This article will cover in detail retirement savings by state. The higher the retirement savings by state, perhaps the more attractive the state is to retire in. After all, the states with the highest retirement savings must be doing something right!
Folks know I'm biased towards West Coast living due to the weather, diversity, food, culture, and employment opportunities. Places like Portland, Seattle, LA, San Jose, and San Francisco are doing well due to the tech boom. The East Coast is nice, but it's not the same. I did live in Virginia and New York from 1991 – 2001, so I do have perspective.
Despite all the job opportunities, it turns out the East Coast, the Midwest, and the Southern states dominate the retirement savings leaderboard according to aggregate data collected from Personal Capital's 2 million user base.
If you don't know, Personal Capital is a leading digital wealth manager with the best free tools for managing your wealth online today. You can sign up for free here.
Let's have a look at the data!
Retirement Savings By State
It's surprising, yet not so surprising that residents of Delaware have the most amount of retirement savings. Delaware is #7 on the list of most number of millionaires per 1,000 households at 35. Meanwhile, Delaware is also one of the most tax friendly states with the following benefits:
- Social Security benefits are not taxed.
- No state or local sales tax.
- No inheritance tax.
- No personal property tax.
- State income tax ranges from 2.2% to 6.6%.
- Railroad Retirement benefits are exempt and taxpayers over 60 years may exclude $12,500 of investment and qualified pension income.
- Up to $12,500 of retirement income is tax exempt for those who are 60 and older.
Connecticut, New Jersey, Maryland, and Massachusetts have high tax rates, but also a larger amount of wealthier residents due to wealth centers in Boston, Washington D.C., and New York City. Residents of Alaska actually get a tax credit every year for living there.
Biggest Surprise Retirement Savings State
The biggest surprise in the top 10 is Iowa at #6. I've been to Des Moines many times to see Principal Investments, one of the nation's largest 401k providers.
But other than Principal and the food processing industry, I'm not sure what other industries provide them with nation-leading retirement savings. Any Iowans out there care to share their source of wealth?
The biggest downside surprise is Hawaii at #46. The cost of living in Hawaii is regularly in the top three, which should portend to a higher retirement saving amount. But perhaps due to Hawaii's high cost of living, a larger majority of retirement savings is spent to live.
Another reason for lower retirement savings could be due to multi-generations under one roof. Each individual/family might not need to therefore save as much compared to the individual/family who lives alone.
Given our earliest settlers started on the East Coast, it makes sense there is more wealth accumulated on the East compared to the West.
Related: The Best States For Retirement
Loading ...Retirement Savings By Generation
In addition to providing analysis on retirement savings by state, Personal Capital also analyzed retirement savings by generation. As would be expected, the amount of retirement savings across all account holders rises with age.
Every single generation's retirement savings amount looks pretty decent compared to the medians and averages across all Americans. So this begs two questions:
- Are wealthier people more proactive in managing their money with free financial tools?
- Or, do people who leverage free financial tools and actively manage their money tend to be wealthier than average?
I'm pretty sure there's some truth to both. If you're a regular reader on Financial Samurai, you can't get enough articles about growing your wealth.
When I was in high school, I'd grab the following magazines in this order: MONEY, Fortune, Forbes, Car & Driver, and Sports Illustrated. I was so fascinated with money that I decided to major in Economics, get an MBA, work on Wall Street, and start a personal finance site! All of these activities helped me create wealth.
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The Biggest Impact To Retirement Savings
Beyond when you were born or where you live, Personal Capital believes the biggest impact on retirement savings has to do with proactive planning. You can believe what we want, but when you've got a statistically significant amount of data like they do, it's good to take notice.
They realized that users who created a retirement plan through the Retirement Planning Calculator had roughly 75% higher retirement balances than those who didn't bother. That is a huge difference!
Due to Financial Samurai, I regularly set financial goals, write goal updates, and analyze successes and failures. There's no doubt in my mind I'd be poorer if I wasn't so focused on personal finance.
So for all of you who've been putting off analyzing your current financial situation, getting help from a financial expert, or setting some concrete financial goals, what are you waiting for? Get on it already!
You can track your net worth, plan for retirement, analyze your investments for excessive fees, manage your cash flow, and plan for retirement for free with Personal Capital. It's all free and easy to use.
Related Posts About Retirement:
The Best States To Buy Real Estate (
States With No Estate Tax Or Inheritance Tax
States With The Highest And Lowest Unemployment Benefits
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If it weren’t for the oil industry, I know exactly where Texas would be on that list…and You are the definition of “The South”!
How can this be accurate? It can’t? Why? Because 48% of all working Americans make less than $20k per year. According to the Bureau of labor statistics. How can tens of millions of people save for retirement at all, on such low pay? Impossible.
But if these figures are accurate. Then baby boomers need social security the least. Maybe they should not receive it and give it to the younger generations since they need it more?
Get to work
So even though we have been working longer and harder than other generations, we should turn over our social security to them?
I’m from Iowa, Des Moines actually. I even used to work at Principal.
Des Moines is the insurance capital of America, possibly even the world. United, Nationwide, Allied, Principal and EMC are all headquarted here. Wells Fargo also has a huge presence. (I think they moved their headquarters here but don’t quote me.) It’s not just farming out here.
We live in the very western part of WI near the IA & MN border with WI. Many farmers, and they tend not to be flashy consumers. I am awed by the numbers of 20 year old cars, and pick-up trucks I see plying the roads daily. In short, many people do not replace vehicles here until they have been worn out (thoroughly worn out). Myself I drive a 1993 vehicle, and our fleet of 3 cars average age is 13.
A lot of the farmers I know have a ‘sinking fund’ set-up for a replacement vehicle, where they put the monthly cost of a new(er) vehicle in there, usually a mutual fund, or ETF until they need it. I know very few who actually purchase a “new” vehicle. They usually buy a new-er one then keep it for a long, long time.
I do not doubt the “savings” goes into their long term retirement investments. Obviously, they aren’t trying to impress the neighbor, except on how long they make their stuff last.
I notice the top of the list is also dominated by cold weather states. There seems to be something about cold weather that forces people to get their financial act together. The cold weather states generally have higher incomes as well as higher wealth levels. You can apply this to a country level, too. With the exception of Russia, cold weather countries generally have their financial act together more than warm weather countries (i.e. compare Germany, Canada, or any Scandinavian country to Greece, Italy, or Venezuela).
Interesting observation! Maybe it’s b/c cold weather states have more misery. And when there is more misery, there is more of a desire to create more wealth to get the hell out? This might sound flippant, but I lived in NYC for two years and Virginia for 8 years, and I just wanted to save so much so I could leave to California or Hawaii!
I’d rather be homeless in Hawaii or CA than in NYC or VA!
My take on Personal Capital. Great service but Personal Capital markets towards people that have some wealth. They only give additional services to people that have over 100k investable assets. PC isn’t marketing towards folks in the hood therefore the statistics they produce are on the high side because of their targeted market. I’ve personally put on friends to PC that don’t meet the 100k threshold and they enjoy it just as much but they don’t get some of the tips and suggestions that the above 100k group gets.
It goes back to my question: Do people who proactively do things to improve their net worth have greater net worths? I think the answer is yes.
If you care about something, you will do things to make that something better. Personal Capital’s app is free for anybody to use. But they do only make money if someone with over $100K wants to have them manage their money. The great thing is, you don’t have to sign up for their money management service at all. I happily just use their tool to track my net worth and do investment cost and retirement analysis for free.
Maryland, Connecticut, and New Jersey round out the top 3 states of millionaires per capita in 2015 according to ThinkAdvisor. I really think this data is misleading because of source bias and incomplete analysis. We’re essentially assuming the following in thinking it’s accurate #1. COLA is the same, #2. Personal Capital is measuring every possible source of funding for retirement, #3 Personal Capital actually has a representative clientele in every state.
1 & 2 are not true, while 3 is unclear. Take a state like North Dakota, which has jumped ahead of almost half the list in millionaires per capita in the last 2 years, yet still has a cost of living average less than the US average, and somehow lands #47 on the list? Farmers in the state regularly run million dollar operations in addition to business and real estate income. Is Personal Capital measuring this cash flow? CT, DE, NJ are all over the average COLA (133.8% for CT so you could shave 33.8% off the number for CT and see where that lands them-in the mid 30’s on the list).
Most professional services at least use current income vs savings as a metric to determine where your income replacement will be at retirement.
Let’s continue the CT/ND comparison.
CT: Average income 2014-$65753 PC savings $279367 Percentage of average income saved: 420% Normalized for COLA: 313%
ND: Average income 2014-$51704 PC savings $178005 Percentage of average income saved: 344% Normalized for COLA: 345%
Just like that, #47 beats #2 on the list regarding who actually is more prepared for retirement in their state-not including retirement funds not measured by PC. That said, if the CT person moves to ND, they’ll be looking better than the average ND retiree in ND.
I think you are over analyzing. Personal Capital is only using the data it has and ranking the average by state. Very simple, no further analysis.
My state, Virginia, is #11. We have three areas of wealth and prosperity: Metro DC, Richmond, and the Tidewater area (think Norfolk Naval base). In my home town (Langley/McLean), we have a lot of retired government workers.
Many here have a lot of their net worth tied up in their homes, and those that don’t choose to retire here, will sell their houses, take the proceeds, and buy something much less expensive in another part of the country. In fact, I think many of my Gen-X colleagues are planning to do just that; but we haven’t made up our minds. Home exerts a strong pull!
Fellow McLean folk! Whatcha doing out there? I lived in McLean from 1991 – 1995, and my parents from 1999 – 2000 or so. Dang, we shoulda kept our humble town home. I think we sold it for like $250-$300K.
Delaware is indeed kicking major butt in the list, wow. I do know about the very lenient tax system, many non-US citizens do have LTDs registered there, because the taxes in their home countries are insane.
NY is indeed very low to the list, which is a little weird in my opinion, provided many people there earn quite an income. On the other hand, the chances to spend a lot are also there, so this might probably be the explanation.
NY’s taxes are a killer… well, especially Manhattan’s.
example- If my taxes are 10% higher than a guy in Idaho’s but my same job in Oregon pays 2X as much how can my taxes be “killer”..
Wow–surprised WA state is so low.
Headquarters for AMZN, MSFT, Nordstrom, SBUX, Expedia, Boeing (BCA side). Maybe that is “new” money vs. wealth yet.
Or their Net Worth is more tied up in primary residence. In Seattle/Bellevue area entry level homes are ~$400K.
Washington seems like California.. bifurcated in terms of wealth. But it seems obvious the Seattle surrounding region is going to just get richer and more expensive.
Blowout Amazon earnings again!
So those 54 votes with $5M to 10M+ of retirement dough….what’s your best piece of advice, let’s hear it??!
Be proactive. Never count on anybody but yourself. Create multiple income streams. Start now, and stay the course. Use rejection as motivation. Never fail due to a lack of effort! Always ask yourself, “Why not me too?”
Pretty sure the baby boomer era was 1945-1964, not 1925-1964.
I generally feel pretty good about how much I have saved for retirement given my age, but the numbers you cite here put me smack in the middle of the pack! I think you’re right with your two points about wealthier people being more proactive in managing their money and people who actively manage their money being wealthier than average. You can’t compare yourself too much to other PF nerds cause they’re all way ahead of the game!!
People in NM and AZ don’t group themselves with the south or the west coast groups. Also, where is the intermountain west?
Did you have access to the median net-worth figures by age-group? Was curious how much of a skew (when compared to the mean) there would be, especially if there were a few ultra-wealthy tech folks using personal capital…
I’ve just got the data by generation = age group. Are you looking for something more granular?
I’ve got:
The Average Net Worth For The Above Average Person
401k Savings By Age
And the survey questions in this post for you to get a better idea.
Sorry, I should’ve been clearer – in the ‘Retirement amounts by state’ and ‘by generation’ I was just curious to see the numbers with both ‘median’ and ‘average’ used to see if that reveals any difference due to ultra-wealthy outliers in personal capital’s user base. Something similar to the median vs average analysis you had at https://www.financialsamurai.com/median401k-retirement-balance-by-age-is-dangerously-low/
I imagine there wouldn’t be that much of a skew since they have almost 1 million accounts, so no big deal!
BTW, I love your site – thanks for the high-quality content you put out so consistently!!
You left Texas out of your voting options. As a native Texan, I can tell you that we don’t lump Texas in with the rest of the South. :)
Haha, come on man. If Texas isn’t considered the south, can Californians not consider themselves to be in the West?
Related: West Coast Living – Obviously The Best
That’s right – it’s one of the first things I learned after moving to Texas. Have you seen this interesting breakdown of America by region? As you can see, parts of Texas lie in 4 different regions, which makes it very unique. https://www.washingtonpost.com/blogs/govbeat/wp/2013/11/08/which-of-the-11-american-nations-do-you-live-in/
I wonder on the flip side, whether we should be looking to buy real estate in Montana, Wyoming, and Hawaii?
Jackson Hole is great, but probably super expensive.
Actually, it’s curious why Hawaii has such low retirement savings given the high cost of living!
The Hawaii thing popped out after I published the post.
The cost of living in Hawaii is regularly in the top three, which should portend to a higher retirement saving amount. But perhaps due to Hawaii’s high cost of living, a larger majority of retirement savings is spent to live. Another reason for lower retirement savings could be due to multi-generations under one roof. Each individual/family might not need to therefore save as much compared to the individual/family who lives alone.
Or perhaps people who move to Hawaii in retirement are not the sort that would use Personal Capital? I wonder how many in the 60-plus crowd use Personal Capital or any other account aggregator service? I don’t know, but I’d guess that it’s not very many.
I thought Florida would be higher since it is such a great retirement state! No income taxes and warm Florida beaches makes for the perfect place to retire! I am also surprised that California and New York aren’t higher given all of the high income potential, but living expenses can really eat away from retirement savings if you aren’t willing to live in a mobile home! :)
Millennials using Personal Capital are not doing too bad! Usually when I see Millennial net worth, it is closer to $10-20k (most of which is in their car!). But any Millennial using Personal Capital is probably ahead of the rest in terms of financial knowledge. Most of my generation (Millennials) is worried about paying off student loans, not saving for retirement!
Very informative post Sam!
I think the primary house should also be considered esp in high cost areas. I live in SF bay area. There are many older boomers in my community that are retired/empty nesters. They bought their houses 20-25 years back for around 200k which are now worth 1.2M to 1.4M. They have been selling their homes in droves and either downsize to a condo or move to a cheaper place. Even after all the taxes and fees they are left with a nice stash.
Sure, I can get down with that.
Related: https://www.financialsamurai.com/why-its-ok-to-include-your-primary-residenc-in-your-net-worth-calculation/
The retirement savings data above are much higher than the retirement savings data from the Federal Reserve data discussed here:
https://www.fool.com/retirement/general/2015/01/10/the-typical-american-has-this-much-in-retirement-s.aspx
Which goes back to my two questions:
Are wealthier people more proactive in managing their money with free financial tools? Or, do people who leverage free financial tools and actively manage their money tend to be wealthier than average?
It seems to me that a huge swath of the US population are not proactive, and don’t care as much about their finances as we do. Opportunity!
The numbers for CA, NY and FL are low because these States represent the extremes – extremely rich in Silicon Valley, extremely poor say in Compton or the workers on the California farms. I have friends and family in CA, they drive brand new cars, couldn’t afford a house, and have very little in savings.
Compare to MA, the state is small, and the State seems to take care of the lower middle class people, and they have higher concentration of educated people, lead to higher financial aptitude, higher earning, higher savings.
Good point. It’s the same thing if you look at the wealth/earnings in country states like Singapore and Hong Kong. Lots of wealth. A more efficient government. Easier to manage the population.
That said, I’m therefore surprised by how lagging Hawaii is.
I didn’t realize that Delaware was that tax friendly. That’s neat about the Alaska tax credit for residents. Makes sense though to help a monetary incentive to keep everyone from fleeing. I’m impressed Alaska is in the top five though. I would not have guessed that ever.
It’s nice to see the data showing how proactive planning really does make a difference in how much retirement savings you can accumulate. I think people who don’t plan are usually too intimidated by the retirement account setup process, assume you have to save a lot to make it worth it, or are overspending.
It’s good for small businesses to incorporate there!
Real estate taxes are extremely low in Delaware too.
Short answer: 1) efficient, non-corrupt government 2) Low cost of living 3) High demand for labor since Iowa is not traditionally desirable place to live and people rarely move there unless they grew up or need a job. With all that, you can get and save a lot of money real easily if you put your mind to it.
I lived in Eastern Iowa for 2 years. There are a surprising amount of high paying jobs for both blue collar and white collar professionals and a high demand for people. During the great recession, the unemployment rate barely broke 6% compared to my home state of Illinois which peaked out at over 11%. The government is well run there with low corruption and maintains a state (not so much locally) funded school system with more equal opportunity across districts. While they have a high income (progressive topping out at 8.98%) tax, a home in one of the larger cities has property taxes under $2,000! Compare that to Illinois, which for the last 4 years had a (flat) income tax of 5% and an average home property taxes of $5-8,000 in the Chicago suburbs! Don’t even get me started on home prices: at $200k, you can buy a new home in the two bigger Iowa cities. Don’t get me started on what you can buy in Chicagoland for that much.
From what I saw too (although I qualify this in that worked/lived in a more blue collar city) there is less of a culture of keeping up with the Jones and indulging in luxury goods like cars. A lot of people liked having boats, but there was a big DIY trend and driving older cars and doing all your work yourself. The black North Face Denali and Infinitis I would see Chicago suburban kids driving around weren’t as common where I worked.
Thanks for the insights on Iowa! Now that I think of it, you are exactly right about LESS OF A CULTURE about keeping up with the Joneses. All the clients who lived there were so low key, even though they made a healthy income. Good culture!
I missed the low key aspect after I moved back to Illinois and had constant badgering on why I drove a 10 year old car from both my friends and coworkers. It wasn’t so much people thought my car was unsafe or an eyesore, just that it was beneath someone to drive something other than a luxury car or at least a brand new car.
I will say, though, that not all aspects of the culture were endearing. I felt a definite hostility where I worked towards minorities. Most of the Asian employees at my workplace were driven out because they couldn’t keep up with the “good old boy” culture. One was fired for doing his job, two (including myself) were sidelined by management into lower tier jobs with minimal chance for advancement. Politics happen in every organization, but it seemed more targeted. I’m not saying everyone there is a racist, but society as a whole seemed to tolerate it.
Oddly enough, it was the younger generation that was college educated (but still from rural backgrounds) with whom I had issues. Most of the more urban people or working class people seemed ok with minorities.
I’m from Massachusetts and I’m not surprised by these results. Or my current state (Tennessee). Personal Capital’s savings by generation really surprised me! But my frame of reference is the national average. To answer your second question, I do believe people who use free financial tools and actively manage their money tend to be wealthier. I recently started using Personal Capital and I’m really digging their product so far!
I don’t really see a difference in your two questions; you’re really getting at the same thing.
A real second question (that we probably can’t answer) is whether personal capital users do better BECAUSE of personal capital. How many portfolios were reallocated because of their tools? How many people changed their investments to avoid high fees due to their fee tool? Are their advisors outperforming other advisors/would their users even have advisors if not for PCs business model?
Although looking at this, it looks more like 4 questions, but the last 3 are what I’d look for to answer the first.
A question that COULD be answered would be what do PC users look like (demographics/occupations)
The PC demographic median age is 42-44 w/ roughly a $500,000 net worth.
But for the two questions, I’m really not so much focused on Personal Capital, but on the overarching population of millions who are either PROACTIVE or REACTIVE. I think it’s clear to me that proactive people do better.
Data is the ultimate gift to humanity.
Thanks for sharing these insights from Personal Capital. Is this something they give you exclusive access to (due to your form consulting relationship)? Or how do you get access to these studies they do?
I get an early heads up from them. But they do send the data out to their user base in their own way of describing/analyzing. I just have my own spin on things. There’s some Millennial data out there that I want to write a follow on post about.
I signed up with them to manage my (quite small) savings and investment balances. Been very happy with the service of the staff and their online tools. All the reports they put out are really interesting as well! Glad to see your breakdowns and analysis of the data they churn out – often times I don’t have the time to read through their reports, but seeing it in a more reader friendly “blog” form here on your site is great!
I live in Iowa, lots of doctors, dentists, etc. Also quite of few farmers that make bank. I am a physician, I take care quite a few wealthy farmers.
As to Iowa – I think most people are shocked to learn the net worth of the American farmer. Land prices (especially tillable ground) has recently increased at an incredible rate. I live in Indiana and know a guy who purchased a small 150 acre farm in 1991 for just under $200,000. He has it on the market now for an even $1 million.
Good for him, but I don’t know if I’d call that an incredible rate. 24 years from 200k to 1M is about a 7% annual return. Still, I agree farmland can be a good investment.
It’s a pretty incredible rate given that the land is producing other profits for that entire period (often these cary government guaranties).
Yes, it is important to remember that not only does the land itself provide additional income. Many of your misc expenses can be written off your taxable income as a part of your farming business. Many farmers will have a vehicle their “farm entity” owns and that same entity will cover the expenses for things like internet and phone service, lawn equipment, etc….
He’d have more if he invested in the S&P 500 and he would have also earned income through dividends. So about the same return as the stock market – which I’d say was pretty good. Of course, he may have earned income from farming (or farming related activities) in excess of what dividends would have paid.
If this farmer covered all living expenses by making a living off the land then this was a great investment. I worked for 32 years in Bay Area of Nor Cal and also bought my home ,I didn’t rent it out or run a business out of it but it was a cost effective way to have shelter for my family. If I choose to sell will get all cost back and then some or my kids will be instant millionaires, real estate is just one way of many to build wealth just ask Trump!
Not bad. I think the perception from the rest of America might be that farmers don’t make as much, and they are suffering from the drought, at least here in California. Good to hear farmers doing well in the Midwest!
We’re #7! We’re #7!
I think these state by state breakdowns are a little silly because of so many outside factors, like cost of living, blah blah. I do think the planner vs. non-planner thing is huge and I hope people take that away. The problem with saving for retirement is that people just aren’t saving. It’s not the asset allocation or the brokerage or whatever. They’re just not planning for retirement.
Wow, I’m surprised that NY and Florida are so low…..