That’s according to an analysis of Census data by Interest.com, a financial information website owned by Bankrate.com. Their report shows that, more often than not, retirees aren’t living as comfortably as they should be.
While most financial experts advise living off of 70% to 80% of your pre-retirement income to keep from feeling the pinch in retirement, in 48 states, seniors have a median household income of $35,107, or 57% of the median income of younger Americans.
“People who live in a given area are competing with each other for the same goods and services, including housing, cars and groceries,” says Mike Sante, managing editor of Interest.com. “This is why we thought it would be useful to compare younger and older adults’ incomes in each state. We found that many senior citizens are significantly underfunded and risk running out of money, especially since people are living longer than they used to and may need to support a two- or three-decade retirement.”
Only in Hawaii and Nevada did they make at least 70% of what pre-retirement aged Americans earned. They topped the list followed by Arizona (68.1%), New Mexico (66.9%) and Florida (66.9%.) The states where seniors have it (comparatively) the worst? Massachusetts fell to the absolute bottom of the list. There, residents live on just 45% of the income of their pre-retirement counterparts. In the states that follow: North Dakota, Rhode Island, New Jersey and New Hampshire, seniors make do on nearly half of what their neighbors make in their pre-retirement years.
Start Saving Now
Along with investment, a key factor in building a comfortable nest egg is time. Start saving early to earn all the wonderful interest between now and your retirement date. Examine your options. Many Americans choose some combination of an employer-sponsored 401(k,) Roth IRA, traditional IRA, stocks and savings. What’s best for you will be determined by whether or not you can tolerate risk and how fast you want to reach your retirement goals. Finally, when we caught up with retirement guru, Darrow Kirkpatrick earlier this month, his key tips for retirement saving were pretty simple: Avoid debt while maxing out retirement contributions and limit splurges.
Photo Courtesy, 401(K) 2012.