Retirement. A time of life many of us dream about and save for. Is our 401k and IRA funded annually? Is our debt paid off? Have we started writing our travel bucket lists? Are we taking golf lessons? Check, check, check and check.
The Magic Number
You’ve probably heard at least one financial advisor say $1 million is the magic number to have saved for retirement. According to a new GOBankingRates study, that same $1 million will last plenty long in retirement — or not nearly long enough. It will last you anywhere from 11 to 26 years, depending on the state you live in. For someone living in and retiring to Mississippi — the least expensive state — this is good news. For those in Hawaii — the most expensive state — not so much.
The annual cost of living for someone 65 and older range from $38,435 (Mississippi) to $85,243 (Hawaii), with a mean of $47,788. My home state of Michigan, ranking only two places behind Mississippi, appears to be a great state to retire in, with the annual cost of living coming in at $40,586.
A nest egg of $1 million should last 24 years, 7 months and 14 days in Michigan. But my husband and I are both still many years away from the age of 65. And we would like to retire well before we get there. Plus, we don’t plan on staying in Michigan year-round and might even relocate entirely.
While Michigan is a great state with four distinct seasons, we want to see the other 30 or so states we haven’t visited. And our retirement dreams include spending winter months in warmer states instead of shoveling snow and scraping ice off our windshields.
In the popular retirement state of Florida, $1 million will last us 22 years and 29 days when spent on housing, utilities, groceries, transportation and healthcare, according to the study. The same $1 million spent in Colorado, Nevada or California will only get us 21 years, 19.8 years or 15.5 years of retirement, respectively.
Start Planning: What It Takes to Save $1 Million for Retirement
Planning for Splurges
But what about dreams of traveling to Australia, Europe or Asia? Buying that big beautiful boat to sail around the Caribbean? Taking those skydiving and golf lessons? Or booking the whale-watching Alaskan cruise for the whole family? And what about charitable missions or paying for our grandchildren’s educations?
For us, a $1 million nest egg, coupled with any Social Security benefits, would undoubtedly afford us a comfortable retirement starting in our mid-sixties. But it might not fulfill all our dreams of financial independence and early retirement by age 55, with years of both adventurous and slow travel, hours of fun on the water and the links, and contributions to our communities and families.
What about you? Do you know what it will take for you to be happy in your retirement years? Will your nest egg go far in your desired city or state? Take the time now to do your homework. Be sure to consider not only the basic cost of living, but also all the costs for your bucket-list items and retirement dreams.
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Methodology: GOBankingRates found the number of years and months that $1 million will last during retirement by multiplying the annual expenditures for someone 65 and older from the Bureau of Labor Statistics by the cost of living for each state from the Missouri Economic Research and Information Center.
This article originally appeared on GOBankingRates.com: Why $1M Might Not Be Enough for My Retirement Dreams (or Yours)