As an accountant helping people with their financial planning, some of your clients will want to take the long-term view — into retirement. And if you have clients with a million bucks stashed in their 401(k)s or IRAs, tell them to take a deep breath, or two, before they read this.
That’s because how long that money will last depends a great deal on where they live and the cost of living — and there are wide variations nationwide.
Data analysis site HowMuch calculated what we’ll bet will be a shocker for a few folks banking on a long, comfortable retirement.
For example, a million dollars in balmy Hawaii will last 13 years and one month, thanks to the highest cost-of-living index at 166.4 and an estimated annual living expenditure of more than $70,000.
But cut that cost-of-living index almost in half — 85.5 in Mississippi and 87.4 in Arkansas — and a million bucks will last the longest nationwide: 25 years and six months in Mississippi and 25 years in Arkansas. And people who are at least 65 can live in both states on less than $40,000 a year.
HowMuch used statistics from the Bureau of Labor Statistics for average annual expenditures of people aged 65 years and older and the Missouri Economic Research and Information Center for the third quarter of 2017.
Here’s a snapshot of the remainder of HowMuch’s findings:
- The District of Columbia also ranks second and is a really expensive place to live for retirees, where that $1 million will last 14 years and two months.
- California is the third most expensive, where the money will last 15 years.
- In New York and Oregon, older people can expect their money to last 16 years and seven months.
- In Vermont, Rhode Island, New Jersey, Maryland, Arkansas and Massachusetts, $1 million will get older people from almost 17 years to just over 18 years with annual expenses of $55,000 to $60,000.
- $1 million for folks in Maine, New Hampshire and Connecticut will buy them from just under 19 years to about 19.5 years.
- In Florida, North and South Dakota, South Carolina, Minnesota, Montana, Pennsylvania, Virginia, Delaware, Colorado, Nevada and Washington, $1 million buys roughly 20 to 22 years.
- The remainder of the states (23) can live on $1 million in savings from about 22.5 to 24.5 years with annual expenses of $40,000 to $45,000.
About Terry Sheridan
Terry Sheridan is an award-winning journalist who has covered real estate, mortgage finance, health care, insurance, personal finance, and accounting and taxation issues for newspapers, magazines, and websites. A Chicago native and former South Florida resident, she now lives in New England.