Affordable Retirement: States Where Retirees Spend the Least Money

illustration of retirement planning with a calculator and eggs in a nest with dollar signs
Your retirement savings will stretch further in some parts of the country. |

How much will you need to retire? $500,000? $1 million? $2 million? Unfortunately, there’s no easy answer. Some people won’t be able to enjoy their dream retirement without millions of dollars in the bank. Others are going to try to get by with $100,000. It all depends on your lifestyle.

It also depends on where you live, according to data from the Employee Benefits Research Institute. Many retirement-savings recommendations are based on national benchmarks, noted the authors of the report on geographic variations in spending in older households. But because there can be huge differences in how much people in different parts of the country have to pay for housing, health care, and other necessities, it’s probably more useful for those who are planning for retirement to consider how much people in their region spend.

Nationwide, the median household with people between the ages of 65 and 74 spent $45,633 per year, including nearly $21,000 on housing costs, $4,300 annually on health care, and $4,700 on food. (Data on spending came from the long-running Health and Retirement Study.) As people age, overall expenses decline and a greater share of the typical household’s budget goes to housing and health care, while spending on travel and entertainment falls. (The survey didn’t include people who were living in nursing homes or other care facilities.)

But when the Employee Benefits Research Institute’s authors broke down the data by Census division, they found some big differences, with retirees in the most expensive regions spending $15,000 per year or more than those in cheaper states.

Where is it cheapest to retire? Let’s take a quick look to find out how much retirees spend in your part of the country.

Median spending is for households with residents ages 65 to 74, unless otherwise noted.

9. West South Central

A pumpjack outside of Midland, Texas, in the sun's shadows
A pumpjack outside of Midland, Texas | Spencer Platt/Getty Images

Median spending: $28,540

Younger retirees in Texas, Oklahoma, Arkansas, and Louisiana spent less than retirees in any other part of the U.S. At $11,742 per year, their housing costs are lower than anywhere else in the country. They also spent less on health care. But unlike most regions of the country, where retiree spending falls over time, people in the West South Central region actual spend more as they get older. By the time people are between the ages of 75 and 84, they’re spending $33,257 per year, in part because of a jump in health care spending to $2,600 per year.

8. East South Central

Welcome to Mississippi road sign
Welcome to Mississippi sign |

Median spending: $29,140

Retirees in the East South Central Region (which includes Mississippi, Alabama, Tennessee, and Kentucky) have the second-lowest spending in the country. They also have the biggest different in spending between pre-retirees (those ages 50 to 64) and people ages 64 to 74, with annual expenditures falling from $42,261 annually to just under $30,000. Downsizing might be the main reason. The older survey respondents spent nearly $7,400 less per year on housing than those in the 50 to 64 age group.

A low cost of living is another reason this region is also home to four of the 10 best cities for people who hope to retire early.

7. East North Central

red barn in snow
A red barn stands during a Wisconsin snow storm. | Tom Lynn/Getty Images

Median spending: $35,201

People in the Great Lakes states of Wisconsin, Michigan, Illinois, Indiana, and Ohio had the lowest median spending outside of the South. That’s good news for people retiring in that region, but it comes with a caveat. Spending in this region didn’t decrease as dramatically with age as it did in some parts of the country. By the time people reached age 85, they were still spending $31,059 per year, more than any other region except New England.

6. Middle Atlantic

car on wooded road
A car on a country road in upstate New York. | John Moore/Getty Images

Median spending: $38,125

Retirees in the mid-Atlantic states of New York, Pennsylvania, and New Jersey spend a median of $38,125 every year, only slightly less than those in the 50 to 64 age group. Their expenses included $13,440 on housing and $1,940 on health care. Several of the worst cities for retirees (as ranked by WalletHub) are also in this region, including Jersey City and Newark, New Jersey, as well as Yonkers, New York.

5. Pacific

surfer stands holding board at water's edge
A surfer in Morro Bay, California | Sean Gallup/Getty Images

Median spending: $38,464

Retirees in Washington, Oregon, California, Hawaii, and Alaska spent about $38,000 per year, including $2,360 on health care and $18,300 on housing. Their housing costs were the second highest in the country after New England, which is hardly surprising when you consider this region is home to eight of the 10 least affordable cities in the United States.

4. Mountain

Rocky Mountains covered in snow
A view of the Rocky Mountains | Doug Pensinger/Getty Images

Median spending: $39,411

Living isn’t cheap for retirees in the vast Mountain region, which includes Montana, Idaho, Wyoming, Nevada, Utah, Colorado, Arizona, and New Mexico. But things get better as you age. People in these states spend about $10,000 less per year between ages 75 and 84 than they do in the first decade of retirement.

If you do end up retiring in the Mountain region, you’ll have lots of company. States, such as Arizona with its sunny skies and relatively low taxes, are perennially popular with retirees. Good weather, a low cost of living, and plenty of recreational opportunities were among the reasons six of the top 10 best states for retirees are in this region, according to Bankrate.

3. West North Central

'Welcome to Nebraska' sign board on a empty road
A Nebraska welcome sign |

Median spending: $42,240

Stereotypically frugal Midwesterners actually had the third-highest spending in the U.S. People in Minnesota, North Dakota, South Dakota, Iowa, Nebraska, Kansas, and Missouri spent more then $42,000 per year from ages 65 to 74. About $20,000 went to housing and health care, with $22,000 left over for expenses, including food, transportation, travel, entertainment, and dining out.

One reason retirees in this region can afford to spend big? Some are quite wealthy. Minnesota, North Dakota, Nebraska, and Iowa are all in the top 25 states in the number of millionaires per capita, according to a study by Phoenix Marketing International.

2. South Atlantic

retirees dancing
Residents dance in the square of a retirement community outside of Orlando, Florida. | Rhona Wise/AFP/Getty Images

Median spending: $44,350

Retirees in the sprawling South Atlantic region, which stretches from Delaware down to Florida, have some of the highest spending in the U.S. People living in Delaware, Maryland, West Virginia, Virginia, North Carolina, South Carolina, Georgia, and Florida spend $44,350 per year, including $16,980 on housing and $3,000 on health care.

1. New England

A view of Lubec, Maine, from the water
A view of Lubec, Maine | Don Emmert/AFP/Getty Images

Median spending: $46,019

New England retirees are the biggest spenders in the U.S., with annual expenditures of just over $46,000 per year. People in Maine, New Hampshire, Massachusetts, Vermont, Rhode Island, and Connecticut have the highest housing costs in the country, at $19,507 annually — almost twice as much as those in the cheapest states — though costs fall significantly as people age. Health care spending among 65- to 74-year-olds is also higher than anywhere else, at nearly $6,000 per year, almost twice as much as what retirees in other parts of the country pay.

4/14: Corrections made for difference in average and median spending.

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