When you’re retired, you might rely on Social Security benefits as part of your income, but it’s often not enough to cover all your living expenses. That’s why many retirees need to supplement their Social Security payments with other savings or income sources. In this article, we’ll explore how much extra money you’ll need to cover your monthly living costs after Social Security in every state, based on the cost of living in each location.
Understanding Social Security and Retirement Savings
Social Security is an important source of income for retirees, but for many people, it’s not enough on its own to live comfortably. The average Social Security benefit for retirees in January 2024 was $1,860.23 per month. However, the amount you need to live comfortably can vary depending on where you live.
In addition to Social Security, it’s wise to start saving early for retirement through accounts like Roth IRAs and 401(k) plans. These savings can provide a significant supplement to Social Security and ensure you have enough money for your retirement years.
How Much Extra Money Do You Need in Each State?
The amount of money you’ll need to supplement your Social Security depends on the cost of living in your state. To determine how much extra income is needed, GOBankingRates analysed the average cost of living across all 50 states. They considered several factors, such as rent, food, healthcare, and other expenses for people aged 65 and older. The total cost was then compared to the average Social Security benefit of $1,860.23 to see how much extra money would be needed each month.
Let’s break down how much money you’d need in different states to cover your living costs:
Alabama
- Rent Average Cost: $980
- Expenditure Average Cost: $2,423.62
- Total Monthly Cost: $3,403.62
- Leftover Monthly Cost After Social Security: $1,543.39
In Alabama, the average cost of living is relatively low compared to other states. Even though your Social Security benefits would not fully cover the costs, you’d still have a significant leftover amount after paying for rent and other expenses.
Arizona
- Rent Average Cost: $1,373
- Expenditure Average Cost: $3,062.33
- Total Monthly Cost: $4,435.33
- Leftover Monthly Cost After Social Security: $2,575.10
Arizona is another state with a moderate cost of living. While the rent and expenses are higher than in Alabama, Social Security still leaves you with some extra money to cover additional costs.
Arkansas
- Rent Average Cost: $915
- Expenditure Average Cost: $2,426.81
- Total Monthly Cost: $3,341.81
- Leftover Monthly Cost After Social Security: $1,481.58
In Arkansas, the total cost of living is lower than in states like Arizona and California. This means that even though Social Security benefits don’t fully cover the cost of living, there’s still a significant amount left over.
California
- Rent Average Cost: $1,827
- Expenditure Average Cost: $4,118.48
- Total Monthly Cost: $5,945.48
- Leftover Monthly Cost After Social Security: $4,085.25
California has one of the highest costs of living in the United States, especially when it comes to rent. The total living expenses are much higher, and you would need a substantial amount of extra income to cover everything.
Colorado
- Rent Average Cost: $1,433
- Expenditure Average Cost: $2,980.23
- Total Monthly Cost: $4,413.23
- Leftover Monthly Cost After Social Security: $2,553
Colorado’s cost of living is also quite high, particularly in cities like Denver. Although it’s not as high as California, you’ll still need a considerable amount of savings or additional income to meet your needs.
Connecticut
- Rent Average Cost: $1,310
- Expenditure Average Cost: $3,244
- Total Monthly Cost: $4,554
- Leftover Monthly Cost After Social Security: $2,693.77
Connecticut is another state where the cost of living is on the higher side. With higher rent and other expenses, Social Security won’t cover everything, but there will be some leftover money to help cover other costs.
District of Columbia (DC)
- Rent Average Cost: $2,105
- Expenditure Average Cost: $4,345.11
- Total Monthly Cost: $6,450.11
- Leftover Monthly Cost After Social Security: $4,589.88
Living in Washington D.C. comes with a high price tag. Rent alone is much higher than in other areas, and the overall cost of living is also expensive. You’d need significant savings or additional income sources to cover all expenses.
How Much Will You Need for Retirement?
Social Security can be an essential part of your retirement income, but in most cases, it’s not enough to fully cover all living expenses. The extra money you’ll need to supplement your Social Security benefits depends on where you live. Some states, like Alabama and Arkansas, have lower costs of living, while others, like California and D.C., have much higher living costs.
Planning ahead for retirement by saving in accounts like a 401(k) or Roth IRA can help ensure that you have enough money to live comfortably when you stop working. In any case, it’s important to know how much you’ll need to cover your living costs based on where you live so you can plan your finances accordingly.
Social Security is just one component of retirement planning, which is crucial. In most cases, you’ll need additional savings to cover your living expenses in retirement. The amount of extra money you’ll need varies by state, with some states having much lower living costs than others. Understanding how much you need to supplement your Social Security income can help you make better financial decisions as you prepare for retirement.
Must Visit: California State Online