Analysis: The average American needs nearly $900K to retire comfortably

A new analysis from Investopedia found that a single American who retires at 65 needs roughly $898,000 in savings to fund a comfortable retirement. But the required nest egg varies sharply — from about $644,000 in North Dakota to more than $1 million in New Jersey, Hawaii, California and Washington, D.C.

An individual age 65 or older who lives alone spends about $59,600 a year on average, according to 2024 Consumer Expenditure Survey data from the U.S. Bureau of Labor Statistics cited in the Investopedia report. Of that total, Social Security covers roughly $23,700, based on the average retired-worker benefit. This leaves a gap of about $35,900 that must be filled by retirement savings.

Using a 4% annual withdrawal rate, a common rule of thumb, the analysis translates the income gap into a required nest egg of roughly $898,000. That is considerably lower than the $1.5 million target cited by respondents as necessary for a comfortable retirement in Northwestern Mutual’s 2026 Planning & Progress Study — but it still represents a substantial hurdle for many households.

Location is a major driver of how much a single retiree needs.

Investopedia’s state-level estimates, based on 2024 federal data, show required savings ranging from about $644,000 in North Dakota to more than $1 million in the highest-cost locations. New Jersey, Hawaii, California and the District of Columbia all top $1 million in required savings, while New York, Washington, Massachusetts, Connecticut, Maryland and New Hampshire fall between roughly $915,000 and $950,000.

The least expensive states for single retirees are concentrated in the Plains and Appalachia. After North Dakota, Arkansas ($648,000), Mississippi ($653,000), West Virginia ($658,000) and Iowa ($667,000) have the lowest required nest eggs under the methodology.

Housing is the main factor behind the wide gap in costs. For Americans 65 and older living alone, housing expenses — including mortgage or rent, insurance, property taxes and utilities — accounts for about 27% of annual spending on average. State-level costs for this category range from roughly $7,000 a year in West Virginia to more than $19,000 in California, according to the analysis.

Prices for other goods and services vary less than housing but still influence the totals. Using regional price parity data from the U.S. Bureau of Economic Analysis, the report notes that prices are about 6% above the national average in Hawaii and about 7% below in South Dakota.

The analysis defines a “comfortable” retirement as average spending for Americans 65 and older living alone — but is not a bare-bones budget. The total includes discretionary items, allocating about $3,000 $3,000 a year on entertainment, $2,800 on dining out and additional travel costs. Retirees spending at the median level typically need 15% to 20% less than the reported amounts.

Investopedia’s methodology combines four federal datasets from 2024 for all 50 states and the District of Columbia. It layers census data on housing tenure and median monthly costs, along with federal expenditure data for single-person retiree households, regional price parities for non-housing expenses, and Social Security Administration figures on average retired-worker benefits.

The remaining annual spending gap after Social Security is multiplied by 25, reflecting the traditional 4% withdrawal rule.

The estimates exclude state income taxes on retirement income, long-term care costs and local property tax exemptions for seniors, which can be significant in some markets. That means actual needs could be higher or lower depending on a retiree’s health, tax profile and housing situation.

For reverse mortgage professionals, the findings underscore how strongly retirement readiness is tied to housing costs and geography. For senior homeowners, decisions about paying off a mortgage, downsizing, tapping home equity or relocating to a lower-cost state can materially change the size of the nest egg required to sustain their standard of living in retirement.

This article was generated using HousingWire Automation and reviewed by a HousingWire editor before publication.