47 of 50 States Have a Major Retirement Problem, Study Finds

A new study from Bankrate looked at how much seniors are living on versus how much working-age adults earn. The data suggest most Americans will face financial hurdles in retirement.

Unless you live in Hawaii, Alaska, or South Carolina, you and your fellow residents have got some catching up to do when it comes to retirement savings.

That’s a core finding of a new report from Bankrate, which compared the finances of seniors to those of working-age adults to determine whether the average senior in a given state has enough money in retirement to continue living the kind of lifestyle they had during their working years.

The study is based on the premise that retirees need at least 70% of the income they made when they worked in order to live a comfortable retirement. So, a dentist who earns $200,000 per year during the final stretch of her working life ought to have the equivalent of $140,000 per year in retirement savings, Social Security, and other income upon retirement.

Bankrate used US Census data to look at the median annual earnings of working-age adults versus the median earnings of retirement-aged individuals. In 47 of the 50 states, seniors were making less than 70% of what working-age adults were, a good indication that the state’s average resident didn’t save enough for retirement.

Only in Hawaii, Alaska, and South Carolina did seniors meet the 70% benchmark, on average. Nationally, seniors were earning about 60% of what the overall working adult earned, well below the benchmark.

However, the states at the bottom of the list were well below the national average. Seniors in Massachusetts and North Dakota replaced less than half what they earned during their working years. Four more states — New Hampshire, Connecticut, Minnesota, and New Jersey – had a median senior income at less than 55% of the median worker income.

The data in the Bankrate report may be a contributing factor to a trend noticed by researchers at the Employee Benefit Research Institute, which last month announced study results finding fewer retirees report being satisfied with their retirement lives.

Fewer than half of Americans (48.6%) said they found retirement to be “very satisfying” in 2012, down from 60.5% in 2008. Meanwhile, a similarly sized increase was reported in those who said they were merely “somewhat satisfied” in retirement.