If you’ve been dreaming of spending your retirement relaxing on one of Hawaii’s pristine beaches, make sure you’ve saved a lot of money.
That’s because Hawaii ranks as the most expensive state to retire in 2022, according to Recent data from Bankrate.
To calculate each state’s affordability, Bankrate analyzed the Economic and Community Research’s July 2022 cost of living index and the Tax Foundation’s 2022 rankings for property tax rates and sales tax.
Here are the seven most affordable states to retire in 2022, according to Bankrate:
- Hawaii
- California
- Connecticut
- Massachusetts
- New shirt
- Vermont
- Rhode Island
If you want to retire comfortably in Hawaii, you will need about 2 million dollars saved, reports Sam Dogen, CNBC Make It contributor and author of “Buy This, Not That: How to Spend Your Way to Wealth and Financial Freedom.”
“For example, the median household income in Honolulu County is $88,000. If someone wanted to take that $88,000 out of their property each year, they’d need about $2,200,000 in investments to get out. at a rate of 4%”. Dogen wrote before.
However, most Americans don’t have anywhere close to the savings. The typical American has about $35,345 save for retirement, follow Vanguard’s 2022 “How America Saves” report.
But a “comfortable” retirement can mean different things to different people. Michael Liersch, head of investment and wealth management planning and consulting at Wells Fargo, says it’s important to first determine what you look like.
“When retirement is not defined, it is very difficult to prepare mentally or financially,” he told CNBC Make It.
Consider what’s most important to you when it comes to retiring to a certain location, and map out how much it will cost to maintain your desired lifestyle, says Liersch.
“Put pen to paper” can help you prepare for retirement now, he says, and “the way to go is right” if needed. By CNBC A decade-by-decade guide to retirement planning is a good place to start.
As for actually spending money, if you’re in your 20s or 30s, try to start maxing out your retirement contributions as much as possible, said Jeff Ostrowski, an analyst at Bankrate. .
“The combination of decades of compounding and the tax advantages of retirement savings will help you establish a comfortable lifestyle after work,” he says.
Although financial planners recommend contributing about 15% of your annual income to your retirement savings, most workers under the age of 35 actually left about 10.5%according to a survey by Vanguard.
Start with what you can afford. But make sure you at least get the perfect match for your employer, says Nilay Gandhi, senior financial advisor at Vanguard.
From there, “increase your savings rate from 1% to 2% each year until you reach your target savings rate of 12% to 15%,” he says.
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