Hawaii has the third-lowest income gap between senior citizens’ incomes and younger residents’ income, according to a new Interest.com report.
Financial experts’ rule of thumb is that retirees need 70 percent of the income that they earned during their working years, but only seniors in Washington, D.C. and Nevada are meeting that threshold.
In comparison, Hawaii residents who are 65 and older have a median annual income that equals 69 percent of their younger counterparts’ median annual income (45-64 years old).
Interest.com examined the U.S. Census Bureau’s 2013 “American Community Survey” (the most recent edition). The Census Bureau broadly defines income to include wages, salaries, tips, social security, welfare, interest, dividends, pensions, income from defined contribution retirement plans (such as 401(k)s and IRAs), rental properties, royalties and other sources.
For each state and Washington, D.C., Interest.com divided the median annual household income for those who are 65 and older by the median annual household income for those between 45 and 64 years old. Washington, D.C. and Nevada were the only places to exceed the 70 percent threshold.
“The D.C. area’s retirees do particularly well for themselves,” said the site’s managing editor Mike Sante. “This is likely due to the fact that the D.C. area has a large number of retired federal employees, many of whom are able to reap the benefits of pension plans.”
Besides Hawaii, Arizona and Mississippi (both at 68 percent) join D.C. and Nevada in the top five.
In the two lowest-ranking states, Massachusetts and North Dakota, people age 65 and older are unable to replace even half of their younger counterparts’ incomes.
Nationally, the median income for those who are 65 and older equals just 60 percent of the median income for 45 to 64 year-olds.
For the complete rankings of all 50 states and Washington, D.C., click here.
Interest.com is owned by Bankrate, Inc. and provides personal finance advice and information on the Internet.