The States Most (and Least) Prepared for Retirement

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The 10 States Most Prepared for Retirement

10. Mississippi
> 401(k) balance to income: 58.2%
> Median balance: $21,497 (15th lowest)
> 401(k) growth 2008-2011: 83.6% (the highest)
> Debt to income: 632% (23rd lowest)
> Average total debt: $123,845 (the lowest)

Between 2008 and 2011, the median balance of a 401(k) plan in Mississippi grew by 84%, a higher rate of growth than any other state in the country. Between just 2010 and 2011, the median 401(k) balance jumped from $11,587, which was the second-lowest amount in the country, to $21,497, the 15th-lowest rate. This remarkable growth was despite the fact that households in the state earned a median income of $36,919 in 2011, the lowest among all states. Mississippi residents held just an average of $123,854 in debt, the second-lowest debt amount in the country. This includes just $4,088 in credit card debt, the lowest in the country, and $103,085 in mortgage debt, the second lowest in the country.

9. Missouri
> 401(k) balance to annual income: 59.0%
> Median balance: $26,705 (18th highest)
> 401(k) growth 2008-2011: 30.7% (13th highest)
> Debt to income: 575% (10th lowest)
> Average total debt: $141,594 (13th lowest)

The median balance of a 401(k) plan Missouri in 2011 was $26,705, the 18th highest in the country — the only year between 2008 and 2011 that it was among the top 20 states. Although far from the highest amount, this is impressive given that Missouri’s median household income of $45,247 was in the bottom-third of all states and well below the national median income of $50,502. The state’s average total debt divided by income was the 10th lowest among all states. The state’s average total debt of $141,594 was the 13th lowest of all states.

Also Read: States with the Widest Gap Between the Rich and Poor

8. Illinois
> 401(k) balance to annual income: 60.0%
> Median balance: $31,962 (8th highest)
> 401(k) growth 2008-2011: 28.2% (20th highest)
> Debt to income: 662% (25th highest)
> Average total debt: $184,547 (20th highest)

The median 401(k) balance of $31,962 in 2011 of Illinois residents was up approximately 65% since the stock market woes brought the median down to $19,336 in 2009, but growth was not as strong as in other states. While the median balance in 2011 was the eighth highest, it was the seventh highest in 2010 and the fifth highest in 2009. The state’s unemployment situation has been worse than the country as a whole during the economic downturn. The September 2012 unemployment rate was a full percentage point higher than the national rate. As for debt, while Illinois average debt compared to income placed the state in the middle of the pack, the state ranked 10th in credit card loan debt, generally considered the worst kind of debt.

7. West Virginia
> 401(k) balance to annual income: 60.8%
> Median balance: $23,390 (21st lowest)
> 401(k) growth 2008-2011: 43.0% (3rd highest)
> Debt to income: 570% (9th lowest)
> Average total debt: $125,641 (2nd lowest)

The median balance of a West Virginia 401(k) plan of $23,390 was the 21st lowest of all states. However, this ranking was up from 20th lowest in 2010 and 19th lowest in 2009. In fact, between 2008 and 2011, the median 401(k) balance grew by 43%, the third most of all states. Given that the state’s median income of $38,482 was the second lowest in the country, West Virginians clearly did a better job saving than residents of most states. It helped that West Virginians were not nearly as indebted as most states — average total debt of $125,641 was the second lowest in the United States. The average mortgage debt of $102,717 was the lowest in the country, while the average credit card debt of $4,707 was the fourth lowest.

6. Vermont
> 401(k) balance to annual income: 61.6%
> Median balance: $32,500 (6th highest)
> 401(k) growth 2008-2011: 16.2% (13th lowest)
> Debt to income: 595% (14th lowest)
>Average total debt: $167,231 (24th lowest)

While Vermonters are not exceptionally high earners — median household income in the state was $52,776 in 2011, slightly above the national median of $50,502 — they save much of what they earn. Last year, the median 401(k) balance of state residents was $32,500, one of the highest figures in the U.S. Among the factors that made Vermont a strong-saving state is the high employment, meaning many resident were more likely to receive 401(k) contributions from an employer. As of September of this year, the state’s unemployment rate was just 5.4%, one of the lowest in the nation. Residents may be more enticed to save money than in other states because of the high college tuition in the state. A four-year public college in Vermont costs more than $13,000 annually, the highest of any state but New Hampshire.