Cost of Living
Cost of living will impact how long your retirement savings will last.
Will one million dollars be enough to last in your home state? Click on the following link – How long will one million dollars in retirement last? – for GoBanking Rates study showing how long $1,000,000 lasts in every U.S. state. The expenses used for the study are: groceries, housing, utilities, transportation, and healthcare. The study found that the US average yearly expenditure for these expenses is $47,788. But, be aware, this list does not include bucket-list items (travel. charitable contributions, etc.).
According to the GoBanking Rates study, the states with the least expensive cost of living are Mississippi, Oklahoma, Michigan, Arkansas, Alabama, Missouri, and Tennessee. These are the states where $1,000,000 in retirement savings will last longer (the average cost to live in these states is about $40,000 a year). The study found that the states where $1,000,000 in retirement savings will last the shortest amount of time are Hawaii, California, New York, Alaska, Maryland, Oregon, and Massachusetts. The average cost to live in these states is over $58,000/year ($85,243 for Hawaii!).
What about Inflation?
Cost of living is important, but what about inflation? If your investments are earning 7 percent on average, and inflation is roughly 3 percent a year, you should be able to withdraw 4 percent from retirement savings. See this previous post. Of course, predicting the future is a gamble, and economic changes may necessitate cutting costs or making a move to a less expensive location, perhaps overseas.