How much you need to retire
Good news for Tennessee residents, planning to retire in the Volunteer State, Tennessee ranks as one of America's most affordable places to retire, requiring significantly less in savings than most other states.
Recent analysis from GOBankingRates reveals that Tennessee retirees need approximately $1,061,725 in total resources for a comfortable 25-year retirement. This includes savings, Social Security, and other income sources combined.
Tennessee's average annual retirement expenses run about $42,469 (roughly $3,539 per month), making it the ninth lowest cost state in the nation. Compare this to Hawaii's $2.2 million requirement or even Oklahoma's lowest-in-nation $735,284, Tennessee offers excellent value while maintaining quality of life. However, Tennessee has one of the highest sales tax rates at 7% state plus up to 2.75% local (averaging 9.62% combined).
Key Age Milestones when calculating your years to retirement and needs:
Age 62: Earliest Social Security eligibility (reduced benefits)
Age 65: Medicare eligibility begins
Ages 66-67: Full Social Security retirement age (varies by birth year)
Savings Benchmarks by Age
3x your annual income by age 40
6x your annual income by age 50
8x your annual income by age 60
7.5 to 13.5x your income by age 65
Quick Calculation Methods
The 4% Rule: Withdraw 4% of savings annually. Need $50,000 beyond Social Security? You'll need $1.25 million saved.
The Rule of 25: Multiply annual expenses by 25. Planning for $60,000 yearly spending? Target $1.5 million.
Replacement Ratio: Most retirees need 70-80% of pre-retirement income. Earning $60,000? Plan for $42,000-$48,000 annually in retirement.
Considerations
The average Social Security benefit (January 2025): $1,976/month or $23,712 annually.
For Tennessee retirees with average expenses of $42,468 yearly, Social Security covers about 56% of costs. The remaining $18,756 must come from savings, pensions, or other income.
Using the 4% rule, you'd need approximately $469,000 in savings to cover this gap, with Social Security handling the rest. This is substantially less than retirees need in high-cost states.
Your 5-Step Tennessee Retirement Plan
Set Your Timeline: Choose your retirement age, weighing Social Security benefit increases against years of work.
Calculate Expenses: Estimate annual costs for your desired lifestyle in Tennessee, including the state's sales tax structure.
Determine Income Sources: Add up Social Security, pensions, and potential part-time income.
Find the Gap: Subtract guaranteed income from expenses to see what savings must cover.
Factor in Extras: Budget for healthcare (Fidelity estimates $345,000 for a couple over retirement), inflation (2.5-3% annually), and unexpected costs.
The Tennessee Advantage
Tennessee's combination of zero income tax, low property taxes, and below-average living costs can save retirees nearly $1 million compared to the most expensive states. This represents a substantial advantage whether you're already a Tennessee resident or considering relocation.
The key to retirement success: start early, save consistently (aim for 15-20% of income), and understand your personal needs. Tennessee's affordability provides a strong foundation, but adequate savings remain essential.
Consider working with a financial advisor to create a personalized plan that maximizes Tennessee's benefits for your unique situation. The state's favorable retirement environment, combined with proper planning, puts a secure and comfortable retirement within reach for many Tennesseans.