INVESTING - SAVING FOR RETIREMENT
Making $1 million last the rest of your life is easier in these six states.
By Katelyn Washington
Edited by Ellen Cannon
Updated Feb. 10, 2023
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If you have $1 million saved for your retirement, you're in better shape than many. But depending on where you retire, that million might not last very long.
Choosing a retirement-friendly location is one of the waysto avoid throwing away moneyin retirement.
Check out these states to get the best quality of life with $1 million in your retirement savings.
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Mississippi
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World Population Review ranks Mississippi as the state with the lowest cost of living for 2022.
A million dollars will likely provide you with a comfortable lifestyle for most, if not all, of your retired years.
There are plenty of things for retirees to enjoy as well, such as golf and sandy beaches.
However, the state has its drawbacks. According to the United States Census Bureau, less than 17% of Mississippi’s population is 65 or older, and nearly 20% of people live in poverty.
Some areas in the state have higher and lower percentages, so choosing the right city also makes a difference.
Kansas
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Kansas is another affordable state and is a good option if you want to live in the Midwest.
Housing costs are a major contributing factor in the state’s appeal for retirees, ranking well below the national average.
Kansas is not entirely tax-friendly for retirees, however. The state also taxes some Social Security income.
If your adjusted gross income (AGI) is over $75,000, Kansas will tax your benefits. Social Security benefits will not be taxed if you don't meet this threshold.
Texas
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Texas is much more tax-friendly for seniors than Kansas.There's no tax on Social Security benefits, and the state doesn't charge income, estate, or inheritance taxes.Seniors 65 and older can also claim an exemption for local property taxes.
While tax breaks might account for much of the population increase, other affordability factors appeal to new residents.
Texas saw the greatest population growth of any state in the country in 2021.Nonetheless, housing costs remain below the national average in many areas.
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South Carolina
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South Carolina also boasts housing costs below the national average. While groceries are slightly higher than in many other states, the total cost of living remains below the national average.
Affordable living combined with moderate winters and desirable beaches makes South Carolina a top choice for seniors with $1 million in savings.
You might decide to use some of the money saved on living expenses to enjoy the state's attractions.
North Carolina
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Residents of North Carolina enjoy mild weather. This state might be a great option if you don’t want to live somewhere as hot as Florida but don’t enjoy northern winters.
The cost of living is also below the national average, allowing your savings to last longer.
North Carolina taxes pensions and retirement account withdrawals, but there's no tax on Social Security benefits.
Florida
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Florida is a popular state for retirees for its warm weather and large senior population. If you're looking to make new friends, you’ll find many other retirees in the Sunshine State.
Florida is also very tax-friendly. There's no tax on Social Security benefits, pensions, or 401 (k) income.
In the event you decide to work during retirement, you’ll also enjoy no income tax in Florida. This is a major bonus for retirees looking for ways to supplement Social Security.
Bottom line
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One million dollars might not go as far as you’d think. The cost of living where you choose to retire will impact how long you can comfortably sustain yourself.
Experts recommend you have 80% of your pre-retirement income to live on, although that percentage can vary depending on factors including where you live.
If you want to see if you can retire early, you’ll need to factor those extra years of retirement into your savings.
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Sure, that article dives into the crucial aspects of retirement planning: making your savings last in different states. It highlights various states' attributes, assessing factors like cost of living, taxation policies, and lifestyle considerations. The concepts discussed here relate to retirement planning, cost of living, taxation on retirement income, state-specific advantages, and factors affecting the sustainability of savings.
Retirement planning involves understanding how to sustain a desired lifestyle after leaving the workforce. It hinges on factors like the cost of living, which varies from state to state. Taxation on retirement income impacts how much of your savings you'll retain. States like Texas and Florida, for instance, are highlighted as tax-friendly for retirees due to their policies on Social Security benefits and income tax.
The article also touches on lifestyle considerations, like the appeal of certain states based on climate, outdoor activities, and population demographics. These factors, alongside financial ones, can significantly impact the quality of retirement.
It's crucial to consider your retirement income needs, factoring in around 80% of your pre-retirement income as a baseline. However, this percentage may vary based on location and personal preferences.
Overall, the article emphasizes the importance of strategic planning and choosing a retirement destination that aligns with your financial means and desired lifestyle.