The next few years are expected to see a surge in Americans retiring, as the last of the baby boomers hit 65 years old. It is what some experts have dubbed the "silver tsunami." At the same time, the amount needed to retire comfortably has steadily increased, especially during the last few years. The general consensus now is that $1.5 million in savings is the "magic number" most people need when they retire. But that number depends on a factors like where you live and what standard of living you're accustomed to. Many retirees can get by with far less, and others choose to rely more on social security.
While individual circumstances vary, one reality is clear for everyone: the price of retirement has gone up. "Just look at what's happened the past few years," says Mitch Kramer, founder of Fluent Financial. "The prior administration was very big on pro-government spending and really fanned the flames of inflation, and the pandemic pumped a lot of federal dollars in to our economy...there's some question about whether we will ever get back to a two-percent inflation rate."
The rising cost of retirement has also changed how people are preparing. "Since the cost of living has gone up, a lot of people believe you should have more money saved up sooner...because let's face it, if you're 45, 55, or 60 your runway to earn money is much shorter," says Kramer. "So, people would much rather have a larger nest egg and not have to go back to work or lower their standard of living after retirement."
By the way, Texas ranks 15th in cost of living for retirees, with $1.5 million estimated to last 46 years here. West Virginia was the most affordable retirement state, while Hawaii and California were the most expensive.
"It all depends on what people want to do after retirement, where they're going to live, and what the taxes are like there," says Kramer.
Photo: EyeEm