Retiring in the wrong state can cost the average American retiree and their beneficiaries as much as $200,000, according to a new study from financial services firm Integra Credit.
Using average retiree income figures, state tax rates, net worth and spending, the study calculated how much money a retiree would have left if they retired at 67 and died at 79.
“Our data analysis of retirement spending and savings data across the U.S. revealed that retirement wealth actually erodes at a staggering rate during the average retirement lifespan of 13 years, unwanted news for those depending on inheritance over building their own pot of savings,” Integra wrote.
Retirement savings decline fastest in Indiana, where retirees will have an average of $84,747 left when they pass.
That’s $201,253 less than what a retiree in Alaska would have left if they pass at age 79, the study found.
After Indiana, West Virginia drained retirement savings the fastest, on average, leaving retirees with $92,235 to pass on to their beneficiaries.
Arkansas was next at $103,272, followed by Iowa ($107,705), Kansas ($120,523) and Mississippi ($121,212).
In all, retirees in six states are projected to pass with less than $125,000 to pass on, the study found.
Conversely, there were six states where retirees pass with an average of $225,000 or more: Alaska, Maryland, Virginia, California, Colorado, Hawaii and Connecticut.
A main factor in the differences in leftover funds between states is taxes, the study said.
“Taxes play an important role in whether people preserve or lose their retirement wealth,” Integra wrote. “Our analysis of state-level retirement income reveals a clear pattern that those in tax-friendly states retain more of their income and inheritance potential.”
On average, workers enter retirement facing a $30,201 shortfall. Over 13 years, that‘s a $182,299 gap.
Americans are doing what they can to combat the costs of retirement.
For some, it means working longer than they planned – nearly one out of four workers in the United States is 55 or older, according to online career development platform MyPerfectResume.
Some 61 percent of Americans plan to transition into retirement – working a side gig after ending full-time work, according to financial services firm Fidelity. More than a third of retirees plan to do a side hustle, 29 percent want to start a small business and 26 percent are considering part-time consulting.
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