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Updated on Monday, October 4, 2021
Saving for retirement is one of the primary underlying reasons for many personal finance decisions, from budgeting to investing. Like any money goal, however, saving for retirement — not to mention saving enough for retirement — is often easier said than done. More than 4 in 10 Americans fear they’ll never be able to retire, according to retirement savings platform SimplyWise.
With that being said, some states may offer a better environment for adults 65 and older to save and stay financially healthy, whether through affordable housing or something else. Overall, an average of 8.9% of these older adults across the 50 states and the District of Columbia live below the poverty line, according to a MagnifyMoney analysis of U.S. Census Bureau data.
Considering poverty, homeownership and mortgage status, housing cost burdens and retirement income, MagnifyMoney researchers created an index score to rank the states by older Americans’ ability to retire. Here’s what analysts learned.
- Nearly 1 in 10 U.S. adults 65 and older are in a bleak financial position. Across the 50 states and the District of Columbia, 8.9% of older adults are below the poverty threshold.
- Older adults in Utah are best positioned to retire. Utah is in a tie for the second-lowest poverty rate among adults 65 and older — 6.2%, just behind Vermont. Plus, 86.4% of Utah residents 65 and older live in a home they own, the highest rate in the nation.
- High living costs make retirement planning difficult. Notoriously expensive California ranks as the state where residents are in the worst position to retire, and is followed by the District of Columbia. High poverty rates and relatively low homeownership rates among older adults demonstrate some of the retirement hurdles in these states.
- The Northeast tends to have the least financially secure older adults. The Northeast state in which older adults are best positioned to retire is Pennsylvania at No. 21. New York, Massachusetts, Rhode Island, New Jersey and Connecticut all fall in the bottom 10.
Older adults in poverty
While the coronavirus pandemic may have changed retirement plans for many adults, the share of older Americans nationally who may be struggling to make ends meet is relatively small. Across the 50 states and the District of Columbia, 8.9% of adults 65 and older live below the poverty line.
In 19 states and the District of Columbia, however, higher rates than the average of adults 65 and older may not be able to afford necessities. New Mexico leads the U.S. with the highest share — 13.5% — of older adults living below the poverty threshold. The District of Columbia follows closely with 13.3% of adults 65 and older in the nation’s capital struggling to get by.
States with the highest poverty rate among adults 65 and older
Percentage of older adults in poverty
|2||District of Columbia|
Of course, just getting by and living on an income that puts older adults right above the poverty rate may still mean a timely and comfortable retirement is out of reach. But low poverty rates may help older adults in some states be better positioned for retirement.
Vermont features the smallest share of impoverished older adults, with 6.1% below the poverty threshold. Utah and New Hampshire tie for the second-lowest poverty rate among adults 65 and older at 6.2%. This small demographic of older folks struggling financially in Utah helps make the state’s residents rank as the best positioned for retirement among those 65 and older.
States with the lowest poverty rate among adults 65 and older
Percent of older adults in poverty
|2 (tie)||New Hampshire|
A beeline to retirement in the Beehive State
Along with the low poverty rate among adults 65 and older, its best-in-the-nation homeownership rate among older adults — 86.4% — helps make Utah the state where older adults are best situated for retirement.
Utah fares well across each metric used to rank the states’ retirement accessibility, including ranking fifth-highest by share of adults 65 and older with retirement income at 64.5%. In addition, Utah ranks 13th for the lowest percentage of its older adults who are housing cost burdened — only 24.5% of homeowners age 65 and older spending 30% or more of their income on housing (the average across the 50 states and D.C. is 28.7%).
West Virginia follows Utah in the overall rankings, bolstered by the lowest rate of older adults — 17.4% — who are housing cost burdened. West Virginia has the third-highest rate of homeowners without a mortgage, meaning many here aren’t bogged down with hefty mortgage payments. Of the 85.2% of adults 65 and older who own homes in West Virginia, 73.8% have paid off or avoided taking on a mortgage.
Coming in at No. 3 overall, Wyoming represents one of the three Western states among the 10 states best positioned for retirement. No. 5’s Idaho joins Wyoming and Utah near the top of the rankings.
States where residents are in the worst position to retire
Unsurprisingly, states known for high costs of living and housing prices can make it more difficult for older adults to position themselves for retirement. California ranks as the state where older Americans are in the worst position to retire.
With the second-highest share of housing cost burdened adults 65 and older (39.3%) and the third-lowest percentage of older adults who own their homes outright (52.4%), it appears the Golden State’s older population has their retirement prep work cut out for them. Just over half — 54.4% — of California’s adults 65 and older report having retirement income, which could make the difference between scrimping throughout retirement and truly enjoying yourself.
The District of Columbia ranks as second-worst, aided by a better rate — 59.7% — of older adults with retirement income. However, the nation’s capital has the worst homeownership rate among older adults — 58.7% — and the smallest share of older adult homeowners without a mortgage in the country. Just over half — 51.2% — of D.C.’s older homeowners still have a mortgage on their homes. Additionally, 1 in 3 older adults are housing cost burdened in the nation’s capital.
Nevada, with the second-highest percentage of older adult homeowners with a mortgage, comes in as the locale where its residents are in the third-worst position to retire.
10 states where older adults are in the worst position to retire
Housing cost burdened rate
Rate of residents with retirement income
Rate of homeowners without a mortgage
|2||District of Columbia|
And though Northeastern states narrowly avoid the bottom three slots, they do make up half of the 10 worst states for adults 65 and older regarding retirement. New York, Massachusetts, Rhode Island, New Jersey and Connecticut all feature homeownership rates for older adults that are lower than the average across the 50 states and D.C. New Jersey has the largest share of housing cost burdened older adults at 40.1%.
Each of these states besides Rhode Island ranks in the top 10 most expensive states to retire, according to a MagnifyMoney study conducted earlier this year — though Rhode Island did place just outside at No. 11.
Connecticut and New Jersey are the only Northeastern states among the 10 worst for retirement with poverty rates among older residents that are lower than the average across states. Just 8.8% of those age 65 and older in New Jersey and 7.3% of folks in Connecticut may struggle to afford necessities.
Still, cost isn’t everything, and everyone has different priorities about where and when they’ll retire.
Cost of living is important, but quality of life matters, too. Some retirees want to stay close to family, while others want to live like they’re on vacation. Whatever your retirement looks like, make sure you have a plan to help you get there.
Still time to save
Having a little bit saved for retirement is better than having nothing. The best way to boost your retirement savings might be to find a time machine to go back and get started sooner, but it’s never too late to stash what you can and make the most of your golden years.
Use these tips to accelerate your savings without a ton of time:
- Tighten up your budget to increase savings. Examine your current spending habits to see if there’s room to cut back and contribute more toward retirement savings. “Take advantage of ‘catch-up contributions’ — several tax-advantaged retirement vehicles have higher contribution limits for people over the age of 50,” Mangla says. Even a relatively small amount in a high-yield savings account can provide a little passive retirement income.
- Use your home to your advantage. “Your home may be a source of liquidity in retirement,” Mangla says. Options like reverse mortgages or home equity loans may help older adults better manage their retirement budgets.
- Keep your retirement plans realistic. Unfortunately, a dream retirement may not be accessible for everyone. Use MagnifyMoney’s retirement calculator to help imagine a retirement that fits your needs and financial ability. “You might have to refigure what retirement looks like for you,” Mangla says. “For example, maybe you continue working in a part-time or different capacity, or perhaps you find ways to cut expenses significantly, like through moving.”
MagnifyMoney researchers looked at five metrics across all 50 states and the District of Columbia to find the places where residents are best positioned for retirement. Analysts used the following metrics, which looked solely at U.S. residents 65 and older:
- Poverty rate
- Housing cost burdened rate (the percentage of older adults who spend 30% or more of their income on housing)
- Homeownership rate
- Rate of adults with retirement income
- Rate of homeowners without a mortgage
All data comes from the U.S. Census Bureau’s 2019 1-year American Community Survey.
Analysts ranked every state and D.C. in each metric and created a final score for each one based on the average rank.