A recent study indicates that retirees are likely to exhaust their financial reserves in 41 states. Surveys suggest that many Americans express a greater fear of running out of money during retirement than they do of death. This anxiety is fueled by increasing life expectancies, longer retirement periods, and the steady rise in daily living expenses.
According to a report from the long-term care network CareScout, the typical American at age 65 faces a retirement shortfall of $109,000. This figure represents the gap between expected income—derived from Social Security, personal savings, and other channels—and the anticipated cost of living. The findings are based on state-level data involving life expectancy at 65, average retirement benefits, median net worth, and projected expenses.
While Social Security provides a steady income, many experts suggest that retirees often need at least $1 million in savings to navigate a retirement period that could span 30 to 40 years. Seniors are particularly vulnerable to outliving their funds in states with high costs of living, such as New York, California, Alaska, and Massachusetts. Conversely, retirees in states like Minnesota, Utah, and Colorado often benefit from more manageable expenses relative to their income.
CareScout CEO Samir Shah emphasized that the report aims to encourage better financial planning, noting that many older Americans currently do not work with professional planners. He stated that many individuals remain unprepared and have not adequately assessed the total capital required for their later years.
In the list of states where seniors are most likely to outlive their savings, New York leads with a projected shortfall of $471,000, followed by the District of Columbia at $432,000, California at $395,000, Alaska at $350,000, New Mexico at $277,000, Louisiana at $241,000, Arkansas at $237,000, Vermont at $232,000, Kentucky at $209,000, and Rhode Island at $200,000. Numerous other states, including Massachusetts, Arizona, and Florida, also present risks of fund exhaustion.
Only nine states show a projected financial surplus for retirees, led by Washington with $276,000, followed by New Hampshire, Colorado, Nebraska, Idaho, Minnesota, Utah, Maryland, and Montana.
Experts recommend several strategies to mitigate these risks. Understanding longevity is critical, as failing to account for a longer lifespan can lead to early depletion of funds. Successful savers often start early, contribute at least 10% of their income to workplace accounts like a 401(k), and avoid tapping into these funds for unexpected expenses. Additionally, delaying Social Security benefits until age 70 can maximize monthly payouts, providing a more robust financial cushion during the later stages of life.
