Money Matters!

How Much Money Do You Need To Retire? It Depends Where You Live

A new survey shows just how much money you should expect to save if you want to retire with an “average” lifestyle.

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Questions about retirement savings are enough to make your head spin: Are you saving enough for retirement? How much is too much to save, or too little? Will you even be able to retire at all? How far will your retirement nest egg get you wherever it is that you decide to retire?

Regardless of the answers to all those questions, one thing is absolutely true: enjoying retirement requires a decent nest egg, no matter where you are. (A recent survey found that half of Americans already don’t have enough saved for retirement to maintain their standard of living once they stop working, and most people haven’t saved for retirement at all.)

LendingTree wanted to find out just how big a nest egg you need to retire, depending on where you live, and found that in only one metro they studied could you retire for less than $800,000.

“Our latest LendingTree study calculates how much people need to retire in each U.S. metro using different methods: based on the amount retirees spend in a year and on the median annual earnings of people ages 55 to 64,” they explained.

To find out those numbers, LendingTree looked at pretax numbers, average annualized Social Security retirement benefits, the estimated median earnings for full-time workers, the average annual spending of retirees, and a tax assessment. These data points came from various sources including Social Security Administration, U.S. Bureau of Labor Statistics, among others.

After weighing all the data, LendingTree calculated the average amount of money — aka the size of the nest egg — you would need depending on which metro area you are hoping to retire in based on “an average lifestyle.”

“Ultimately, each metro is unique and will have its own quirks that can make it more or less expensive,” LendingTree senior economist Jacob Channel says.

Plus, it’s important to note that people will have different retirement needs, based on their standard of living, their medical needs, their life span, whether or not they’re paying rent or their mortgage, and if they have life insurance, still — some will require much more than “average” to survive the rest of their lives financially, and some won’t have as much to worry about at all.

“Even if you do ‘everything right,’ there’s no guarantee you’ll ever end up with a million-dollar nest egg. That said, a million dollars isn’t something everyone will need to have a happy retirement. What matters most is saving what you can and planning a lifestyle around the finances that you do have, instead of the finances that you wish you had,” Channel noted.

And there were some interesting findings:

  • Nationally, an average retiree would need an average nest egg of $1,071,127.
  • 147 of the 384 U.S. metros require more than $1 million to retire with an average lifestyle.
  • Of the top 20 metros that require the largest nest egg, 12 are in California.
  • There’s only one metro where you can retire for less than $800,000.

These five metros across the U.S. that require the most savings to retire with an “average” lifestyle:

  1. San Francisco, CA, will require a nest egg of $1,365,870
  2. New York, NY, will require a nest egg of $1,315,587
  3. San Diego, CA, will require a nest egg of $1,298,796
  4. Honolulu, HI, will require a nest egg of $1,288,763
  5. San Jose, CA, will require a nest egg of $1,276,997

The five metros across the U.S. that require the least savings to retire with an “average” lifestyle:

  1. Johnstown, PA, will require a nest egg of $779,765
  2. Cumberland, MD, will require a nest egg of $802,988
  3. Danville, IL, will require a nest egg of $804,301
  4. Florence, AL, will require a nest egg of $812,485
  5. Duluth, MN, will require a nest egg of $821,084

To read the full report — and to see where your idyllic retirement location falls on the map — check out LendingTree.