Retirement is a big step in life and it should not be taken lightly. In addition to leaving work, there is one piece of retirement that needs to be given some extra consideration. Retirement savings can make a difference in how people spend their time after they have retired. Without sufficient savings, people cannot afford to retire and enjoy their lives.
In the United States, the majority of people are not prepared for retirement. About 34 percent of Americans have no savings. 35 percent have a few hundred dollars saved up. Often, employers will match their employees’ retirement contributions by a certain percentage or up to a set dollar amount. This is not the case for all people though.
In the United States, the average amount of money that people have saved for retirement is $218,181 with a range from $150,000 to $290,000 by state. The actual statistics for how much people have saved for retirement vary by state, with many factors that can influence the amount that is saved for retirement. It can include one or more of the following:
- Number of investments
- Duration of investments
- Type of investments
- Matching by employer
- Other types of savings
- Income taxes
- Cost of living
New Jersey, Delaware, Connecticut, and Alaska are the states whose residents have the greatest average retirement savings, ranging anywhere from $270,000 to $290,000. New Hampshire is slightly behind with an average of $264,624. The northeast is known for having a higher average for retirement savings.
One of the reasons that New Jersey and Connecticut have high retirement savings is due to the high income taxes in these states. With higher taxes, more of the government money can go toward retirement funding. In addition, residents in Alaska receive tax credit simply for living in the state. This money can then be saved for retirement, increasing the average.
People in other states are not as fortunate. Oklahoma, Montana, and Wyoming are on the other end of the spectrum. The residents in those states have an average of $150,000 to $170,000 saved for retirement. As mentioned before, there are several potential reasons behind this. The main one for these states, in particular, is the low cost of living. This affects other western states too.
Of course, there are people who fall in the middle of the high end and the low end of retirement savings. The average across the United States is $218,181, which means that quite a few states fall into the $210,000 to $230,000 range. The states in this category are Arizona, California, Colorado, Florida, Georgia, Illinois, Indiana, Kentucky, Maine, Missouri, New Mexico, Ohio, South Carolina, Texas, West Virginia, and Wisconsin.
It is important to know that not all retirement savings go the same distance. In some states, less money is needed for retirement. If the cost of living is lower, the savings will last longer and take people further. This can also depend on their plans once they retire, especially if expensive vacations are included. If people know where they want to live when they retire, they may plan ahead based on that cost of living.
Overall, being aware of the national and state averages for retirement savings can help people to understand where they fall. The right preparations can ensure that people truly enjoy their retirement and get to take advantage of this time in their lives. Saving for retirement is one of the best ways to do this.