At a time when the traditional idea of retirement is no longer a reality for most, it’s interesting to assess how each U.S. state’s residents are making it work. While workers typically strive to still earn about 70 percent of their income once they retire, recent reports illuminate that this is simply not a possibility for most. A vast majority of U.S. retirees is only earning about 50 to 60 percent of their pre-retirement income.
But is the outlook dismal for all? Interestingly enough, residents in certain states seem to be faring better than others. Interest.com researched the current median incomes for workers and retirees in the 50 states and the District of Columbia to calculate the “replacement” percentage for each state based on its respective income numbers. It also calculated how much this percentage has changed since 2005, and the percentage of households led by someone 65 and over in each state. Here are the 10 states that post the best figures:
10. West Virginia
West Virginia is the first to make our top 10 list with an impressive replacement income of 63.03 percent. How does Interest.com get to this figure? The median income for the state’s residents between 45 and 65 of age is $45,019 and the median income for those 65 and older is $28,375. Thus, once those living in WV retire, they still make about 63.03 percent of their pre-retirement income. This number has increased by 10.17 percent since 2005, which is especially favorable for the 26.20 percentage of households that are currently led by someone 65 or older.
Alabama is up next with a similar replacement income that allows it to just surpass West Virginia on the list. Its replacement income is 63.44 percent — a number that affects 23.10 percent of Alabama households that are controlled by someone at least 65 years old. This income replacement rate is increasing faster than WV’s, as it posts a 11.36-percent change from 2005, and the state reports just slightly higher income figures for workers and retirees.
Montana is third on our list, coming in with a replacement income of 64.47 percent. The state’s median income for workers and retirees is higher than its predecessors on the list, posting figures of $51,568 and $33,247 respectively. Montana also has a higher 24 percent of homes that are led by those 65 years of age or older. Still, its change in replacement income has only risen 9.73 percent since 2005, a significantly lower figure than Alabama’s.
Arkansas makes the list at #7, with a replacement income that is continuing to creep up at 65.67 percent. Arkansas and Montana have the same percent of homes controlled by those 65 or older, but the former’s percent of replacement income has increased from a conspicuously higher 11.32 percent since 2005. Additionally, even though Arkansas is ranked better than Montana, its median income for its workers and retirees is still lower, as its workers make $46,077 and retirees make $30, 259.
6. South Carolina
South Carolina is granted the #5 stop on our list with a replacement income of 66.27 percent. Its median income for workers and retirees is much greater than Arkansas’s, with figures of $50,054 and $33,171 respectively, but its percentage of homes led by those retired workers is also less, at 23.20 percent.
The Sunshine State is next, posting a 66.86 percent replacement income figure. This number especially affects a striking 27.90 percent of the Florida households controlled by someone at least 65 years old. Workers in Florida make a median income of $52, 183 and retirees then earn $34, 892 — numbers that lead to a 8.04 percent change in replacement income since 2005.
4. New Mexico
New Mexico comes up at #4 with its 66.89 percent replacement income. It hosts significantly fewer retirees than Florida, as evidenced by its 23 percent of households led by someone of 65 years or older. The state’s workers make similar money to those in Florida, with a median income of $51,811. Retirees subsequently make about $34,657.
Arizona makes the top three, a rank afforded by its impressive replacement income of 68.10 percent — a figure that has increased by 10.17 percent since 2005. Arizona hosts a similar geographic of people, with 23.8 percent of its households controlled by someone at least 65 years of age. The median income for its workers is $55,187, while its retirees make about $37, 581.
Next up is Hawaii, with a replacement income just shy of our #1 spot, at 70.06 percent. And more residents are also affected by this figure, as a solid 25 percent of households in Hawaii are controlled by someone 65 or older. The median income for workers aged 45 to 65 in Hawaii is strikingly high at $73, 310 — almost $20,000 more than the state that beat it on the list. And as its replacement income rate ensures, residents are still making a significant chunk of change once they retire. In fact, they’re almost making more than the pre-retirement workers of #1. The median income for Hawaii retirees is $51, 361.
Speaking of #1…Nevada takes the title with its replacement income at 70.72 percent. As aforementioned, the state’s median income for its workers and retirees is conspicuously less than Hawaii’s at $55,401 and $39,181. Thus, no matter how much of a difference the two states are making, Nevada retirees still make a greater percent of their pre-retirement income than those in Hawaii do. This number has increased by 9.7 percent since 2005, which is especially favorable for the 20.80 percentage of households that are currently led by someone 65 or older.