7 Reasons $1 Million Will Only Last You 13 Years In Retirement In New York

Angela Mae
4-min read
Willowpix / Getty Images
Willowpix / Getty Images

New York is one of the most expensive states in the country. In fact, the Missouri Economic Research and Information Center (MERIC) found that the Empire State ranks fifth in terms of the highest cost of living. The only places more expensive are California, Massachusetts, the District of Columbia and Hawaii.

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The overall cost of living index in New York is 125.9. Everything from groceries and housing to utilities and healthcare is more expensive than the national average.

If you have $1 million, it probably won’t be enough to get you through retirement in New York. If you’re lucky, it’ll get you through the first half — but if you live for a long time or want to retire early, you’re going to need a bit more.

Based on a study conducted by GOBankingRates, here is why living in New York is expensive.

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Typical Annual Costs

The typical annual cost of living in New York is $73,140, which is not cheap. Some places, like New York City, are even less affordable. Here’s a breakdown of how much it costs to live in this state for a year, and how long $1 million is likely to last you.

  • Housing: $20,695

  • Utilities: $4,363

  • Groceries: $4,994

  • Transportation: $5,304

  • Healthcare: $8,173

  • Total (Annually): $73,140

With the average cost of living and a nest egg of $1 million, you can expect to have enough money for 13 years, 8 months and 1 day.

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Other Factors That Can Add To Your Total Costs

No two people are the same, but most New York retirees have to spend money on more than just the essentials. This means that even if you budget for the average amount on things like housing and groceries, you could still need more money on other costs to get you through retirement.

Here are six other reasons why $1 million might last a little less than 14 years in New York:

  • Taxes: You’ll need to start taking out the required minimum distribution when you reach 72 or 73 years old, per the IRS. If you don’t, you may need to pay an excise tax equal to 50% of the amount you don’t withdraw. This can cut into your overall retirement savings.

  • Longevity: According to the Social Security Administration (SSA), the full retirement age is 66 or 67 depending on your year of birth. The Centers for Disease Control and Prevention (CDC) lists the average life expectancy of an American as 77.5 years. If you’re in good health, you could expect to live longer; however this also means increased costs that your money might not be able to keep up with.

  • Long-Term Care: The older you are, the more likely you may be of needing long-term care. For many, this means assisted living at home or in a facility. According to a 2021 American Association for Long-Term Care Insurance survey, the average annual cost of a long-term care policy ranges from $1,700 to $7,225 for individuals aged 65 and up. This adds up quickly if your nest egg is only $1 million.

  • Housing: If your house is fully paid off before retirement, that’ll help with your annual expenses; however, you’ll still need to consider things like maintenance, property taxes, homeowners insurance and repairs. Depending on your property value, these costs could eat into your retirement savings.

  • Lifestyle Choices: If you have a more luxe lifestyle or plan to spend a lot on recreational activities like personal interests or hobbies, $1 million might not even last 13 years. Gym memberships, online monthly subscription services, airfare and the like can eat into your funds if not budgeted for properly.

  • Inflation: The current inflation rate is 3.4%, per the U.S. Bureau of Labor Statistics, but costs continue to rise across the board. Every year, the value of the dollar goes down just a little bit more. This could have a major impact on your savings if you don’t plan accordingly.

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This article originally appeared on GOBankingRates.com: 7 Reasons $1 Million Will Only Last You 13 Years In Retirement In New York