Many Americans count on Social Security benefits to support their retirement, but the effectiveness of these benefits varies significantly depending on where they live. Some states offer an affordable environment that enables retirees to stretch their Social Security and retirement savings for decades, while in higher-cost states, these funds deplete much faster. A recent GoBankingRates study highlights the impact of living costs on how far Social Security can go in each state, revealing that the choice of location can profoundly affect the longevity of one’s retirement funds.
States Where Social Security Lasts Longest
According to the GoBankingRates study, states such as West Virginia, Oklahoma, Kansas, Alabama, and Mississippi offer the best value for retirees relying on Social Security. In these states, a combination of Social Security benefits and retirement savings could last anywhere from 26.19 to 28.8 years, thanks to generally lower costs for housing, utilities, and taxes.
Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, notes that this isn’t surprising given that a lower cost of living allows retirees to stretch their benefits further. Not only are daily expenses more manageable, but the lower real estate prices and taxes in these states also contribute to a more financially sustainable retirement.
| State | Estimated Longevity of Retirement Funds (Years) |
|---|---|
| West Virginia | 28.8 |
| Oklahoma | 28.3 |
| Kansas | 27.9 |
| Alabama | 26.7 |
| Mississippi | 26.19 |
States Where Retirement Funds Dwindle Faster
In states with high costs, such as Hawaii, California, Massachusetts, Alaska, and New York, Social Security benefits and retirement savings are projected to last between only 8.8 and 15.38 years. High living costs, particularly for housing and taxes, make it difficult for retirees in these areas to sustain themselves on Social Security alone, often necessitating higher independent savings to cover their needs.
| State | Estimated Longevity of Retirement Funds (Years) |
|---|---|
| Hawaii | 8.8 |
| California | 10.9 |
| Massachusetts | 12.3 |
| Alaska | 14.1 |
| New York | 15.38 |
Stretching Social Security Dollars
The study assumes an individual retirement savings amount of $750,000 alongside average Social Security benefits, but many Americans do not have this level of savings. The Federal Reserve reports that the average retirement savings for individuals aged 65 to 74 is around $609,230, while the median savings is significantly lower, approximately $200,000. This discrepancy illustrates the financial challenges faced by a substantial portion of retirees, for whom Social Security and retirement savings may run out sooner than estimated by the study.
Strategies like delaying Social Security claims can increase monthly benefits. Waiting until age 70, for example, increases benefits by 24%, while claiming at age 62 reduces them by 35%. However, delaying benefits is not feasible for everyone, as many retirees need financial support earlier in retirement.
Other Factors Influencing Retirement Longevity
Beyond location and Social Security, personal circumstances play a key role in how long retirement funds last. Alex Beene highlights that paying off major expenses, like mortgages and vehicles, can dramatically impact retirement sustainability. Health costs are another crucial factor, as healthcare spending often increases with age and can consume a significant portion of retirement income.
Support networks also make a difference. Drew Powers, founder of Powers Financial Group, notes that nearby family members can reduce costs that would otherwise require paid services. Family members can assist with home maintenance, transportation, and grocery shopping, saving retirees thousands each year in service fees, which helps extend their retirement savings.
Where retirees live can have a significant impact on how long their Social Security benefits will last. States with lower living costs provide a financial advantage, enabling retirement funds to last longer, while high-cost states require more substantial savings.
Beyond geographic location, managing healthcare costs, reducing debt, and having a reliable support network are also essential to making the most of Social Security benefits in retirement.
How much can Social Security benefits cover in retirement?
The extent to which Social Security benefits cover retirement expenses depends heavily on location, living costs, and individual financial circumstances, such as debt and healthcare needs.
What is the impact of delaying Social Security benefits?
Delaying Social Security benefits until age 70 can increase monthly payments by 24%, while claiming as early as 62 leads to a 35% reduction.
Which states are best for stretching Social Security benefits?
States like West Virginia, Oklahoma, Kansas, Alabama, and Mississippi offer a lower cost of living, allowing Social Security benefits to last longer.
