How much money do Americans need to save for a secure retirement? According to a recent analysis by the financial website Investopedia, single retirees who have paid off their mortgages still need an average of about $693,000 to maintain a comfortable retirement lifestyle. However, the amount of money needed for retirement varies depending on the location, with significant differences between states.
This estimate is much lower than what Americans expect for retirement. A 2026 survey by Northwestern Mutual revealed that Americans believe they need $1.46 million for a comfortable retirement. The difference lies in the fact that the former is based on estimated retirement expenses, while the latter reflects the subjective expectations of the respondents.
Having paid off the mortgage is a significant cost advantage for retirement living. Citing data from the US Census Bureau, Investopedia reports that the median monthly housing costs for households headed by individuals aged 65 and over with no mortgage are $658, while homeowners still repaying their mortgages pay as much as $1,736 per month, a difference of $1,078.
Investopedia’s model first estimates the annual expenses for a comfortable retirement in each state, including daily expenditures and housing costs that homeowners must bear after paying off their mortgages.
Next, the model subtracts the national average annual Social Security benefits: $23,704 for singles and $37,713 for couples. The remaining gap is filled by individual savings.
Finally, the model utilizes the commonly used financial planning “4% rule”: withdrawing 4% of savings annually in retirement. Based on this, dividing the annual gap by 0.04 (equivalent to multiplying by 25) gives the total savings needed.
Extending the reading: Which states in the US face the risk of exhausting retirement savings for the elderly?
According to Investopedia’s estimation, Arkansas requires the least savings for single retirees with no mortgage, around $572,000. Following are Louisiana, North Dakota, Mississippi, and Tennessee, all needing less than $590,000, over $100,000 less than the national average of $693,000.
The states with the highest required savings are concentrated in the Northeast. New Jersey tops the list at around $909,000; followed by New York at $840,000, Washington DC at $834,000, Massachusetts at $826,000, Connecticut at $819,000, and New Hampshire at $814,000.
Even if the mortgage is paid off, homeowners still have to pay property taxes, insurance, utilities, and various other expenses. Citing data from the US Census Bureau, Investopedia notes that these ongoing costs for homeowners aged 65 and over without mortgages range from around $398 per month in West Virginia to just over $1,200 per month in New Jersey. These continuous expenses are cited as one of the reasons for the cost differences in retirement across states.
Investopedia points out that nearly 80% of households headed by Americans aged 65 and over own their homes, with almost two-thirds having no mortgage. However, citing data from the Census Bureau, it is noted that as of 2024, 36% of homeowners aged 65 and over still have mortgages.
Investopedia clarifies that this estimation only takes into account financial assets, excluding the value of retirees’ homes, and does not assume that retirees will use their home equity to cover expenses. The housing costs used are based on data from homeowners aged 65 and over with no mortgages; its previous baseline model mixed housing costs for homeowners and renters.