Retirement in Texas: Why It Costs $644K (Plus Social Security)

As soon as you enter the workforce, the ticking of your retirement clock starts ringing out like the “60 Minutes” stopwatch on a Sunday night. There’s added pressure when it comes to figuring out where you are going to live and how much you’ll need to save to do so when you retire. Social Security benefits only get you so far, which is why you need to start building your retirement nest egg today.

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GOBankingRates recently conducted a study to figure out how much you will need to retire in each state. The research included both your savings amount and Social Security benefits and how long those would last once you factor in cost of living, mortgage payments, grocery bills, housing costs and more.

• The national average Social Security income is $21,567 which is a good barometer to compare what your projected retirement income will cover in Texas.
• The minimum savings needed to retire in Texas for 20 years: $644,080
• The minimum savings needed to retire in Texas for 25 years: $805,100
• The minimum savings needed to retire in Texas for 30 years: $967,086

Here are some key takeaways for spending your golden years in the Lone Star state .

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Setting financial goals is the first step toward achieving them, and knowing approximately how much money you will need to put away for retirement day helps you allocate your funds now.

Whether you are a native Texan or are hoping to move there upon retirement here is why you’ll need over $644,000 to retire for just 20 years in Texas.

1. Big Price Tags on Texas Real Estate

• Average Annual Housing Cost: $9,832.97

It’s no secret that Texas is a big state, so real estate and housing costs will vastly vary from small towns to big cities like Dallas, Houston or Austin. Between rental costs, mortgage payments or even property taxes there is much to consider when budgeting your housing costs in retirement. GOBankingRates finds that on average, Texans can expect about $9,833 a year to go toward their home expenses.

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2. Bigger Bills in the Lone Star State

• Average Annual Cost of Healthcare: $7,042.36
• Average Annual Cost of Utilities: $4,299.54
• Average Annual Cost of Groceries: $4,605.12

Making sure you are splitting up your fixed income each month in a way that covers your necessary costs but still leaves some fun money can be a tricky balance. Healthcare, utilities and food costs are all big percentages of your monthly and budget. Knowing what to expect can better prepare your finances for the future.

3. Big Auto Costs in the Land of Big Oil

• Average Annual Cost of Transportation: $4,512.96

From energy-efficient autos to gas-guzzling trucks, Texas is home to a lot of drivers and is a state where a car is often necessary for your daily commute. This means you have to worry about not only what you pay at the pump but also car maintenance, both expected and unexpected. GOBankingRates found that it costs around $4,513 a year in transportation costs.

4. Retirement Costs Are Bigger in Texas — Before and After Social Security

• Average Annual Total Cost of Living: $53,770.74
• Average Annual Total Cost of Living After Social Security: $32,203.98
• The minimum savings needed to retire in Texas for 20 years: $644,080
• The minimum savings needed to retire in Texas for 25 years: $805,100
• The minimum savings needed to retire in Texas for 30 years: $967,086

The cost of living seems to be ever-increasing no matter where you reside, so to save enough for your desired retirement destination now it helps to work backward from what is estimated you’ll need.

GOBankingRates found that if you wish to retire in Texas for 20 years you’ll need at least $644,000 and $967,000 if you want to stretch that timeline to 30 years.

In large, this is because the average annual cost of living is about $53,771, which dips to $32,204 after Social Security.

The bottom line is that working one job for 40 years and then retiring from that pension is not always the path available to most people in today’s workforce. However, with a bit of planning, a pinch of investing and a whole lot of savings you can achieve all of your retirement goals and live out your golden years comfortably.

Methodology: To find out exactly how much you need to retire in your state, GOBankingRates found the annual cost of expenditures for a retired person in each state by multiplying the 65-year and older expenditures from the Bureau of Labor Statistics 2022 Consumer Expenditure Survey by the cost-of-living index for each state from the Missouri Economic Research and Information Center’s Q3 2023 cost-of-living series. To find how much money a retired person would need to save, we divided each state’s annual expenditures, minus the annual Social Security income as sourced from the Social Security Administration’s Monthly Statistical Snapshot, March 2022, by 0.0333%, 0.04%, and 0.05% assuming 20, 25 and 30 years of retirement respectively. All data was collected and is up to date as of January 8, 2024.

This article originally appeared on GOBankingRates.com : Retirement in Texas: Why It Costs $644K (Plus Social Security)