Report Projects Retirees In 41 States Will Outlive Their Savings—is Yours On The List?

Key Takeaways

• In most states and Washington D.C., 65-year-olds are projected to outlive their savings, according to a CareScout analysis.
• Americans are expected to face an average shortfall of $109,000, with estimates varying widely from state to state.

The golden years now come with a bill most 65-year-olds can’t cover.

That’s the picture from a recent analysis by CareScout, a long-term care insurance and planning company, which projects that older Americans in 41 states and Washington, D.C., will exhaust their retirement savings. The average gap nationwide is $109,000.

Financial pressures are mounting as Americans live longer and health and elder care costs rise due to inflation and tighter immigration policies, said Arthur Bretschneider, chief product officer at CareScout.

Why This Matters To You

For most Americans, retirement now runs on individual savings rather than pensions, leaving future retirees to try to predict how much their post-work life will cost. Analyses like this one suggest that many are coming up short.

The Retirement Gap Seniors Don’t See Coming

Americans in most parts of the country may not be financially prepared for their later years, according to CareScout, which gauged resources by looking at average Social Security payments and median net worth, and projected spending based on life expectancy, cost-of-living and cost-of-care data.

Five states and Washington, D.C., face projected shortfalls above a quarter of a million dollars. New York’s is the largest at $471,000, followed by Washington, D.C., at $432,000; California at $395,000; Alaska at $350,000; and New Mexico at $277,000.

Differences in the cost of living drive much of the spread among the states, though not all of it. Vermont, Rhode Island and Massachusetts all have projected gaps above the $109,000 national average. But Washington state, where costs run high, has the country’s largest projected surplus.

9 States With a Savings Surplus

Seniors in nine states are likely to have saved more than they will need, with the projected surpluses ranging from $276,000 in Washington to $19,000 in Montana, CareScout said. The rest, in descending order of projected surplus, are New Hampshire ($240,000), Colorado ($188,000), Nebraska ($145,000), Idaho ($112,000), Minnesota ($109,000), Utah ($79,000) and Maryland ($21,000). Every other state and Washington, D.C., is projected to fall short.

Some states are considering ways to help older adults cover elder care costs, an expense many don’t account for. But Bretschneider said younger adults shouldn’t wait on policy: build health and savings now.

“A lot of people who have been thinking about retirement over the last few years really didn’t bake in the cost of long-term care,” he said. “We’re starting to see that come to life.”

Note

The federal government estimates that 70% of older adults will need long-term care. Medicare covers up to 100 days in a skilled nursing facility after a qualifying hospital stay and some intermittent home health, but it pays nothing toward assisted living or ongoing care at home.

Retirees Get Creative To Cut Costs

Where older adults live can have a bigger impact on their financial outlook than how much they’ve saved, CareScout said. Retirees often move to make the math work, with regional cost-of-care often a factor in how they plan for their later years, Bretschneider said.

Some CareScout clients are even relocating abroad to reach lower costs, Bretschneider said. “Folks are certainly trying to get creative right now... it’s a real financial challenge.”