Retirement almost always costs more than people expect it to when they're younger, or even when they're only months away from calling it quits. But there's a big difference between retiring comfortably and leaving the workforce in well-to-do fashion. And there are certain states where you'll be more likely to achieve the latter than others, according to a newly released survey.
If your clients are looking to retire and keep as much of their hard-earned assets as possible - and whose aren't? - Delaware is the most likely place where they can do it, a recent study from GoBankingRates.com showed. Thanks to the Blue Hen State's affordable cost of living, low tax rate - in comparison to other states, especially along the Atlantic - and more reasonably priced health insurance premiums, Delaware is the best state in the country to retire in style.
Social Security payouts in NJ generous
Interestingly, of the 10 states where retirement living favors the wealthy, all of them lie east of the Mississippi River, among them Michigan, Indiana, Maryland and Florida. New Jersey is considered to be the sixth best state for affluent retirement, thanks in part to typical Social Security payments per month being $1,452, the report noted.
Financial expert Kristen Bonner, lead researcher for the GoBankingRates.com study, noted that while the West Coast may often be viewed as the most optimal place to retire, both from a cost of living standpoint and quality of living, given the pleasant weather - the East has it beat.
"We found that these states have lower home prices on average, as well as relatively low health insurance premiums and Social Security benefits among the highest in the country," Bonner explained.
Indeed, from a real estate perspective, asking prices are more reasonably priced, despite limited inventory levels. According to the most recent figures from the National Association of Realtors, a median priced home in the Northeast costs $268,600. In the West, the median is $346,900 - nearly an $80,000 difference.
"A median priced home in Honolulu costs buyers over $700,000."
Thrifty spending almost impossible in Hawaii
On the opposite end of the spectrum are those states where living large doesn't come as easily. Perhaps unsurprisingly, chief among them is Hawaii. The study found that in the Aloha State, retirees also bid "aloha" to their wallets, due to the high cost of living and exorbitant list prices on single-family homes up for sale.
Other states that don't favor wealthy living included Vermont, North Dakota, Montana and New Mexico. In the state's capital city of Honolulu in the first quarter, the typical home there sold for approximately $721,400, based on analysis from the NAR. Only two other metro areas in the country cost more to buy, those being San Jose and San Francisco at $970,000 and $770,300, respectively.
Daily expenses is part of the reason why more Americans plan on retiring later on. Most workers expect to leave the workforce once they turn 66, according to a survey done by Gallup. That's up from an average of 64 between 2004 and 2008.
'Sandwich' generation providing for kids and parents
Even after adjusting for inflation, it costs more to retire today than it did in previous generations. Michael Schweitzer, global head of sales and distribution for the multinational financial services firm HSBC, told CNBC that what complicates matters further are more Americans financially providing for their loved ones, both older and younger.
"Many people, particularly those in their 40s, are supporting others such as their children and their parents," Schweitzer explained. "So people see that and experience that, and there's a recognition there, that they need to take a more active role in planning for retirement and doing all they can to pad their nest egg for the future."
How active a role? According to HSBC's research reported by CNBC, it takes at least 30 years of saving to retire and be truly financially secure. That translates to seven years more than the silent generation, or those born between 1923 and 1944.
One of the advantages of Leveraged Planning® Solutions lies in the fact that your clients' savings add up over time, meaning that the earlier they take advantage of this strategy, the better off they'll be whenever they do decide to retire. For more information on life insurance premium financing and whether your client would be a good candidate, speak with a GFD Financial Services Manager.