Everyone wants to know the magic number you need to be saving for retirement, but is there such a thing as where you live may also have an impact on your actual retirement savings? Almost 5 years ago today, we started to look at the average retirement saving amounts of our over 2 million dashboard/tool users (anonymized of course) to assess how much people had in their retirement nest eggs, broken out by age, generation and state. But a lot has changed since we did the analysis and 2020 has been a year of many challenges – market volatility, unemployment spikes, and in the midst of a world pandemic. So what has changed and has people’s retirement savings been impacted from all of the unrest in 2020? Let’s dive into the results…
The Average Retirement Savings by State
|Average Retirement Savings Balances|
|State||1/30/2020||3/31/2020||6/30/2020||Rank (as of 6/30/20)|
|AK||$466,003||$410,470||$460,571||2 out of 51|
|AL||$361,810||$317,440||$361,416||36 out of 51|
|AR||$333,864||$290,946||$336,237||43 out of 51|
|AZ||$377,797||$332,780||$376,981||31 out of 51|
|CA||$393,102||$344,608||$392,809||19 out of 51|
|CO||$393,699||$344,185||$389,137||22 out of 51|
|CT||$472,948||$415,981||$471,719||1 out of 51 (BEST)|
|DC||$306,378||$267,803||$305,410||50 out of 51|
|DE||$435,087||$384,873||$424,424||8 out of 51|
|FL||$385,941||$338,460||$381,142||29 out of 51|
|GA||$384,911||$337,440||$382,559||26 out of 51|
|HI||$327,512||$289,161||$325,590||46 out of 51|
|IA||$423,487||$367,904||$415,167||12 out of 51|
|ID||$350,936||$305,399||$347,053||39 out of 51|
|IL||$394,994||$346,007||$392,424||20 out of 51|
|IN||$379,175||$330,160||$375,185||32 out of 51|
|KS||$386,963||$339,530||$381,330||28 out of 51|
|KY||$387,941||$338,949||$383,028||25 out of 51|
|LA||$364,561||$317,351||$363,282||34 out of 51|
|MA||$427,789||$377,002||$429,387||7 out of 51|
|MD||$432,496||$381,363||$431,119||6 out of 51|
|ME||$391,263||$342,018||$386,624||24 out of 51|
|MI||$397,113||$347,898||$396,497||16 out of 51|
|MN||$410,678||$359,854||$409,137||14 out of 51|
|MO||$378,832||$332,813||$377,572||30 out of 51|
|MS||$303,430||$277,662||$323,561||47 out of 51|
|MT||$326,659||$280,787||$325,731||45 out of 51|
|NC||$398,464||$348,137||$395,023||18 out of 51|
|ND||$333,477||$284,042||$319,224||48 out of 51|
|NE||$374,179||$325,793||$370,770||33 out of 51|
|NH||$467,239||$406,884||$455,477||4 out of 51|
|NJ||$459,431||$402,803||$457,156||3 out of 51|
|NM||$401,192||$348,914||$388,621||23 out of 51|
|NV||$338,424||$300,649||$340,935||40 out of 51|
|NY||$337,345||$298,136||$339,280||41 out of 51|
|OH||$396,734||$347,870||$395,288||17 out of 51|
|OK||$339,245||$294,334||$339,168||42 out of 51|
|OR||$417,848||$366,584||$417,604||10 out of 51|
|PA||$414,935||$363,673||$411,490||13 out of 51|
|RI||$363,865||$317,709||$361,687||35 out of 51|
|SC||$387,824||$341,823||$381,995||27 out of 51|
|SD||$351,975||$308,707||$357,096||37 out of 51|
|TN||$355,584||$312,564||$353,595||38 out of 51|
|TX||$391,000||$342,754||$391,847||21 out of 51|
|UT||$283,763||$247,627||$280,214||51 out of 51 (WORST)|
|VA||$435,013||$380,871||$431,288||5 out of 51|
|VT||$431,704||$370,938||$422,620||9 out of 51|
|WA||$407,189||$359,649||$416,295||11 out of 51|
|WI||$400,644||$351,141||$397,573||15 out of 51|
|WV||$335,347||$297,743||$333,515||44 out of 51|
|WY||$317,996||$277,209||$318,466||49 out of 51|
As you can see in the chart above, overwhelmingly most if not all of the 50 states including D.C. saw a decrease in total average retirement savings this year, averaging about a 12-13% drop in total savings from January to the end of June.
However, there are a few specific regions that seem to stand out the most in terms of top ranking. If you compare East Coast vs. West Coast – it’s clear East Coasters are tucking away more in their retirement nest eggs these days. Connecticut leads this year’s top 5 list with an average retirement savings of $471,719. Fellow East Coast states also included in the top 5 are: New Jersey (3rd – $457,156), New Hampshire (4th – $455,477) and Virginia (5th – $431,288). Compared to 2015 when we first pulled the top 5 ranking, only Connecticut and New Jersey keep their top spots.
|Top 5 2020|
Alaska also makes this year’s top 5, making a considerable jump in their ranking as this year the average came in at $460,571.
As far as the bottom of the list goes, this year the states are: Utah (1st bottom – $280,214), District of Columbia (2nd bottom – $305,410), Wyoming (3rd bottom – $318,466), North Dakota (4th bottom – $319,224) and Mississippi (5th bottom – $323,561).
|Bottom 5 2020|
Why Some States Rank Higher
There are several factors at play when looking at retirement savings averages and it should be noted that looking at the state by state breakdown only may be unfair when you think of different tax burdens and cost of living metrics that vary between states. In our analysis, we did not look specifically into these other factors as a leading cause, but in our assumption, it likely makes sense why states such as Alaska are included in the top 5 list – especially since Alaska is a state known for favorable tax laws compared to states such as California. See the Tax Burden chart below.
High cost of living could also be a factor for certain states not making the top 5 cut and that is likely the reason for Hawaii, D.C. and New York to name a few, as cities in those states top the highest cost of living according to The U.S. Bureau of Labor Statistics. According to this 2020 ranking, here’s the top 5 states with the highest cost of living: Hawaii, Washington D.C., California, New York and Oregon.
|Rank||State||Total Tax Burden||Property Tax Burden||Individual Income Tax Burden||Total Sales & Excise Tax Burden|
New Jersey is known for having the most number of millionaires per household (8.95%) so it’s no question they are included in the top five. And Delaware is still one of the most tax-friendly state in the country including no taxes on Social Security, no local and state taxes and no inheritance or personal property taxes. Wyoming also made a recent 2020 list as one of the best states for retirees due to it’s incredibly low to none taxes (no income tax!).
|Rank||State||% of millionaire households|
Also, it’s no surprise that Alaska and New Hampshire recently topped our list of best places to retire in 2020.
The Surprises on the List
Comparing 2015 to now, Hawaii saw the most growth in average retirement savings. In 2015, the average retirement savings was around $283,038 and that number jumped to $325,590 this year. Other honorable mentions for the highest growth in average savings amounts goes to: Kansas, Louisiana, New Mexico and Washington state.
How Much Do You Need to Retire Comfortably in Each State?
Unfortunately, there’s no one answer to how much you will need to retire comfortably, no matter what state you live in. But there are a few factors to consider, and there are a few common methods to help you determine what you might need to support your desired retirement lifestyle.
One thing to consider when determining how much you’ll need to retire is your state’s tax burden. We covered this a little earlier, but there are several types of taxation that vary by state and that could really impact your ability to sustain your desired lifestyle. Some of these include property tax, income tax, and inheritance tax. For example, if an expected inheritance is part of your retirement plan, then you should know if your state has estate or inheritance taxes.
There are various methods of calculating how much you might need to spend or withdraw from your portfolio, as a common one is the “4% rule.” If you follow this rule, you withdraw 4% of your portfolio in the first year of retirement and then you annually withdraw that same dollar amount, adjusted for inflation, for the next 30 years. The idea is that if you follow this rule, you minimize your chances of running out of money in retirement. While this rule is a good starting point, it has been hotly debated since it was established. Some argue that it is too conservative. Others argue that today’s low-interest environment and longer life expectancies make it too risky. Meanwhile, your financial future hangs in the balance. If the rule is too conservative, then you’ve unnecessarily constrained your retirement lifestyle. If the rule is too risky, you could run out of money just when you need it most.
So a good way to get a personalized plan is to use a tool like Personal Capital’s free Retirement Planner. The Retirement Planner will allow you to input specific information that’s personal to you (like planned major spending events, when you want to take Social Security, what age you plan to retire, etc) and will run thousands of simulations to give you a percent chance of retirement success based on your current portfolio. Get access to the Retirement Planner by signing up for Personal Capital’s FREE financial tools.
By Generation Breakdown
In addition to the average retirement balances for each state, you may be curious how your retirement balance compares with the average balance for each of the different generations. As you look at the table below, it is important to keep in mind that everyone’s financial goals and plans differ and that your focus should be on controlling the controllables and developing a plan that fits your long-term strategy.
|By Generation (as of 5/31/20)|
|Age Group||Total Users||Average
|Other/No Age Data||17,777||$329,570||$109,777|
While much has changed in the past few years as we’ve seen from the changes in our state-by-state retirement leaderboard, some things always remain the same. The keys to a successful retirement are visibility into your finances, and having an objective person in your corner who can help you make decisions that are in your best financial interest.
That’s where Personal Capital can help, pairing expert financial guidance with free financial tools for monitoring your accounts and investments. To see how Personal Capital can increase your control and help you with your retirement planning in these uncertain times, register for our free financial tools to get started.
About our data: To obtain this data, Personal Capital analyzed the retirement accounts of dashboard users on an anonymized basis. Data presented represent the average (mean) balances of retirement accounts linked by users of Personal Capital’s dashboard broken out by state as of 6/30/2020. Location data was assumed based on a user’s IP address. Certain accounts, such as test accounts, major outliers, duplicative spousal accounts, and non-retirement accounts such as retail checking and savings accounts, were excluded from this analysis.
All charts, figures, and graphs are for illustrative purposes only. Read Full Disclosures »