This article takes a look at the 20 states where you may not be able to retire at age 65. If you wish to skip our detailed analysis of social security challenges and state-by-state considerations, you may go to 5 States Where You May Not Be Able to Retire at Age 65.
Social Security Challenges and State-by-State Considerations
In the United States of America, the major source of income for thousands of retirees across the country is social security. Three out of five beneficiaries over the age of 65 receive 50% or more of their retirement income from these benefits. As of 2022, the average retiree received $21,901 a year, whereas a couple received an estimated $36,255 a year. For many of these retirees, getting by on solely these benefits can be hard. So the question remains: Do you have to retire at the age of 65? Thankfully, not quite. The Pew Research Center observes a twofold increase in the proportion of older Americans engaged in the workforce, with many driven by financial necessities amid the inflationary pressures prevailing in the country. However, it must also be realized that the Social Security Administration can hold the money from a retiree's checks in case they continue to work while claiming benefits. While not everyone faces this issue, the rules just got a little more flexible in 2024.
Before this year, retirees under their Full Retirement Age (FRA) who were working lost $1 for every $2 they earned over $21,240. However, the limits for 2024 have been raised. In 2024, a retired working individual under the FRA can earn up to $22,320 without losing any money from their social security checks. Despite the modest silver lining of a 3.2% Cost of Living Adjustment (COLA), the overall picture remains delicately balanced. Since the COLA is designed to counter inflation and a reduced adjustment suggests a slowdown in inflation, retirees find themselves unable to bask in the coolness of this economic trend. The reality is that the impact on their lives isn't reflecting the purported easing of such inflationary pressures.
Nevertheless, the show must go on. Despite the economic volatility and inadequate retirement savings, seniors must continue to live through this “golden” period of their lives. The 4% rule is likely a good start to help retirees sustain their life-savings for an estimated 30 years or so. However, many retirees aren’t aware of the many surprise expenses that they may have to encounter during the years. According to The Charles Schwab Corporation (NYSE:SCHW), one such retirement expense is that of housing.
While 80% of seniors own their homes, long-term housing costs are often unaccounted for by pre-retirees. Unanticipated home repairs, for example, are the most likely culprits that take senior homeowners by surprise. On the other hand, for seniors who are looking to own a home, downsize, or even move, the housing market has looked rather bleak these past few years. Many states are so expensive that owning a home in notable cities and towns almost seems like a dream. For instance, some of the most expensive places to retire such as Park City in Utah, West Palm Beach in Florida, and even Boca Raton have median home prices out-of-reach for the average retiree. According to Redfin Corporation (NASDAQ:RDFN), home prices in Boca Raton were up by 5.2% as of December 2023, selling for a median price of $631,000. Similarly, homes in Park City cost $1.5 million while those in West Palm Beach are selling for a median price of $440,000.
Can the average retiree afford homes in such price ranges? Probably not. Unlike these expensive places, seniors can afford homes in some of the best states for taxes and cost of living. For instance, Mississippi, Oklahoma, Kansas, and Missouri all boast a cost of living that is lower than the national average. According to Redfin Corporation (NASDAQ:RDFN), homes in Missouri are selling for a median price of $240,000. Homes in Oklahoma are selling for a median price of $234,500; while those in Kansas report a price of $253,800. Missouri and Oklahoma also fall amongst the states with the lowest average retirement age in the US.
The average retirement age in Missouri stands at 63 years, while that in Oklahoma is 62. This means that retirees, on average, have the liberty to retire before 65 in these states because of factors such as low cost of living and tax-friendly policies. However, not every retiree has the luxury of retiring at this age. Many states are bad to retire for taxes and cost of living, and an average retiree may not be able to retire there at age 65. Let’s check what states fall in our list of places where you may not be able to retire at this age.
20 States Where You May Not Be Able to Retire at Age 65
Methodology
To compile the list of states where you may not be able to retire at age 65, we began by listing out all the states with their average retirement ages. These ages have been sourced from our previous work on the states with the lowest average retirement age in the US. We have also discussed the estimated annual cost of retirement from our previous source. States have been ranked based on their average retirement ages, while tie-breaking has been done based on their annual estimated costs of retirement. We did not base our rankings on the annual cost of retirement as these are estimated costs with a comfort-buffer for a comfortable retirement. This implies that an average retiree may be able to live for far less (or more) than what the estimated costs suggest. For states with the same average retirement age, the state with a higher cost of retirement has been placed higher on our list. Please note that the highest average retirement age in the US is in the District of Columbia, at age 67. However, it has not been included in our list as it is not a state.
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Here are the states where you may not be able to retire at age 65:
20. New York
Average Retirement Age: 64
Estimated Annual Cost of Retirement: $77,911
While the Big Apple doesn't say you can't retire at age 65, the high cost of living in this state will push many retirees to work past this age. According to the Missouri Economic Research & Information Center, the cost of living in this state is 26.5% higher than the US average. Moreover, given that the average cost of retirement per month is an estimated $6,492, it only makes sense to push past the retirement age to reap higher social security benefits.
19. California
Average Retirement Age: 64
Estimated Annual Cost of Retirement: $83,279
The case of California is no different than New York. The average cost of living in the state is 36.4% higher than the national average. Moreover, the median price of a home in California is $746,723 as noted by Redfin Corporation (NASDAQ:RDFN), and the average retiree would need an estimated $6,939 to live comfortably in this state. Given these statistics, many retirees who choose to live in this state would try their best to push past 65 at work.
18. Kansas
Average Retirement Age: 65
Estimated Annual Cost of Retirement: $50,223
Even though the cost of living in the state of Kansas is 12.6% lower than the national average, the cost of living figures come down to an estimated $4,000 per month if one wishes to live a comfortable retirement. For the average retiree in 2024, the 3.2% COLA has raised the social security check to $1,906, on average. Analysis of this information makes it obvious that pushing past the retirement age is the way to go.
17. Texas
Average Retirement Age: 65
Estimated Annual Cost of Retirement: $52,341
In Texas, retirees quit work at the age of 65, on average. While Texas is one of the states that don’t tax social security, the COLA is going down each year, and the fact that retirees are still feeling the heat of economic pressures also pushes Texas in our list of states where you may not be able to retire at age 65.
16. Iowa
Average Retirement Age: 65
Estimated Annual Cost of Retirement: $52,399
Another state where the average retirement age is 65 is Iowa. The estimated monthly cost of retirement in the state is $4,366; way above the average social security check that a retiree will receive this year (on average).
15. Nebraska
Average Retirement Age: 65
Estimated Annual Cost of Retirement: $52,439
Nebraska also falls in our list of states where you may not be able to retire at age 65. While retirees may choose to do so because of medical illnesses or other problems, pushing past the retirement age will reap them higher benefits and allow them to save more for their golden years.
14. Utah
Average Retirement Age: 65
Estimated Annual Cost of Retirement: $54,363
Boiling down to an estimated monthly cost of $4,500, pushing past the retirement age is a wise move for retirees living in Utah as well.
13. Minnesota
Average Retirement Age: 65
Estimated Annual Cost of Retirement: $56,849
In the state of Minnesota, nearly one-third of workers don’t have access to a retirement plan at work. An AARP survey further reveals that more than 42% of retirees depend on social security for half of their retirement income in this state, reinstating the idea of choosing to retire after the age of 65 as a wise move.
12. North Dakota
Average Retirement Age: 65
Estimated Annual Cost of Retirement: $57,060
North Dakota boasts a cost of living that is 5.7% lower than the national average. Yet, the average retiree may not be able to retire at 65 similar to other states because Medicare eligibility doesn’t begin before this age, and it only makes sense to save as much as one can before they leave work for good.
11. Virginia
Average Retirement Age: 65
Estimated Annual Cost of Retirement: $58,120
The cost of living in Virginia is 1.1% higher than the national average. The estimated monthly cost of retirement is $4,843, and given that the average social security check is less than even half of this amount, embracing the work path beyond age 65 is advisable.
10. Colorado
Average Retirement Age: 65
Estimated Annual Cost of Retirement: $60,357
The state of Colorado boasts living expenses that are 6.9% higher than the US average. Monthly retirement costs are higher as well, putting Colorado on our list of the states where you may not be able to retire at age 65.
9. New Hampshire
Average Retirement Age: 65
Estimated Annual Cost of Retirement: $62,011
New Hampshire is also noted for its higher-than-average living costs and similarly, its cost of retirement. Again, you may not be able to retire at age 65 in this state.
8. Rhode Island
Average Retirement Age: 65
Estimated Annual Cost of Retirement: $67,594
The estimated monthly cost of a comfortable retirement in the state of Rhode Island is a whopping $5,632, implying that retirees may not be able to retire at age 65 here as well.
7. Vermont
Average Retirement Age: 65
Estimated Annual Cost of Retirement: $67,651
Combining the impacts of a higher estimated cost of retirement and a 14.9% higher-than-average cost of living implies that Vermont is also one of the states where you may not be able to retire at age 65.
6. New Jersey
Average Retirement Age: 65
Estimated Annual Cost of Retirement: $67,764
In the state of New Jersey, the average retiree may choose to push past the age of 65 for retirement in order to maximize their savings and live comfortably in the state.