Everyone wants to know the magic number you need to be saving for retirement. But does where you live also have an impact on your actual retirement savings?
Almost six years ago, we set out to answer this question by looking at the average retirement savings of our millions of Dashboard users (anonymized, of course). This allowed us to assess how much people had in their retirement nest eggs, broken down by age, generation, and state.
This year, in the midst of a global pandemic marked also by market volatility and unemployment spikes, we took a look at how people’s retirement savings have changed.
Let’s dive in.
The Average Retirement Savings by State
| Average Retirement Savings Balances | ||
|---|---|---|
| State | Average Retirement Balance | Rank (as of 9/29/21) |
| AK | $503,822 | 4 out of 51 |
| AL | $395,563 | 36 out of 51 |
| AR | $364,395 | 46 out of 51 |
| AZ | $427,418 | 31 out of 51 |
| CA | $452,135 | 17 out of 51 |
| CO | $449,719 | 19 out of 51 |
| CT | $545,754 | 1 out of 51 (BEST) |
| DC | $347,582 | 49 out of 51 |
| DE | $454,679 | 14 out of 51 |
| FL | $428,997 | 28 out of 51 |
| GA | $435,254 | 26 out of 51 |
| HI | $366,776 | 45 out of 51 |
| IA | $465,127 | 11 out of 51 |
| ID | $437,396 | 25 out of 51 |
| IL | $449,983 | 18 out of 51 |
| IN | $405,732 | 33 out of 51 |
| KS | $452,703 | 15 out of 51 |
| KY | $441,757 | 23 out of 51 |
| LA | $386,908 | 39 out of 51 |
| MA | $478,947 | 8 out of 51 |
| MD | $485,501 | 7 out of 51 |
| ME | $403,751 | 35 out of 51 |
| MI | $439,568 | 24 out of 51 |
| MN | $470,549 | 9 out of 51 |
| MO | $410,656 | 32 out of 51 |
| MS | $347,884 | 48 out of 51 |
| MT | $390,768 | 38 out of 51 |
| NC | $464,104 | 12 out of 51 |
| ND | $319,609 | 50 out of 51 |
| NE | $404,650 | 34 out of 51 |
| NH | $512,781 | 3 out of 51 |
| NJ | $514,245 | 2 out of 51 |
| NM | $428,041 | 29 out of 51 |
| NV | $379,728 | 42 out of 51 |
| NY | $382,027 | 40 out of 51 |
| OH | $427,462 | 30 out of 51 |
| OK | $361,366 | 47 out of 51 |
| OR | $452,558 | 16 out of 51 |
| PA | $462,075 | 13 out of 51 |
| RI | $392,622 | 37 out of 51 |
| SC | $449,486 | 21 out of 51 |
| SD | $449,628 | 20 out of 51 |
| TN | $376,476 | 43 out of 51 |
| TX | $434,328 | 27 out of 51 |
| UT | $315,160 | 51 out of 51 (WORST) |
| VA | $492,965 | 6 out of 51 |
| VT | $494,569 | 5 out of 51 |
| WA | $469,987 | 10 out of 51 |
| WI | $448,975 | 22 out of 51 |
| WV | $370,532 | 44 out of 51 |
| WY | $381,133 | 41 out of 51 |
There are a few specific regions that seem to stand out the most in terms of top ranking. If you compare East Coast versus West Coast, it’s clear East Coasters are tucking away more in their retirement nest eggs. Connecticut leads this year’s top 5 list with an average retirement savings of $545,754. Fellow East Coast states also included in the top 5 are: New Jersey (2nd – $514,245), New Hampshire (3rd– $$512,781), and Vermont (5th – $494,569).
| Top 5 2021 | |
|---|---|
| CT | $545,754 |
| NJ | $514,245 |
| NH | $512,781 |
| AK | $503,822 |
| VT | $494,569 |
The lone state representing the west region in the top 5, Alaska ranks fourth with an average balance of $503,822.
As far as the bottom of the list goes, this year the states are: Utah (1st bottom – $315,160), North Dakota (2nd bottom – $319,609), Washington D.C. (3rd bottom – $347,582), Oklahoma (4th bottom – $361,366) and Mississippi (5th bottom – $347,884).
| Bottom 5 2021 | |
|---|---|
| UT | $315,160 |
| ND | $319,609 |
| DC | $347,582 |
| OK | $361,366 |
| MS | $347,884 |
Why Some States Rank Higher
There are several factors at play when looking at retirement savings averages. It should be noted that only looking at the state-by-state breakdown 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. 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. That is likely the reason for Hawaii, District of Columbia, 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 2021 ranking, here are the top 5 states with the highest cost of living: Hawaii, California, New York, Oregon, and Massachusetts.
| Rank | State | Total Tax Burden | Property Tax Burden | Individual Income Tax Burden | Total Sales & Excise Tax Burden |
|---|---|---|---|---|---|
| 1 | Alaska | 5.16% | 3.71% | 0.00% | 1.45% |
| 2 | Delaware | 5.52% | 1.85% | 2.47% | 1.20% |
| 3 | Tennessee | 6.18% | 1.92% | 0.08% | 4.18% |
| 4 | Wyoming | 6.47% | 3.81% | 0.00% | 2.66% |
| 5 | Florida | 6.82% | 2.79% | 0.00% | 4.03% |
| 6 | New Hampshire | 6.85% | 5.57% | 0.08% | 1.20% |
| 7 | Oklahoma | 6.94% | 1.65% | 1.79% | 3.50% |
| 8 | Montana | 7.22% | 3.51% | 2.47% | 1.24% |
| 9 | Alabama | 7.36% | 1.43% | 1.88% | 4.05% |
| 10 | South Carolina | 7.48% | 2.88% | 1.98% | 2.62% |
According to a 2020 report from Statista, New Jersey is known for having the highest ratio of millionaire households per capita in the country (9.76%). So it’s no question they are included in the top five for highest average retirement balances. Alaska is one of the most tax-friendly states in the country, including no state income tax and no state sales tax. Ranked second on our list for highest average retirement balances, New Hampshire also carries several tax-friendly benefits. Residents don’t have to pay state income tax on Social Security benefits, pensions, distributions from retirement accounts, or income from a classified retirement job.
| Rank | State | % of millionaire households (as of 11/2020) |
|---|---|---|
| 1 | New Jersey | 9.76% |
| 2 | Maryland | 9.72% |
| 3 | Connecticut | 9.44% |
| 4 | Massachusetts | 9.38% |
| 5 | Hawaii | 9.20% |
| 6 | District of Columbia | 9.12% |
| 7 | California | 8.51% |
| 8 | New Hampshire | 8.47% |
| 9 | Virginia | 8.31% |
| 10 | Alaska | 8.18% |
Also, it’s no surprise that Alaska and New Hampshire recently topped our list of best places to retire in 2021.
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. 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. Your focus should be on controlling the controllable and developing a plan that fits your long-term strategy.
| By Generation (as of 9/29/21) | |||
|---|---|---|---|
| Age Group | Total Users | Average Retirement Balance | Median Retirement Balance |
| Gen Z | 121,489 | $38,633 | $12,016 |
| Millennials | 742,108 | $178,741 | $75,745 |
| Gen X | 375,718 | $605,526 | $303,663 |
| Baby Boomers | 191,648 | $1,076,208 | $587,943 |
| Other/No Age Data | 304,134 | $288,592 | $64,828 |
Our Take
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 financial accounts and investments. To see how Personal Capital can help you control your retirement planning in any environment, 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 9/29/2021. 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 »
See the Average Retirement Balances for Each State On the Personal Capital Map