Is $1 Million Enough for Retirement in America?
The average American needs their retirement savings to last them 14 to 17 years. With this in mind, is $1 million in savings enough for the average retiree?
Ultimately, it depends on where you live, since the average cost of living varies across the country. This graphic, using data compiled by GOBankingRates.com shows how many years $1 million in retirement savings lasts in the top 50 most populated U.S. cities.
Editor’s note: As one user rightly pointed out, this analysis doesn’t take into account interest earned on the $1 million. With that in consideration, the above calculations could be seen as very conservative figures.
How Long $1 Million Would Last in 50 Cities
To compile this data, GOBankingRates calculated the average expenditures of people aged 65 or older in each city, using data from the Bureau of Labor Statistics and cost-of-living indices from Sperling’s Best Places.
That figure was then reduced to account for average Social Security income. Then, GOBankingRates divided the one million by each city’s final figure to calculate how many years $1 million would last in each place.
Perhaps unsurprisingly, San Francisco, California came in as the most expensive city on the list. $1 million in retirement savings lasts approximately eight years in San Francisco, which is about half the time that the typical American needs their retirement funds to last.
|City||How long $1 would last (years)||Cost-of-living Index||Annual expenditures
(after using annual Social Security)
|El Paso, TX||40.3||81.4||$24,789|
|Oklahoma City, OK||37.3||85.4||$26,824|
|Kansas City, MO||36.7||86.2||$27,231|
|San Antonio, TX||34.4||89.7||$29,011|
|New Orleans, LA||30.8||96.3||$32,367|
|Forth Worth, TX||29.3||99.8||$34,148|
|Colorado Springs, CO||27.3||104.5||$36,538|
|Virginia Beach, VA||26.9||105.6||$37,097|
|Las Vegas, NV||24.8||111.6||$40,149|
|San Diego, CA||15.4||160.1||$64,816|
|Long Beach, CA||15.3||160.4||$64,969|
|Los Angeles, CA||13.9||173.3||$71,530|
|New York, NY||12.7||187.2||$78,599|
|San Jose, CA||10.8||214.5||$92,484|
|San Francisco, CA||8.3||269.3||$120,355|
A big factor in San Francisco’s high cost of living is its housing costs. According to Sperlings Best Places, housing in San Francisco is almost 6x more expensive than the national average and 3.6x more expensive than in the overall state of California.
Four of the top five most expensive cities on the list are in California, with New York City being the only outlier. NYC is the third most expensive city on the ranking, with $1 million expected to last a retiree about 12.7 years.
On the other end of the spectrum, $1 million in retirement would last 45.3 years in Memphis, Tennessee. That’s about 37 years longer than it would last in San Francisco. In Memphis, housing costs are about 2.7x lower than the national average, with other expenses like groceries, health, and utilities well below the national average as well.
Regardless of where you live, it’s helpful to start planning for retirement sooner rather than later. But according to a recent survey, only 41% of women and 58% of men are actively saving for retirement.
However, for some, COVID-19 has been the financial wake-up call they needed to start planning for the future. In fact, in the same survey, 70% of respondents claimed the pandemic has “caused them to pay more attention to their long-term finances.”
This is good news, considering that people are living longer than they used to, meaning their funds need to last longer in general (or people need to retire later in life). Although, as the data in this graphic suggests, where you live will greatly influence how much you actually need.
Mapped: How Much Does it Take to be the Top 1% in Each U.S. State?
An annual income anywhere between $360,000-$950,000 can grant entry into the top 1%—depending on where you live in America.
How Much Does it Take to be the Top 1% in Each U.S. State?
There’s an old saying: everyone thinks that they’re middle-class.
But how many people think, or know, that they really belong to the top 1% in the country?
Data from personal finance advisory services company, SmartAsset, reveals the annual income threshold at which a household can be considered part of the top 1% in their state.
Some states demand a much higher yearly earnings from their residents to be a part of the rarefied league, but which ones are they, and how much does one need to earn to make it to the very top echelon of income?
Ranking U.S. States By Income to Be in the Top 1%
At the top of the list, a household in Connecticut needs to earn nearly $953,000 annually to be part of the one-percenters. This is the highest minimum threshold across the country.
In the same region, Massachusetts requires a minimum annual earnings of $903,401 from its top 1% residents.
Here’s the list of all 50 U.S. states along with the annual income needed to be in the 1%.
|Rank||State||Top 1% Income|
|Top 1% Tax Rate
(% of annual income)
California ($844,266), New Jersey ($817,346), and Washington ($804,853) round out the top five states with the highest minimum thresholds to make it to their exclusive rich club.
On the other end of the spectrum, the top one-percenters in West Virginia make a minimum of $367,582 a year, the lowest of all the states, and about one-third of the threshold in Connecticut. And just down southwest of the Mountain State, Mississippi’s one-percenters need to make at least $381,919 a year to qualify for the 1%.
A quick glance at the map above also reveals some regional insights.
The Northeast and West Coast, with their large urban and economic hubs, have higher income entry requirements for the top 1% than states in the American South.
This also correlates to the median income by state, a measure showing Massachusetts households make nearly $90,000 a year, compared to Mississippians who take home $49,000 annually.
How Much Do the Top 1% Pay in Taxes?
Meanwhile, if one does make it to the top 1% in states like Connecticut and Massachusetts, expect to pay more in taxes than other states, according to SmartAsset’s analysis.
The one-percenters in the top five states pay, on average, between 26–28% of their income in tax, compared to those in the bottom five who pay between 21–23%.
And this pattern exists through the dataset, with higher top 1% income thresholds correlating with higher average tax rates for the wealthy.
|State Ranks||Median Tax Rate|
These higher tax rates point to attempts to reign in the increasing wealth disparity in the nation where the top 1% hold more than one-third of the country’s wealth, up from 27% in 1989.
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