Optimal U.S. States for Retirement Savings: Tennessee Tops the List

The year 2024 marks the beginning of the "Peak 65" era. This is the phase during which a record number of 4.1 million Americans will reach the age of 65 each year until 2027. The concerning aspect of this is that the majority of these "Peak 65ers" do not have access to employer-sponsored retirement plans, which used to fill the gap left by Social Security. Studies from firms like Vanguard and Fidelity show an increase in Americans' retirement savings; however, the majority still fall far short of the amounts they consider necessary for a comfortable retirement. A Vanguard report titled "How America Saves 2024" revealed that the account balances of Vanguard participants increased by 19% since the end of 2022. The average account balance in 2023 was $134,128, but the median was only $35,286, indicative of few investors with very high balances. A record participation in 401(k) plans was also recorded in the first quarter of 2024. A Fidelity analysis of 26,000 company plans and nearly 24 million participants showed that the combined savings rate reached 14.2%. However, the recommended benchmark is 15% to maintain the current standard of living in retirement. In light of financial realities, many older Americans recognize the need to move. According to a report by "Hire a Helper," over 338,000 U.S. citizens moved to a new home in 2023 – an increase of 44% compared to the previous year. Top states include Texas and Florida, which offer no income tax and low living costs. Not everyone can or wants to move. Therefore, individuals should start saving as early as possible. This includes contributing to 401(k) accounts and taking full advantage of employer matches. Setting up an IRA and utilizing "catch-up contributions" from the age of 50 can also help boost retirement savings. T. Rowe Price Group recommends a savings rate of 15% and offers several plans for retirees, also known as Dividend Aristocrats. The financial challenges remain, but T. Rowe Price remains financially strong with low debt, supporting dividend payouts even in volatile times. A comprehensive evaluation of the best U.S. states for retirement building is based on living costs, retirement tax friendliness, and overall tax burden. States like Mississippi, Delaware, and Florida are among the best options. Texas offers living costs over 8% below the national average and no income tax. Michigan and West Virginia are attractive due to low living costs and moderate tax burdens. The ranking is conducted by Insider Monkey, with states like Alabama and Oklahoma also performing well. At the top of the list is Tennessee, which represents an optimal choice for retirees with its low tax rates and living costs.