As concerns about Social Security solvency, inflation, rising interest rates, and bank closures increase, many Americans worry about having enough money to live their golden years. A Gallup poll found that seniors are retiring four years later than they were in 1991, and where they choose to retire will significantly impact their finances, as income, taxes, and expenses vary widely by state.
Thankfully, a new study by Seniorly reveals that Tennessee is the 10th most affordable state to retire in the US. Eight financial metrics were analyzed in all 50 states and D.C., including retirement income, tax rates, cost of living, healthcare costs, and senior poverty rates. Tennessee has an average retirement income of $23,829, the average annual Medicare spend is $11,894, and 80.2% of seniors spend less than 30% of their income on housing.
For young adults concerned about having enough money to retire in the future, it's essential to start saving as early as possible. According to a study by the National Institute on Retirement Security, millennials only have an average of about $24,000 saved for retirement. To put that into perspective, the recommended retirement savings for someone in their 30s is roughly $200,000. Young adults must start saving as early as possible, even if it's just a small amount each month. Over time, the power of compound interest will help their savings grow significantly.
For those nearing retirement, it's essential to consider their needs and priorities when deciding where to retire. Affordability is a significant factor, but it's not the only consideration. Proximity to friends and family, access to health care and amenities, safety, cultural connections, and transportation are all important factors to consider. According to a study by Merrill Lynch, nearly three-quarters of pre-retirees want to stay in their homes, while others may prefer to move closer to family or a warmer climate.
It's also essential to have a plan for how to spend retirement. Many retirees may experience boredom, loneliness, or a lack of purpose when they stop working. Having hobbies, social activities, and other ways to stay engaged and connected with others is important. Retirees may also want to consider part-time work, volunteering, or starting their own business to stay active and engaged during retirement.
Another important consideration for retirees is health care. Apart from housing and transportation, health care is the biggest annual expense for seniors. Seniors should have a plan for how to pay for medical expenses, including long-term care and dental services, which Medicare doesn't cover. Many seniors may want to consider purchasing supplemental insurance or a long-term care policy to help cover these expenses.
Deciding where to retire is a significant decision that will impact a retiree's finances, lifestyle, and overall well-being. By carefully researching and considering all the factors, seniors can maximize their retirement income, minimize their living expenses, and find the community that suits them best. For young adults, it's essential to start saving for retirement as early as possible, while those nearing retirement should have a plan for how to spend their retirement and how to pay for medical expenses. With careful planning and consideration, anyone can enjoy a comfortable retirement in the community of their choice.
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