Did you know that the location where you spend your later years can have a huge impact on how long your retirement savings last?
Retirees have only a finite amount of income, with their money generally coming from a combination of Social Security and savings. Since Social Security benefits don't provide enough money to live on, withdrawals from retirement accounts are necessary to supplement it. And there's only so much money you can take out before your account runs dry.
If you have a fat retirement nest egg, you may not need to worry about spending all your money in your lifetime. But if your savings balance is a little smaller than you'd like, residing in an area with a high cost of living could mean you spend it too soon and are left with too little.
But there are plenty of places across the United States where it's relatively affordable to meet your basic expenses. In fact, research from University of Massachusetts Boston has identified the most- and least-expensive states across the country for seniors.
If you have doubts that your retirement savings are substantial enough to see you through and you don't already live in one of the most affordable locales, you may wish to relocate. This list of the 10 cheapest states for retirees could give you a good idea of where to start looking for a new home.
The 10 cheapest states for retirees
Researchers at University of Massachusetts Boston used their Elder Index to determine the cost of living for senior renters across the United States.
The Elder Index determines the amount seniors need to cover basic expenses without loans, gifts, or means-tested government benefits. This includes housing, transportation, food, healthcare, and essential household items, but no entertainment or travel spending.
Using the Elder Index, these are the 10 cheapest states, along with the amounts singles or couples would need to live in each one annually, starting with the absolute cheapest of all for singles:
- Alabama A single senior needs $21,504 to cover the basics here, while a senior couple needs $31,956.
- Kentucky A single senior needs $21,684; couples need $32,796.
- Arkansas Singles, $21,720; couples, $33,084.
- West Virginia Singles, $21,792; couples, $33,156.
- Ohio Singles, $21,996; couples, $32,844.
- Missouri Singles, $22,092; couples, $32,940.
- Indiana Singles, $22,164; couples, $33,012.
- Tennessee Singles, $22,188; couples, $32,784.
- Nevada Singles, $22,260; couples, $31,836.
- Mississippi Singles, $22,344; couples, $33,996.
In each of these states, seniors require much less money than in more expensive locales. In Washington, D.C., for example, a single senior would require $33,060 to pay for the essentials, while couples need $44,868.
Washington is the nation's most expensive place for seniors; living there would cost you almost $12,000 more as a single than if you retired to Alabama instead.
Should you relocate to a state with a low cost of living?
Cost is just one factor to consider in deciding where you want to spend your later years. But it's an important one, especially if your goal is to have the best quality of life without causing your account balance to fall too fast.