"Got $1 million to retire? Here’s how long it will last, by U.S. state"

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"Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by Taylor Larimore » Tue Nov 21, 2017 12:01 am

Bogleheads:

MarketWatch has an interesting article showing how long $1 million will last depending on the state you live in.

At the end of the article is a Retirement Income Calculator.

Got $1 million to retire? Here’s how long it will last, by U.S. state

Best wishes.
Taylor
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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by warowits » Tue Nov 21, 2017 12:24 am

Just don't read the comments. Makes me appreciate our moderators.
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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by hoops777 » Tue Nov 21, 2017 1:34 am

I read this a week ago.Possibly the most inaccurate thing I have ever read in relation to real people and ignoring SS and investment income as well as a few other things.
Last edited by hoops777 on Tue Nov 21, 2017 6:50 pm, edited 1 time in total.
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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by OnTrack » Tue Nov 21, 2017 1:46 am

They seem to be assuming no other source of income (e.g. Social security) and no return on investments.

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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by White Coat Investor » Tue Nov 21, 2017 1:47 am

Interesting way to look at cost of living. Thanks for sharing. Agree that there are probably some flaws in their methodology as far as getting $1M to last. I'll be there are lots of people in Hawaii who retired on less than that!
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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by digarei » Tue Nov 21, 2017 4:18 am

Taylor Larimore wrote:
Tue Nov 21, 2017 12:01 am
Bogleheads:

MarketWatch has an interesting article showing how long $1 million will last depending on the state you live in.

At the end of the article is a Retirement Income Calculator.

Got $1 million to retire? Here’s how long it will last, by U.S. state

Best wishes.
Taylor
Interesting, yes. I like the ordering of states and the use of a color coded matrix to demonstrate how far, on average, accumulated savings and investments will last. It’s good enough to use as a rule of thumb for someone who needs or wants to move to a different state for their retirement. At least, it starts the decision process.

Of course, if one’s anticipated or realized retirement expenses vary from the “average annual expenditure” data used to manufacture the chart, it has less utility. Nothing can substitute for drawing up a budget in light of personal research.

I have little confidence that the Retirement Income Calculator is useful beyond showing the uninformed that they need to save more money—and guiding them to open a brokerage account at Ally Invest. The calculator tool resisted all my attempts to enter my own data, automatically decreasing my savings rate and increasing my retirement age (by 8 years!) until the result could demonstrate that I needed to save more (at Ally, presumably). Marketing?
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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by kmurp » Tue Nov 21, 2017 5:25 am

These things never work for me in New York. I live upstate and get lumped in with HCOL downstate.

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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by GoldenFinch » Tue Nov 21, 2017 6:41 am

The word that came to mind when I saw this article was “arbitrary.” A million could last a very long time or not long at all in many places. Generalizing by state is ridiculous. In my little city of around 30k people property taxes on houses range from 2.5k a year to 74k a year, so a million might go a bit further if you live 5 blocks in one direction or the other.

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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by birdog » Tue Nov 21, 2017 6:43 am

Interesting info on costs per state. Thank you for sharing.

That retirement calculator is suspect, however. It must base recommended savings on a percentage of current income which makes no sense, IMO. It told me I needed to save $24M prior to retiring but never asked what my expenses in retirement would be.

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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by GoldenFinch » Tue Nov 21, 2017 6:52 am

birdog wrote:
Tue Nov 21, 2017 6:43 am
Interesting info on costs per state. Thank you for sharing.

That retirement calculator is suspect, however. It must base recommended savings on a percentage of current income which makes no sense, IMO. It told me I needed to save $24M prior to retiring but never asked what my expenses in retirement would be.
Yikes! 24M! :happy

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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by Cunobelinus » Tue Nov 21, 2017 7:15 am

White Coat Investor wrote:
Tue Nov 21, 2017 1:47 am
Interesting way to look at cost of living. Thanks for sharing. Agree that there are probably some flaws in their methodology as far as getting $1M to last. I'll be there are lots of people in Hawaii who retired on less than that!
Shootz. Live with your parents (and grandparents) for a long time. Like, forever.

There are places in the islands cheaper than Honolulu (or more expensive). There are places in CA cheaper than San Francisco. There are places in New York (state) cheaper than Manhattan.

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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by TheTimeLord » Tue Nov 21, 2017 7:27 am

Fun article.
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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by Jack FFR1846 » Tue Nov 21, 2017 7:41 am

I agree with kmurp that where in the state really matters. Costs in Boston have nothing to do with costs in Sandisfield, MA (population under 1000, known for being the first town to report voting in the state). Even comparing big California cities, I would not assume San Francisco and Sacramento are going to be even close. Farming communities far from California cities, even less of a connection.
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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by SimplicityNow » Tue Nov 21, 2017 8:27 am

Interesting read. It reminded me of the all those articles of the "10 Best Places to Retire". All the data and the method they use is so arbitrary to make it all useless. I guess we should all start packing our bags and move to Mississippi?

The calculator is too simple, doesn't capture enough data to make their suggestions worthwhile.

Here in a few lines is more helpful information.

1) Try to save more and spend less.
2) Live below your means.
3) Your savings will go further in a LCOL area then a HCOL one.
4) Remember to include other sources of income such as pensions, social security, etc.
5) Ignore the noise and pay more attention to those who actually support individual investors like Jack Bogle, Bill Bernstein, Alan Roth, Mike Piper, Taylor Larimore, Mel Lindauer and all the other wonderful, knowledgeable, insightful and bright people on this forum.

Thanks for the link Taylor!

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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by ResearchMed » Tue Nov 21, 2017 9:25 am

birdog wrote:
Tue Nov 21, 2017 6:43 am
Interesting info on costs per state. Thank you for sharing.

That retirement calculator is suspect, however. It must base recommended savings on a percentage of current income which makes no sense, IMO. It told me I needed to save $24M prior to retiring but never asked what my expenses in retirement would be.
And we just got the opposite result... that we already have more than we need, which I don't believe for a minute.

We've felt good recently (after the past several years, that's been easy) as a belated retirement (by choice) finally seems to be approaching.
But it's not *this* good....
(Or "they" know something about our life expectancy that we don't know!)

Too little input for so-called program... no question about whether one wants to spend down or not... or even if "current income" is what is desired/needed in retirement (could be more, could be less).

Silly.
(I'd love to know what algorithms were used to create this estimate.)

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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by iceport » Tue Nov 21, 2017 10:31 am

SimplicityNow wrote:
Tue Nov 21, 2017 8:27 am
Interesting read. It reminded me of the all those articles of the "10 Best Places to Retire". All the data and the method they use is so arbitrary to make it all useless. I guess we should all start packing our bags and move to Mississippi?
I agree completely. In fact, that's the way I see the whole over-emphasis on taxes or cost of living in general when assessing the desirability of a place to live.

The chart reminded me of those old Consumer Reports car evaluations back in the early 1980s (when I first started reading them). The priority they placed on cost of ownership had them claiming the tin box Toyotas and Hondas of the day were far superior cars to any Mercedes, BMW, or any other high quality car. The pin-point priority on cost rendered the evaluation practically meaningless for drivers with any other priorities.

I see the same glaring flaw in focusing solely on cost of living when assessing potential locations for retirement living.

But I do appreciate the link; there was some interesting information on relative costs of living. Thanks, Taylor.
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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by Sandtrap » Tue Nov 21, 2017 10:43 am

White Coat Investor wrote:
Tue Nov 21, 2017 1:47 am
Interesting way to look at cost of living. Thanks for sharing. Agree that there are probably some flaws in their methodology as far as getting $1M to last. I'll be there are lots of people in Hawaii who retired on less than that!
There was a calculation some time ago that said that a Hawaii resident moving to the mainland would increase his income by 1.8 or so. Something like that as my senior memory is frail and fading.
It was the one thing that sunk into this stubborn "local boy" to eventually retire from Hawaii's HCOL to the Southwest's LCOL. The choice was to "survive" in Hawaii or "thrive" elsewhere.
True, Hawaii residents retire on far less than stated in the article, but they still struggle with $80k/year with a paid off mortgage and zero debt. Multi-generational households are common to make ends meet. Hawaii is most often highest on these types of HCOL lists. The intrinsic non-quantifiable costs are never stated but add to the strain of retirement "quality of life" nonetheless.

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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by retire57 » Tue Nov 21, 2017 10:46 am

Assumes no ROI.

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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by Ruger » Tue Nov 21, 2017 10:46 am

kmurp wrote:
Tue Nov 21, 2017 5:25 am
These things never work for me in New York. I live upstate and get lumped in with HCOL downstate.
I agree....my state is listed as one of the worst. However, I think they are considering the urban areas. Where I live, and in much of the state,
living expenses are not what it costs in the main population areas.

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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by alfaspider » Tue Nov 21, 2017 10:52 am

They aren't taking property taxes into account. States that are more tilted towards income over property taxes will favor retirees.

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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by JPH » Tue Nov 21, 2017 10:56 am

An interesting article; thanks for sharing. I doubt that the author believes that anyone is silly enough to believe this is literally how long a million dollars would last. There is an undeniable difference between the top tier and the bottom tier.
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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by willthrill81 » Tue Nov 21, 2017 11:09 am

Stay away from the coasts and your COL is significantly more manageable. I doubt that anyone would be surprised to hear that.

I was pleased to see my home (not current) state, Mississippi, at the top of the heap. It really is cheap to live down there, and you'd be surprised how many retirees move down there because of it. Many have media-driven misconceptions about the state, but it has its perks too.
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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by flyingaway » Tue Nov 21, 2017 11:51 am

If $1MM is not enough, make it $2MM before retire.
Lifestyles are different.

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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by Ron Scott » Tue Nov 21, 2017 12:58 pm

It might look bad for New Yorkers but if you average in your place in Florida you're fine!
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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by Ron Scott » Tue Nov 21, 2017 1:00 pm

flyingaway wrote:
Tue Nov 21, 2017 11:51 am
If $1MM is not enough, make it $2MM before retire.
Lifestyles are different.
The median NW of a retiree in this country is about $100,000 so...
Retirement is a game best played by those prepared for more volatility in the future than has been seen in the past. The solution is not to predict investment losses but to prepare for them.

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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by WhiteMaxima » Tue Nov 21, 2017 1:08 pm

$1 mil is not a lot money it use to be. In a developed world like in the US, everything is expensive. Look beyond the border: Mexico, Panama, Thailand. There are many places in the world $1 mil can get you twice or three times purchase power. If you retire young, why not explore low cost to extend your $ purchase power.

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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by onthecusp » Tue Nov 21, 2017 1:08 pm

The site that was lifted from "Howmuch.net" has a bunch of interesting if questionable comparisons. Good for hours of pondering. :D

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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by overthought » Tue Nov 21, 2017 1:46 pm

GoldenFinch wrote:
Tue Nov 21, 2017 6:41 am
The word that came to mind when I saw this article was “arbitrary.” A million could last a very long time or not long at all in many places. Generalizing by state is ridiculous. In my little city of around 30k people property taxes on houses range from 2.5k a year to 74k a year, so a million might go a bit further if you live 5 blocks in one direction or the other.
I hope that's because some houses in your town are hovels and other are mansions on large estates? Otherwise, that's pretty messed up.

Everywhere I've lived so far had a procedure for contesting property taxes that are significantly higher than other substantially similar properties. It usually involves monitoring real estate to identify houses substantially similar to your own that have sold recently, and then following up with a land records search to get the last sale price and assessed tax rate. If you find a big discrepancy, you send a letter or fill a form to formally request that your rate be brought in line with theirs.

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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by flamesabers » Tue Nov 21, 2017 2:50 pm

I think a good illustration of the limitations of this article is how the average annual expenditure for retirees in my state is close to my current annual gross income. Judging by this data, I will never be able to retire. :?

At least for my state I suspect the HCOL areas are driving up the average annual expenditures to the point this article doesn't have any meaningful data for me.
Last edited by flamesabers on Tue Nov 21, 2017 2:52 pm, edited 1 time in total.

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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by rec7 » Tue Nov 21, 2017 2:50 pm

onthecusp wrote:
Tue Nov 21, 2017 1:08 pm
The site that was lifted from "Howmuch.net" has a bunch of interesting if questionable comparisons. Good for hours of pondering. :D
Neat site.
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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by CyclingDuo » Tue Nov 21, 2017 7:55 pm

willthrill81 wrote:
Tue Nov 21, 2017 11:09 am
Stay away from the coasts and your COL is significantly more manageable. I doubt that anyone would be surprised to hear that.

I was pleased to see my home (not current) state, Mississippi, at the top of the heap. It really is cheap to live down there, and you'd be surprised how many retirees move down there because of it. Many have media-driven misconceptions about the state, but it has its perks too.
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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by ThankYouJack » Tue Nov 21, 2017 8:05 pm

There's a big difference between cost of living and average annual expenditures for 65 and older. Just because the Joneses are spending a ton in Hawaii because they have tons to burn, doesn't mean a Boglehead needs to.

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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by snowox » Tue Nov 21, 2017 8:47 pm

These articles IMO are written more to get people to think more about saving by people that probably don't save at all. There so generic. Always some interesting tool or colors but as many mentioned one size doesn't fit all in many states.

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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by VictoriaF » Tue Nov 21, 2017 9:01 pm

I like the picture of retired people in the beginning of the article!

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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by baw703916 » Tue Nov 21, 2017 9:10 pm

VictoriaF wrote:
Tue Nov 21, 2017 9:01 pm
I like the picture of retired people in the beginning of the article!

Victoria
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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by Taylor Larimore » Tue Nov 21, 2017 9:11 pm

VictoriaF wrote:
Tue Nov 21, 2017 9:01 pm
I like the picture of retired people in the beginning of the article!

Victoria
Victoria:

They invested in The Three-Fund Portfolio. :happy

Best wishes
Taylor
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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by VictoriaF » Tue Nov 21, 2017 9:16 pm

Taylor Larimore wrote:
Tue Nov 21, 2017 9:11 pm
VictoriaF wrote:
Tue Nov 21, 2017 9:01 pm
I like the picture of retired people in the beginning of the article!

Victoria
Victoria:

They invested in The Three-Fund Portfolio. :happy

Best wishes
Taylor
Thank you, Taylor,

The Three-Fund Portfolio is magical in so many ways!

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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by Levett » Wed Nov 22, 2017 5:54 pm

The important variables (assuming $1 million at 65 ) are where you live, what you spend, longevity , and how you allocate assets (including pensions, annuities, and Social security). Those with pensions (especially with COLA) have an immediate advantage.

Lev

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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by TD2626 » Wed Nov 22, 2017 6:07 pm

One's own expenses (which one should know or be able to estimate) are what matter. Cost of living in an area affects expenses, but isn't the same as expenses. It's possible to be especially frugal in a HCOL area or wasteful in a LCOL area.

There can be other isssues too - this is a good one:
kmurp wrote:
Tue Nov 21, 2017 5:25 am
These things never work for me in New York. I live upstate and get lumped in with HCOL downstate.

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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by quantAndHold » Wed Nov 22, 2017 8:28 pm

TD2626 wrote:
Wed Nov 22, 2017 6:07 pm
One's own expenses (which one should know or be able to estimate) are what matter. Cost of living in an area affects expenses, but isn't the same as expenses. It's possible to be especially frugal in a HCOL area or wasteful in a LCOL area.

There can be other isssues too - this is a good one:
kmurp wrote:
Tue Nov 21, 2017 5:25 am
These things never work for me in New York. I live upstate and get lumped in with HCOL downstate.
I have the same problem. I live in a HCOL area in “high tax” California, but CA doesn’t tax social security, we own the home outright, and property tax rates favor people who’ve owned their homes for a long time. So my personal living expenses as a retiree are very reasonable. Most of my retired friends are in similar situations financially.

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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by nisiprius » Wed Nov 22, 2017 10:18 pm

It seems kind of meaningless unless you also factor in how easy it is to save that $1 million in the first place--by state. It's a lot harder to save that $1 million in Mississippi than it is in California.

Sure, you could move. But if we're talking about moving, and just looking at the numbers, shouldn't we be also be looking at how long $1 million will last in Costa Rica?
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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by WanderingDoc » Wed Nov 22, 2017 11:49 pm

"Monthly savings should be at most 40% of your income"

A warning pops up saying that, means it doesn't let you input more than 40% of your monthly income. Very bold of them to tell me how much I should save at most.
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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by finite_difference » Thu Nov 23, 2017 12:21 am

I think I might prefer to retire 13 years in Hawaii and go broke than spend 25 years in Mississippi :twisted:. (Although I hear the beaches in MS are not bad.)

Here’s the source article: https://howmuch.net/articles/one-millio ... t-by-state

It would be cool if they crunched the numbers for other countries that are friendly to US “expats” as well! Plus the US territories. Puerto Rico, here I come!
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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by IMO » Thu Nov 23, 2017 12:39 am

quantAndHold wrote:
Wed Nov 22, 2017 8:28 pm
I have the same problem. I live in a HCOL area in “high tax” California, but CA doesn’t tax social security, we own the home outright, and property tax rates favor people who’ve owned their homes for a long time. So my personal living expenses as a retiree are very reasonable. Most of my retired friends are in similar situations financially.
I'd say the CA example is pretty bad:

While CA is an expensive state to be working, if you've lived there for some time and own a home, you're property taxes are kept very low by Prop 13 and one's income tax level is likely now at a very low level. Have family in that situation and know quite a few other people who's necessity expenses are actually very low in retirement.

If you are a retiree you are renting and not in a rent controlled housing situation, or if you are moving into the state to retire and buying a property at current levels, then in those situations you're expenses are going to be significantly higher. And those that have lived there for some time and are now retired who are also home owners, they have the added benefit of being able to take advantage of significant home equity should they opt to move to a LCOL area or can cash out and move into an assisted living facility.

jalbert
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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by jalbert » Thu Nov 23, 2017 12:46 am

Given that $1M would buy more than enough in COLA'd SPIA income for a 65-year-old to live quite confortably until death in all but maybe 2 or 3 of the states, I think the data is meaningless.
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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by littlebird » Thu Nov 23, 2017 1:06 am

We retired with a lot less than a million and we've lived comfortably, quintupling our original nest egg -- over the course of 30 years. With very modest pension and SS. Of course we could have spent it all in the 19 years assigned to our state if we had really tried.

Dantes
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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by Dantes » Thu Nov 23, 2017 7:37 am

So here is how they come up with 19 years 7 months for Maine, the state I expect to live in when retired:

They use a single national figure for average household expenses 65 or more years old, 45,756.
They multiply that by the 2nd quarter cost of living index which is by state; 111.7 for Maine.
1.117 * 45756 = 51109 (I think at this point we aren't losing much accuracy by rounding to whole dollars).
1,000,000 / 51109 = 19.56, which with more rounding leads to 19 years 7 months.

This article uses such broad strokes its impossible to recognize what the picture really is.

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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by edge » Thu Nov 23, 2017 8:43 am

Umm. Taxes are horrible throughout the state. Everyone kept telling me when we moved to WNY how the cost of living was lower. Well, it wasn’t. Our house was half the cost but due to taxes our monthly payment was the same. Sales tax, much higher. Income tax, sky high.


kmurp wrote:
Tue Nov 21, 2017 5:25 am
These things never work for me in New York. I live upstate and get lumped in with HCOL downstate.

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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by abuss368 » Thu Nov 23, 2017 9:12 am

I did read this and found it interesting. Thank you for sharing.
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Re: "Got $1 million to retire? Here’s how long it will last, by U.S. state"

Post by H-Town » Thu Nov 23, 2017 9:32 am

Taylor Larimore wrote:
Tue Nov 21, 2017 9:11 pm
VictoriaF wrote:
Tue Nov 21, 2017 9:01 pm
I like the picture of retired people in the beginning of the article!

Victoria
Victoria:

They invested in The Three-Fund Portfolio. :happy

Best wishes
Taylor
Nah. They have rich parents.

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