Is $1.5 million the new ‘magic number’ for retirement savings in the US? Here are the top 4 best and worst states for making it last

The ‘magic number’ keeps getting higher

The ‘magic number’ for retirement savings has jumped 50% since 2020 — driven in large part by fears of inflation eating away at people’s retirement savings. Consider the dramatic inflation rates we saw from 2021 to 2023, which reached as high as 9.1% in June 2022.

Those inflation fears aren’t behind us, though. Consumer confidence has fallen to a 12-year low, according to the latest Conference Board Consumer Confidence Index, which received write-in responses showing that “inflation is still a major concern for consumers and that worries about the impact of trade policies and tariffs in particular are on the rise.”

Another factor bumping up that magic number is the belief that Americans will spend more time in retirement than previous generations. Three in 10 millennials and Generation Z Americans “believe it’s likely or highly likely that they will live to age 100,” according to Northwestern Mutual’s study.

While millennials expect to retire at 64, Gen Z plans to retire earlier, at age 60. This is much earlier than baby boomers, who plan to enter their golden years at age 72, and Generation X, who expects to retire at 67.

That means Gen Z may need their retirement savings to last 40 years. But those expectations may be far from the current reality.

According to the Transamerica Center for Retirement Studies, the median retirement age is 62, while the U.S. Centers for Disease Control and Prevention puts the average life expectancy in America at 74.8 years for men and 80.2 years for women.

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Determining your retirement income

Retirees need to carefully plan how much to withdraw each year to live comfortably in retirement while ensuring their money will last as long as possible. A common rule of thumb is known as the 4% rule that, when followed, should allow your portfolio to last at least 30 years.

This rule stipulates that in the first year, a retiree withdraws 4% of their portfolio, followed by inflation-adjusted amounts in the following years. With a portfolio of $1.5 million, this will provide $60,000 in the first year.

Most Americans won’t have to rely solely on their nest egg to fund their retirement since they’ll also receive Social Security benefits (and possibly a pension). In February 2025, the average monthly benefit paid to retired workers was $1,980, which is about $23,760 per year.

With a portfolio of $1.5 million — supplemented with an average monthly Social Security benefit — a retiree could reasonably expect to live on $83,760 per year. Still, life happens, so you may need to withdraw more (or less) than 4%, which will dictate how long your nest egg will last.

But withdrawals aren’t the only factor to consider.

Where your nest egg will and won’t last

A recent analysis looked at how long $1.5 million would last, by state, based on the cost of living after Social Security. According to the study, your retirement nest egg will last longest in West Virginia, where the annual cost of living after Social Security is $27,803 and your $1.5 million portfolio will last 54 years.

It’s followed by:

• Kansas, with an annual cost of living after Social Security of $28,945 (a $1.5 million portfolio will last 52 years)
• Mississippi, with an annual cost of living after Social Security of $29,426 (a $1.5 million portfolio will last 51 years)
• Oklahoma, with an annual cost of living after Social Security of $29,666 (a $1.5 million portfolio will last 51 years)

Meanwhile, you’ll whittle down your nest egg fastest in Hawaii, where the annual cost of living after Social Security is $87,770 and your $1.5 million portfolio will last just 17 years. That’s a far cry from West Virginia, where your portfolio will last more than three times longer, at 54 years.

Hawaii is followed by:

• Massachusetts, with an annual cost of living after Social Security of $65,117 (a $1.5 million portfolio will last 23 years)
• California, with an annual cost of living after Social Security of $63,795 (a $1.5 million portfolio will last 24 years)
• New York, with an annual cost of living after Social Security of $50,997 (a $1.5 million portfolio will last 29 years)

Of course, there are several factors you’ll need to consider when choosing where to retire (like being close to your grandkids). But given that your money will last an extra 37 years in West Virginia than in Hawaii, where you choose to live in retirement is something to seriously consider — particularly if you don’t have a $1.5 million nest egg.