Everyone in the United States can get Social Security payments when they hit retirement age, but the amount these benefits can cover in retirement depends a lot on where someone lives. People who live in places with lower costs of living can get more out of their Social Security checks, which means they don’t need to save as much on their own for retirement.
As part of a new study, GoBankingRates ranked states by how long retirees can expect to get Social Security payments. West Virginia, Oklahoma, Kansas, Alabama, and Mississippi are the places where retirees can say that their money will go the furthest. It was thought that Social Security payments and retirement savings would last between 26.19 and 28.8 years in these areas.
Alex Beene, a teacher of money matters at the University of Tennessee at Martin, said in an interview, “There aren’t many surprises here.” People can get more out of their Social Security payments in states with lower costs of living. In states with higher costs of living, those funds are spent more quickly.
The reverse is also true: retirees in states with higher costs of living will likely see their benefits run out faster. Hawaii, California, Massachusetts, Alaska, and New York are the five places where people who get Social Security are most likely to have a bad time. The study found that between 8.8 and 15.38 years of Social Security payments and $750,000 saved for retirement would be enough in these high-cost areas.
The study used a made-up amount of $750,000 saved for retirement and the average monthly payment from Social Security to figure out how long the money would last. It’s important to note, though, that this amount is a lot more than what many Americans have saved for retirement. A study by the Federal Reserve found that families with members aged 65 to 74 have saved an average of $609,230 for retirement. Around $200,000 is the average amount saved for retirement.
Other things that can help make Social Security payments bigger
People can get more money from Social Security if they wait when they start getting benefits, but they should carefully think about their own health and financial situations before making this choice. For instance, if you wait until you are 70 years old to start collecting Social Security, your payouts will go up by 24%. But if you start getting benefits before you turn 62, you will get 35% less than you would have at full retirement age.
Besides the time of year someone claims Social Security, people who made more money while they were working also get bigger payments. But, as Beene said, there are other things that can affect how far your Social Security benefits last when you leave.
“In the end, things like how much you have to spend on health care and whether or not your house and cars are paid off will be more important to your bottom line in retirement than your Social Security benefits,” Beene said. “Yes, living in a state where many things are cheaper does help those funds last longer, but if some of that check is going to other things anyway, it might not be as much as you think.”
Another important thing to think about is how much help retirees might get from their family. Drew Powers, head of the Powers Financial Group in Illinois, said that living close to family can make a big difference in your finances.
People who are retired can save a lot of money each year by having a loved one close who can do basic home maintenance, go grocery shopping, or give them rides to doctor’s appointments, according to Powers. “So, the list is a good starting point, but the final calculation is very subject to change.”
