New York State Retirement: Why It Costs $1 Million (Plus Social Security)
Retiring in New York doesn’t necessarily mean settling down in an expensive location like New York City itself, but that doesn’t mean the rest of the state is necessarily a steal. Even if you have diversified retirement accounts, know you’ll be pulling in a public pension income and even have an emergency fund, it still takes a huge chunk of savings to last just 20 years in retirement.
Learn More: Cutting Expenses for Retirement? Here’s the No. 1 Thing To Get Rid Of First
Be Aware: 7 Reasons You Shouldn’t Retire Before Speaking To a Financial Advisor
GOBankingRates recently conducted a study to determine the minimum savings you need in each state to retire, plus Social Security retirement benefits. The general cost-of-living statistics were based on factors including everything from utility bills to healthcare.
Here are some key takeaways:
The national average Social Security income is $21,567, an important figure to remember amid New York state’s inflated property tax rates, health insurance, cost of living and more.
The minimum savings needed to retire in New York for 20 years: $1,031,460
The minimum savings needed to retire in New York for 25 years: $1,289,325
The minimum savings needed to retire in New York for 30 years: $1,548,739
Let’s take a closer look at how much you’ll need to comfortably spend your golden years in the Empire State.
Earning passive income doesn't need to be difficult. You can start this week.
5 Reasons Social Security and $1 Million Only Buys You 20 Years
Having over $1 million in your savings is quite a hefty financial goal. They say if you can make it in New York you can make it anywhere, but working on your savings now will only help you stretch your retirement income later.
Here are five reasons why you need at least $1 million saved, plus your Social Security benefits, if you are planning to retire in the state of New York.
1. Housing Costs as High as the Empire State Building
Average Annual Housing Cost: $20,694.84
Whether you are on the final stretch of paying off your mortgage or looking to rent a retirement property, keep in mind that New York real estate can come with a pretty steep price tag.
Trending Now: If You Have $1 Million in Retirement Savings, Here’s How Much You Could Withdraw Per Year
If your retirement income is primarily benefit-based, you’ll need to set aside a large percentage of your monthly paycheck to start saving now.
GOBankingRates found the average housing cost for New Yorkers to be $20,695 a year.
2. A Big Apple a Day Won’t Keep Healthcare Expenses Away
Average Annual Cost of Healthcare: $8,173.36
Medical bills, both expected and unexpected, are huge retirement budget considerations. If you don’t have your health, retirement taxes won’t be a priority so planning now helps your future financial outlook.
GOBankingRates estimates the average annual cost of healthcare to be $8,174.
3. Bills, Bills, Bills
Average Annual Cost of Utilities: $4,363.08
Average Annual Cost of Groceries: $4,993.68
Well, you’ve got to eat, need water to survive and electricity sure does make things more convenient, so grocery bills and utilities are all non-negotiable expenses. You should also be aware that many places in New York have above-average income taxes and sales taxes.
The average cost of groceries in New York is $4,994 and utilities are $4,363 a year according to the study by GOBankingRates.
4. Transportation Costs May Steer You Toward Debt
Average Annual Cost of Transportation: $5,303.84
The cost of having a car, or other modes of transportation, has gone up across the board in general. Whether it’s a lump sum payment when purchasing an automobile, the insurance premiums or just the ever-rising gas prices, what you spend just to commute around New York can add up.
GOBankingRates estimates you’ll pay around $5,304 a year on transportation alone living in New York.
5. It Costs a Lot to Live Here — Before and After Social Security
Average Annual Total Cost of Living: $73,139.77
Average Annual Total Cost of Living After Social Security: $51,573.01
Minimum Needed for 20 Years of Retirement: $1,031,460
Minimum Needed for 25 Years of Retirement: $1,289,325
Minimum Needed for 30 Years of Retirement: $1,548,739
Social Security is an income cushion most retirees rely on to last them through their retirement. However, depending on where you live, it might not get you as far as it would in other places. The average cost of living in New York is $73,140 a year which is higher than the national average salary.
Even when it lowers to $51,573 after you factor in Social Security, this is still quite substantial.
The bottom line is that if your long-term retirement goal is to live in New York, you have a lot of financial planning to do. For 20 years of retirement, it’s estimated that you’ll need over $1 million to retire, and over $1.5 million to last you 30 years, plus Social Security.
Having a specific number in mind for tomorrow can help you build your budget, and your savings, today.
Methodology: To find out exactly how much you need to retire in your state, GOBankingRates found the annual cost of expenditures for a retired person in each state by multiplying the 65-year and older expenditures from the Bureau of Labor Statistics 2022 Consumer Expenditure Survey by the cost of living index for each state from the Missouri Economic Research and Information Center’s Q3 2023 cost of living series. To find how much money a retired person would need to save, we divided each state’s annual expenditures, minus the annual Social Security income as sourced from the Social Security Administration’s Monthly Statistical Snapshot, March 2022, by 0.0333%, 0.04%, and 0.05% assuming 20, 25 and 30 years of retirement respectively. All data was collected and is up to date as of January 8, 2024.
More From GOBankingRates
What Is the Median Income for the Upper Middle Class in 2024?
If You Shop Online, Make Sure You Do This -- It Could Put an Extra $200 in Your Wallet
This article originally appeared on GOBankingRates.com: New York State Retirement: Why It Costs $1 Million (Plus Social Security)
