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Retirement planning

Top 10 states for a healthy and affordable retirement

By Alyssa Place
February 16, 2021 1:35 PM
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Having enough money to live in retirement is a major hurdle for many employees. Figuring out where those retirement funds and 401(k) earnings will go the farthest is a critical piece to deciding when — and where — to retire.

Read more: Prudential shares the top tools to helping employees reach retirement

The average American has just $60,000 saved for retirement and 26% had no money saved at all, according to the Federal Reserve. COVID-19 has made saving even more difficult and nearly one in four employees plan to push back their retirement in order to offset the financial impact of the pandemic, according to a survey by loan provider Lending Tree.

Read more: Workplace retirement benefits still make long-term savings hard

The Bureau of Labor Statistics estimates retirees will need $49,000 per year for housing, healthcare costs and other expenses including transportation and food. A recent survey by WalletHub found the best and worst states for retirees. Each state was given a total score out of 100, based on affordability, quality of life and overall health factors. These are the top 10 states for retirement:

10: New Hampshire

Total score: 56.29

The economic turmoil caused by the pandemic has highlighted the need for a retirement savings system overhaul, especially to help those most vulnerable to market volatility, including pre-retirees and retirees reliant on their 401(k) savings.

Read more: Coronavirus crisis highlights need for retirement system overhaul

9: Minnesota

Total score: 56.33

While we all hope for an end to the pandemic, and a return to economic and social normalcy, in 2021, interest rates are likely to stay at their near-zero levels for the foreseeable future. And with interest rates continuing to hover at historic lows, every dollar will count for retirement-savers going into 2021.

Read more: How sponsors can facilitate better retirement participant outcomes and improve plan metrics in 2021

8: Utah

Total score: 57.11

As a handful of states roll out employer-mandated retirement-savings programs for their workers, a group of researchers is now advocating for a nationwide policy, arguing that a universal mandate could dramatically boost savings rates and ease the strain on federal assistance programs.

Read more: Nationwide employer mandate could dramatically boost retirement savings

7: Idaho

Total score: 57.28

While Latinx employees experienced difficulties in saving for retirement well before the pandemic, exclusion from the labor market has made retirement increasingly unattainable. Additionally, recent data from Prudential found that 21% of the working Latinx Americans saw their household income cut in half as a result of the coronavirus pandemic, compared to 17% of the general population.

Read more: Strategies to close the retirement gap for Latinx employees

6: Montana

Total score: 57.35

The coronavirus pandemic, income inequality and a record level of public debt are worsening retirement prospects in the U.S. and globally, with of the biggest threats to retiree wellbeing being low-to-negative interest rates.

Read more: Falling interest rates, coronavirus threaten retirement security

5: North Dakota

Total score: 57.49

Security Benefit has debuted a new retirement app for employer clients and other customers that allows employees to track and manage their retirement savings progress, while also offering them educational tools and rewards to keep them motivated.

Read more: Security Benefit expands retirement platform with new mobile app

4: Virginia

Total score: 58.61

Early retirement offers and job losses due to the pandemic are causing many older workers to consider leaving the workforce before retirement age. The labor force participation rate for workers aged 55 and older fell to 38.5% from 40.3% between February and May 2020, according to research from AARP.

Read more: How to handle early retirement during the coronavirus pandemic

3: Delaware

Total score: 58.69

Traditional pensions and other defined-benefit plans might not be coming back, but as employers rethink their benefits mix amid growing concerns about retirement security, many are looking with renewed interest to some form of retirement income offering.

Read more: Employers inch toward offering retirement income option in benefits mix

2: Colorado

Total score: 60.94

As the unemployment rate has soared to a recent record 14.7%, the highest since the Depression era, the coronavirus crisis may result in one alarming trend: forcing thousands of Americans into early retirement.

Read more: Record unemployment is reshaping the American retirement picture

1: Florida

Total score: 61.09

Though it's far too early to assess the long-term impact of the coronavirus pandemic on workers' retirement security, early indicators suggest that employers are not abandoning their retirement plans and employees are not cashing out in droves.

Read more: Coronavirus pandemic offers chance to rethink retirement planning
Alyssa Place
Editor-in-chief, Employee Benefit News
Retirement planning Retirement income Retirement readiness Retirement in Focus
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