A new analysis reveals stark regional differences in retirement savings needs across the U.S., with Hawaii requiring over $2.1 million in savings versus under $700,000 in states like Mississippi. Housing costs are the primary driver of these disparities.
- Hawaii requires $2.14 million in savings to retire comfortably at 65.
- Mississippi ranks lowest at $683,000, a $1.46 million difference.
- Housing costs account for up to 40% of the total savings gap between states.
- California, New York, and Massachusetts require over $1.6 million in savings.
- The 4% withdrawal rule underpins the analysis, assuming a 30-year retirement.
- REITs (XLRE) and dividend stocks (VYM) may benefit from sustained demand in high-cost regions.
Retirement planning has become increasingly state-specific, with the financial burden of retiring at age 65 differing dramatically depending on location. Nationwide, the median savings required to maintain a comfortable lifestyle post-retirement stands at approximately $1.4 million, but this figure varies from a low of $683,000 in Mississippi to a high of $2.14 million in Hawaii. These figures reflect the significant impact of regional cost-of-living variations, particularly in housing, where median home prices in Hawaii exceed $1.2 million—nearly double the national average. The underlying model used in the analysis assumes a 30-year retirement horizon and a 4% annual withdrawal rate, consistent with the widely accepted '4% rule.' It accounts for housing, healthcare, transportation, and discretionary spending, with housing expenses alone making up nearly 40% of the total savings gap between states. In high-cost areas like California, New York, and Massachusetts, retirement savings needs surpass $1.6 million, driven by both housing and healthcare costs. For investors, these regional disparities underscore the importance of geographic diversification in retirement portfolios. Real estate investment trusts (REITs) such as XLRE and dividend-focused funds like VYM may benefit from long-term demand in high-cost urban centers, while broader equity exposure via SPY could absorb regional volatility. Meanwhile, financial services firms offering retirement planning tools may see increased demand in states with higher savings requirements. The data reinforces the need for personalized retirement strategies, especially as life expectancy continues to rise and inflation pressures persist. Individuals in high-cost states may need to adjust savings rates, delay retirement, or consider relocating to reduce financial strain.