Retirement Dreams in Massachusetts: The High Cost of Living and Saving

Retiring in Massachusetts is a big dream for many, but it comes with a hefty price tag. The state is known for its high living costs, making it one of the most expensive places to live in the U.S. This means that saving for retirement here requires careful planning and a substantial amount of money.

The Numbers

Experts suggest that most people will need millions to retire comfortably in Massachusetts. This might sound shocking, but when you break it down, it makes sense.

$1,000,000 might seem like a lot.
Divided by 30 years, it's about $33,000 a year.
That's roughly $2,700 a month or $600 a week.

Does that sound like a comfortable retirement to you?

Key Questions to Ask Yourself

What will your expenses be when you retire?
Do you plan to stay in Massachusetts or move to a more affordable state?
At what age do you want to retire?
How long do you expect to live?
Do you want to leave anything behind for your family or favorite causes?

The 10x Rule

A simple rule to follow: take your last year's salary before retirement and multiply it by 10. This gives you a rough estimate of how much you should have saved.

Example: If you're currently earning the median salary in Massachusetts, which is around $81,170, and you expect a 3% raise each year, your future salary at 65 would be about $228,401.
Using this rule, you would need $2.28 million to retire.

Expenses Matter

You also need to consider your expenses. A good rule of thumb is to have 25 times your annual out-of-pocket expenses saved up.

To maintain your standard of living, you need at least 80% of your pre-retirement income per year.
If your pre-retirement annual expenses are $80,000, you would need $64,000 to meet your annual expenses in retirement.
Using this number, you would need $1.66 million to cover your retirement costs.

Cost of Living in Massachusetts

49% higher than the national average.
Housing costs alone are 109% higher.
About $2,508 per month for a single person.
About $4,598 per month for a family of four.
Food expenses are 15% above the national average.
Utilities, transportation, and health care costs are 16.1% higher.

More Affordable States

If you're thinking about moving to a more affordable state, consider:

Arkansas
Mississippi
South Dakota

They have the lowest cost of living in the country. But remember, if you work in Massachusetts before retirement, it ranks second highest in per capita income.

Retirement Age

There are many things to consider, including:

Your financial savings
Health condition
Family obligations
Level of work satisfaction

Social Security offers minimum benefits at 62, with the full benefit age not until 67. Some people also defer receiving monthly Social Security benefits to maximize their benefit at 70.

Longevity

In Massachusetts:

Men who retire at age 65 can expect to live 18 more years to 83.
Women can expect to live 21 more years to 86.

Living longer means you'll need more savings to support yourself.

Leaving an Inheritance

If you plan to leave an inheritance for your family or make a contribution to nonprofits, you will need to set aside more funds. The key is to start saving young to build up your funds. The more you save today, the better your retirement future will be.