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How much do you think you’ll need to save for retirement?
If you’re in one of these big cities, the answer would be at least $1 million to live an average lifestyle, according to MagnifyMoney.
To find the amount of money needed to retire in each city, analysts used data from the U.S. Bureau of Labor Statistics, Bureau of Economic Analysis, Tax Fund, Census Bureau, and U.S. Bureau of Statistics. Social Security to calculate the pre-tax income needed to meet the average retiree’s spending.
“$1 million is a big number,” says certified financial planner Marguerita Cheng, CEO and co-founder of Blue Ocean Global Wealth and a member of CNBC Advisory Board.
She added that people don’t necessarily get overwhelmed when they see that number. There are things you can do in advance to make sure you’re prepared for retirement.
“You break it and you build,” she said.
Where are the most expensive cities
The analysis shows there are 28 cities where you need more than $1 million to retire, representing about 7% of the total number of municipalities included in the report.
The most expensive places are concentrated on the East and West coasts, and only five states – Alaska, California, Hawaii, New York and Oregon – have more than the two most expensive cities. California has the most states, with 14 cities where retirees should have more than $1 million to live comfortably.
Ismat Mangla, senior content director at LendingTree, MagnifyMoney’s parent organization, said: “It’s not surprising that we know that many of the country’s coastal regions tend to have the most expensive metropolises.
The rest of the list also shows that costs vary greatly depending on where you plan to retire. Less than $1 million is needed to retire in the remaining 93% of municipalities analyzed by MagnifyMoney.
“It will really depend on which part of the country you plan to retire in,” says Mangla. “On the other hand, there are a lot of places in the country where you don’t really need that much to retire.”
In one city – Jackson, Tennessee – the average retiree can earn less than $500,000.
Start preparing now
If you’re worried about potentially saving hundreds of thousands of dollars or even millions of dollars, Cheng explains, it’s a good idea to start planning for retirement as early as possible, even if that means just a few minutes. save $50 per month.
Allowing that money as much time as possible to grow will help you achieve success. Also, remember that your retirement nesting egg includes your savings and Social Security payments, says Cheng.
Taking advantage of things like employer matching will help your retirement even grow over time. This means it’s important to enter enough to get any matches you qualify for, even if you can’t drop the maximum, which for 2021 is $19,500 in a 401(k) plan. employer-sponsored if you’re under 50.
“There’s a maximum mid-match and match satisfaction,” says Cheng.
She also encourages people to take advantage of multiple retirement accounts with different tax benefits. While an employer-sponsored 401(k) plan develops before taxes, you can also save in an individual retirement account, which you contribute to after taxes. The maximum 2021 contribution to a Roth IRA is $6,000.
If you’re slow to save in retirement and are over 50, you should take advantage of offset contributions. If you’re 50 or older, you can put $26,000 into your 401(k) and $7,000 into an IRA in 2021.
If you’re overwhelmed, it can be helpful to work with a financial professional to make sure you’re preparing for retirement or planning otherwise.
They can also help you make important decisions about your life in retirement, such as when you retire, where you want to live, the type of home you need, or other major expenses.
Working a few more years can save you what you need to live comfortably. You can also cut costs by “aligning” your life, explains Cheng.
For example, you could move to another city, change your living arrangement, or even cut down from two cars to one if you retire around the same time as a partner.
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