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Cheapest states to retire in: How much money for retirement in 2026
How much you need to retire by age, income, and household size, and which states stretch your savings furthest.
How much money you need to retire depends on 3 things: Your age, your income, and where you live. Retiring at 50 requires a different financial runway than retiring at 65, and living in Oklahoma costs considerably less than living in California. The cheapest states to retire in can therefore change how far the same nest egg goes.
This guide breaks down retirement savings by age and income, then looks at 2026 living costs and state taxes so you can see what your retirement budget needs to cover.
This guide offers general information based on public data and common retirement-planning methods, not personalized financial advice. Consult a licensed financial advisor for guidance specific to your situation.
How much money do you need to retire, by age
Fidelity’s widely used benchmarks work out to about $70,000 by age 30, $210,000 by 40, $420,000 by 50, and $560,000-700,000 by 60-67 for someone earning $70,000 a year. Fidelity recommends saving 1x your income by 30, 3x by 40, 6x by 50, 8x by 60 and 10x by 67. Because these benchmarks are based on your income, your target will be higher or lower if you earn more or less than $70,000.
| Age | Savings benchmark | What this looks like on a $70K salary |
|---|---|---|
| 30s | 1x income by 30 | $70,000 |
| 40 | 3x income | $210,000 |
| 50 | 6x income | $420,000 |
| 65-67 | 8x-10x income | $560,000-700,000 |
If you’re asking how much money do you need to retire at age 50, this benchmark gives you a starting point of roughly six times your current income. Someone earning $70,000 would therefore be targeting about $420,000 at 50 under Fidelity’s framework. Someone planning to retire in their 30s needs a much larger cushion because savings will have to fund several decades.
How much money do you need to retire, based on your income
A common retirement-planning rule is to aim for 70-80% of your pre-retirement income each year after you stop working. This one uses a different approach from the age-based savings benchmarks above. In this scenario, if you earn $70,000 a year before retirement, you should aim for $49,000-56,000 in annual retirement income from sources such as Social Security, pension, and your savings.
One way to estimate how much of that income your savings need to provide is the 4% retirement rule. Say you retire with $1 million saved. The 4% rule says you could start by taking out 4% of that money in the first year:
$1,000,000 × 4% = $40,000
So you’d have about $40,000 to spend from your savings in the first year.
The idea behind the rule is that, assuming your remaining money stays invested and markets behave roughly within the historical ranges, withdrawing around 4% initially has historically been a reasonable way to make a portfolio last for about 30 years.
| Pre-retirement income | Estimated annual need in retirement | Estimated nest egg at 4% |
|---|---|---|
| $50,000 | $35,000-40,000 | $875,000-1 million |
| $70,000 | $49,000-56,000 | $1.225-1.4 million |
| $100,000 | $70,000-80,000 | $1.75-2 million |
These figures are a rule of thumb, not a personal target. Social Security can cover part of your retirement income, meaning you don’t need your savings portfolio to generate the entire amount.
Can you retire on $500K? $1M? $1.5M? $2M?
$500,000: At a 4% initial withdrawal, $500,000 produces $20,000 a year. Add the average retired-worker Social Security benefit of about $2,071 a month, or roughly $24,855 a year, and the combined starting income is about $44,855 before taxes.
$1,000,000: A 4% withdrawal produces $40,000, which becomes $64,855 when combined with that average Social Security benefit. The Federal Reserve’s 2022 household survey found 10% of respondents reported more than $1 million in retirement savings, although this was not limited to retirees.
$1.5 million: A 4% withdrawal gives you $60,000 a year, or roughly $84,855 including one average retired-worker Social Security benefit.
$2 million: At 4%, the portfolio produces $80,000 a year, or about $104,855 with one average Social Security benefit. Whether that supports your preferred lifestyle depends on spending, healthcare, taxes and where you live.
The above just shows the math using a 4% initial withdrawal rate and one average retired-worker Social Security benefit. The amount you’ll actually need depends on your annual spending, other income, retirement age and where you live, since the cost of living can vary significantly across the US.
How much does a couple need to retire?
A couple retiring on a combined $100,000 income should target $70,000-80,000 a year in retirement, using the 70-80% income-replacement rule. If savings have to provide all of that income, the 4% rule puts the required nest egg at roughly $1.75-2 million. A couple does not need twice as much as one person to retire because housing, utilities, transportation and other household costs can be shared.
But the calculation changes depending on your income sources. A couple receiving 2 Social Security benefits needs less from savings, while a couple relying on 1 Social Security benefit plus a pension or savings might need a larger portfolio. The amount you need can also change depending on where you retire, since housing and everyday costs vary. For example, the costs for retirement in South Carolina, retiring in Arizona, a Georgia retirement, and retirement in Colorado look quite different from one another.
Cheapest states to retire in
Oklahoma, Alabama, Iowa, West Virginia, Kansas, Mississippi and Missouri are among the 10 lowest-cost states nationally, according to the Missouri Economic Research and Information Center’s (MERIC) annual Cost of Living Index Q2 2026. It compares living costs across U.S. states. But the cheapest states to retire in shouldn’t be determined by living costs alone. State taxes on Social Security, pensions and retirement-account withdrawals also affect how far your savings go.
| State | Cost of living index | Taxes Social Security? | Taxes pension/401(k) withdrawals? |
|---|---|---|---|
| Oklahoma | 83.0 | No | Limited retirement exclusion; other taxable withdrawals may apply |
| Alabama | 86.0 | No | Many pensions exempt; IRA/other distributions is taxable |
| Iowa | 86.1 | No | Qualifying retirement income is excluded for eligible taxpayers |
| Kansas | 87.1 | No | Some public/federal retirement benefits exempt; other retirement income is taxable |
| Mississippi | 87.4 | No | Qualifying retirement income, pensions and annuities generally exempt |
| Missouri | 88.2 | No | Public-pension and private-pension exemptions apply, but are not universal |
| Tennessee | 89.7 | No | No state tax on Social Security, pensions, IRAs or 401(k) distributions |
Note that low cost of living and low retirement taxes are two different advantages. Oklahoma, for example, ranks first in MERIC’s cost-of-living data, but it does not make every retirement withdrawal tax-free.
Alabama does not tax federal Social Security and exempts several types of retirement income, including government and defined-benefit pensions, but not every IRA or 401(k) withdrawal. Iowa excludes qualifying retirement income for taxpayers who are 55 or older, while Social Security is excluded from Iowa taxable income.
State income tax treatment makes a significant difference in retirement, especially for people relying on pensions, Social Security, or retirement-account withdrawals. States with no income tax in the USA, such as Florida and Tennessee, eliminate tax on these sources, while other states offer partial exemptions. States with lower income-tax rates can also reduce the overall tax burden.
The overall cost of retiring can look very different from one state to another, even when two states have similar tax rules. For example, retiring in California might appeal to people who want warm weather, and you’ll enjoy retiring in Florida or a Texas retirement because they have no state income tax. Retiring in North Carolina, retiring in Virginia or retiring in Tennessee includes a different mix of housing costs, taxes and lifestyle considerations.
How long will your retirement savings last?
How long will your retirement savings last depends on your withdrawal rate, investment returns and life expectancy. The traditional 4% rule starts with a withdrawal equal to 4% of the portfolio and was designed around roughly a 30-year retirement under historical market assumptions.
Withdraw more than 4%, and the money has less room to absorb poor investment returns. A major market decline early in retirement can also do more damage than the same decline later because withdrawals continue while the portfolio is down.
The 4% rule is a planning heuristic, not a guarantee. Inflation, investment performance, taxes, healthcare costs, spending changes and how long you live can all alter the result. Where you live matters too. So comparing retirement options across the US will help you see how costs vary by location.
Stay connected wherever you retire with Holafly
Retirement doesn’t always mean staying in one place. You might spend winters in Florida, visit family across the country, or split your year between the US and another country. Holafly Plans gives you seamless connectivity across 160+ destinations, with Unlimited and Light plans, no long-term contract, and 24/7 multilingual support if you need help.
The Unlimited plan includes hotspot data and a local US, UK or Canadian number, which can be useful when you’re managing bank accounts, appointments or verification codes while traveling. Both plans include Always On, which automatically provides 1GB of free data each month after your plan is paused or canceled.
If you’re still figuring out how much money you need to retire and are considering life outside the US, comparing the best places to retire in the world will help you look at international options.
FAQ about how much you need to retire
How much money does the average person need to retire?
There isn’t one fixed amount the average person needs to retire, but $1 million or more is a common planning target depending on income, spending, retirement age and other sources of income.
Where can I retire on $1,000 a month in the US?
A $1,000 monthly budget is restrictive for a single retiree in most US states, especially once housing, healthcare and transportation are included. The best chance is retiring in a lower-cost rural area where housing costs are substantially below the national average.
Where can I live for $2,000 a month in the USA?
A $2,000 monthly budget is more workable in lower-cost states such as Oklahoma, Alabama, Iowa, Kansas or Mississippi, particularly for someone with low housing costs.
What are five places I can retire to on $3,000 a month or less?
The five states at the low-cost end of the MERIC data include Oklahoma, Alabama, Iowa, Kansas and Mississippi. A $3,000 monthly budget gives you more room, but housing, healthcare, taxes and transportation still determine whether the budget will work in a specific city.
Sources and methodology
This guide uses 2026 MERIC cost-of-living data, Social Security Administration benefit data, Fidelity retirement-savings benchmarks, Federal Reserve household data and individual state revenue departments. Amount estimates use the 4% withdrawal rule and 70-80% income-replacement framework; actual retirement needs will vary.
- Fidelity retirement savings benchmarks
- Social Security Administration
- Federal Reserve household retirement savings data
- MERIC Q2 2026 cost-of-living index
- State retirement-tax guidance
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With an MBA degree I used to put to good use in another life, I now write for both passion and profession! When not writing, I'm exploring the world, collecting stories and souvenirs along the way.
