Connecticut retirees face high savings hurdles

Ask Americans how much they think they'll need to retire, and most will say they need an average of $1.46 million to do so comfortably, according to Northwestern Mutual's 2026 Planning and Progress study.

That's what people assume, they'll need, said Dan Paige, of Northwestern Mutual. The actual number could skew downward or soar upwards, depending on your lifestyle and health care needs. What's clear is that most people, even in Connecticut, don't have nearly that much. The median retirement savings in the state in 2026 is $118,400, according to SmartAsset.

The financial service company Fidelity recommends workers save 10 times their annual income by age 67. The personal finance publisher Kiplinger maintains that to retire comfortably in Connecticut, a person needs $1,191,417. Finally, AARP says that the general "rule of thumb is that you'll need about 80% of your preretirement income to maintain your lifestyle," according to its website. That's because retirees do not pay into Social Security, put money into a 401k, commute or buy new office clothing, AARP reports.

Nevertheless, although Connecticut is among the wealthiest states, it's doubtful most people have that much saved for retirement, said Eric McAlley, associate teaching professor in finance at Quinnipiac University. "Many people are simply keeping up with monthly expenses, and it becomes difficult to save," he said. "Add in inflation over the last few years, and it becomes genuinely hard to set money aside, even when the intention is there."

That may be why 67% of Americans worry more about running out of money than death, according to an April study by annuity and life-insurance provider Allianz Life. A 2024 survey from AARP found that 1 in 5 Americans over 50 has no retirement savings at all, and 37% "are worried about covering basic expenses, such as food and housing."

Retirement costs

"Connecticut has always been one of the higher cost states," for aging said Beth Ludden of CareScout, a subsidiary of Genworth Financial that sells long-term care insurance. Newsweek reported last month that Connecticut is among 13 states requiring $100,000 annually in which "to retire comfortably."

Ludden points to the state's high housing costs and property taxes, adding that Connecticut is among eight states that tax Social Security benefits, although it exempts joint filers with an adjusted gross income less than $100,000 and single or married filers with income under $75,000, according to the Connecticut General Assembly.

In Connecticut, where the annual cost of living was $65,128 in 2025, according to Consumer Affairs, the average 65-year-old needs $47,656 a year outside of what they receive in Social Security to make ends meet comfortably, according to Go Banking. Three-quarters of American workers plan to keep working after they retire, according to the 2026 Retirement Confidence Survey by the Employee Benefit Research Institute. However, more than half left the workforce before they had expected, according to the Society of Actuaries Research Institute, for reasons including health or layoffs.

Financial advisors stress that the time to start saving for retirement is now. Younger workers can take advantage of compounding interest by putting as little as 5% of their pay into a 401K or other savings vehicle, said Eric McAlley, who teaches finance at Quinnipiac University.

What often shocks people, said Julie Robison, professor of medicine at UConn Center on Aging is not necessarily higher medical costs, but the cost of housing. "Most people realize that as we get older, we will have more medical expenses," she said. However, " Alot of people don't think that the same costs you had before -- fuel, transportation, property taxes -- will increase. That's where you get the worry. You have to figure out how to reduce your costs."

EBRI reports that the number one cost of aging is housing. Expenses like property taxes, maintenance, taxes and utilities have risen sharply since the pandemic, said Osman Kilic, professor of finance at Quinnipiac University. "Property values are going up; property insurance is going up; replacement costs (of a home) are going up," he said. Property insurance has doubled in the last six years, according to Insurance Business Mag. That helps explain why people 65 and older spend about $22,000 a year on housing-related expenses, McAlley said.

Kilic expects inflationary pressures will continue for the next four to five years. "We have to get used to it," he said. "This is a new normal."

Specifically, EBRI's report found that 30% of retirement spending goes toward housing; 26% for food expenses; 19% for travel and entertainment; 8% for medical and health insurance and another 5% for out-of-pocket medical costs.

Other expenses, like renovations that allow people to age in place, can be costly, depending on the homeowner's needs. Although about 75% of Americans say they want to age in place, according to AARP, "The cost of upkeep of a home continues to creep up," said Robison, noting unexpected costs like replacing a roof or gutters or updating appliances.

Robison also notes the cost of pet care -- nearly half of those 65 and older own pets, according to Frontiers in Public Health -- rose 38% from 2021 to 2026, according to data from the Department of Labor.

Those costs, as well as family dynamics which can turn spouses, children and grandchildren into unpaid caregivers, also need to be factored in, Robison said.

Healthcare costs

"Unexpected healthcare costs are likely the number one cost that can unexpectedly spike if a loved one needs full-time care," McAlley said.

The average private pay cost of a skilled nursing facility is $191,900 annually, according to the Connecticut Partnership for Long-term Care. The average cost of an assisted living facility in Connecticut is about $107,460 a year, according to Genworth Financial, noting that the cost of this care has continued to outpace inflation. Short of needing facility-based care, state residents can expect to pay anywhere from $35 an hour for a personal care aide, to $43 an hour for a home-health aide, $107 hourly for a Licensed Practical Nurse and between $203 to $215 an hour for physical, occupational or speech therapy, according to the Connecticut Partnership. Adult Day Care is about $120 an hour, according to the group.

Unfortunately, said Ludden, "Most people are in a reactive situation when a long-term care situation takes place," she said.

But long-term care insurance is prohibitively expensive, said Robinson. Recently, policyholders have reported dramatic rate increases, often more than 50% and as high as 174%, a Connecticut Mirror investigation found.

Understanding the expenses of medical care is critical, according to AARP. It notes that the standard monthly premium for Medicare Part B, which covers most doctors' services, is now $202.90 or higher, depending on income. Those on Medicare also have to pay 20% of the Medicare-approved amount for most medical services after reaching the $283 annual deductible, according to AARP. The organization estimates that an average couple will need $330,000 after taxes to cover medical expenses over the course of their retirement. That's without long-term care.

However, medical costs are variable. The financial services firm Fidelity estimates that a single 65-year-old who retired in 2025 would spend an average of $172,500 on health care and medical expenses throughout retirement.

For its part, EBRI estimates a 65-year-old couple retiring with average drug expenses now needs $405,000 to $469,000 in savings to have a 90% chance of covering their health insurance premiums, deductibles, and out-of-pocket prescription costs throughout retirement.

The organization also reports that couples on Medicare Advantage, an alternative to original Medicare offered by private companies, will need to save less, or $203,000 "to have a 90% chance of covering their healthcare expenditures in retirement." That's because couples using Medicare Advantage typically require less savings to cover retirement healthcare expense because such plans charge lower out-of-pocket premiums and mandatory annual out-of-pocket maximums and frequently bundle prescription drug coverage, the group reports.