than it will in, say, Hawaii, according to an analysis of state-by-state retirement cost-of-living data by HowMuch.net.

The analysis underscores just how much the decision of where to retire impacts the life of a nest egg.

To size up all 50 states, HowMuch.net first looked at how much money someone 65 and older actually spends each year, according to Bureau of Labor Statistics.

The researchers then adjusted that for cost-of-living data tracked by the Council for Community and Economic Research, which factors for average costs for groceries, housing, utilities, transportation, healthcare, and dozens of other goods and services.

Finally, HowMuch.net looked at how these costs impacted the life of a $1 million nest egg. To keep things simple, researchers assumed no changes in cost of living over time and no investment returns after retirement.

The 5 States Where $1 Million Lasts the Longest

The state where your retirement dollar will go the furthest: Mississippi. With average cost of living of just over $39,000, a million-dollar nest egg in the Magnolia State should last you 25 years and six months.

Arkansas, with annual expenses of just under $40,000, finished second in the rankings at 25 years. And it was followed by Tennessee, Kansas, and Oklahoma — all with annual expenses of around $41,000 and all being able to sustain a $1 million nest egg for nearly 24 1/2 years.

What mattered most? Not surprisingly, housing costs and healthcare are the biggest variables to extending your retirement savings. In fact, all the top ten most affordable states have housing costs at least 20% below the national average, says Raul Amoros, content director for HowMuch.net.

Contrast that to the top ten most expensive states, where housing is, at a minimum 50% higher the national average.

In Washington D.C. and Hawaii — where $1 million will only last 14 years and 13 years, respectively — housing is two-and-a-half to three times more than the national average.

“It is not surprising that Hawaii ranks as one of the worst states in affordability,” he adds. “By every measure, it is incredibly expensive to live the island life on a fixed income.”

Indeed, in Hawaii, where annual expenses run more than $76,000, a $1 million retirement portfolio will only last about 13 years.

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No doubt, there are many details that ultimately go into the decision of where to put down roots in retirement.

Moreover, your expenses will vary depending on where you settle in any given state. Seven-figures will last a lot longer in Old Forge, New York, for instance, than it will in New York City.

Still, there’s something to be said for measuring your retirement savings not just in dollars but in the number of years it will last.

“The good news,” Amoros says, “is that in well over half the country, a $1 million nest egg can support someone for 20 years or longer.” (And that’s without the benefit of investment gains in retirement, which could sustain you for several years longer.)

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