Is $1 million enough to retire in Missouri? Here’s how many years it would last
Planning a retirement in Missouri? Your savings may last longer than you’d think.
Many Americans believe they need just over $1 million to retire comfortably, according to a new study. While the exact dollar amount depends on your own situation and preferences, where you live will also affect how long you can make your retirement funds last.
In Missouri, at least, you might outlast your savings.
Americans think they’ll need $1.27 million to live a comfortable retirement, according to the 2023 Planning & Progress Study from life insurance company Northwestern Mutual. That’s up from $1.25 million in 2022.
That said, most Americans aren’t on track to meet those savings goals. The median retirement savings for all families, according to the Federal Reserve’s 2022 Survey of Consumer Finances, is just $87,000.
Retirement can last longer than 25 years, according to Fidelity, so you need to be sure you won’t run out of cash before you … well, die.
The average life expectancy was 77.5 years in 2022, according to data from the CDC published in November 2023. For women, it was 80.2 years and for men, 74.8 years.
The average retirement age, according to a 2022 Gallup poll, is 61. You can receive reduced Social Security benefits as early as age 62, but can’t get full benefits until 67, according to the Social Security Administration.
The Employee Benefit Research Institute’s 2023 Retirement Confidence Survey found 64% of workers said they feel “somewhat confident” they’ll have enough money to retire comfortably. Only 27% reported feeling “very confident.”
A 2023 analysis from GoBankingRates, an online personal finance resource, used data from the U.S. Bureau of Labor Statistics and the Missouri Economic Research and Information Center to find how long $1 million would last in each state. The analysis broke down the cost of living by groceries, utilities, transportation and healthcare for a retiree age 65 or older. It didn’t include Social Security benefits.
$1 million lasted the least amount of time in Hawaii at just 10.3 years, followed by Massachusetts at 12.8 years. California took third at 13.8 years.
In Missouri, $1 million lasted 21.3 years. Next door in Kansas, the Sunflower State lasted the third longest (tied with Alabama) at 22 years.
Funds lasted the longest in Mississippi at 22.7 years, with Oklahoma close behind at 22.1 years.
Here’s a look at how long $1 million in savings would last you across the country.
How can you make your savings last?
One popular retirement strategy is the 4% rule. When you retire, you take out 4% of your savings for the first year, according to Investopedia. You’ll take out the same amount, adjusting for inflation, for the next 30 years.
For example, let’s say you retire with $1 million at age 65. You take out 4% for your first year of retirement, or $40,000.
Inflation in year one was 2.5%. You’ll multiply that by the original amount you withdrew and add that. In year two, you’d take out $41,000.
Let’s say inflation stays the same through that second year. In year three, you would withdraw $42,025.
While it’s easy to follow and offers predictable income, the 4% rule doesn’t account for market fluctuations, rising medical costs as you age or your life expectancy. A 5% rule for withdrawals could be more realistic, according to Investopedia.
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