Retirees don't mind living in expensive states. Should they?

Retirement can look a lot different depending on the state you live in. The same amount of money can last over 50 years in some states and less than 20 in others. Yet, data shows that retirees don't appear to put much weight into a state's cost of living when deciding where to spend their retirement years.

New research from GOBankingRates analyzed how long a retiree could live on Social Security benefits as well as $1.5 million in retirement savings in each U.S. state. The findings highlight a stark gap in expenses for retirees — one that older Americans often ignore when deciding where to live in retirement.

The question is: Do more retirees live in states with a lower cost of living? To answer that question, Financial Planning combined GoBankingRates study with an analysis of Census data showing the population percentage of Americans age 65 and up in each state.

Across all 50 states, there's no significant difference in the population of older Americans based on a state's cost of living, Financial Planning analysis shows. For advisers like John Power, a financial adviser at Power Plans in Walpole, Massachusetts, that's hardly a surprising finding.

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"In my experience, clients who generally plan properly for life, including retirement, focus on where they want to be and the lifestyle they want to enjoy," Power said. "Many choose to stay in their homes because of the connections, family locations, etc."

Thomas Murphy, CEO of Murphy & Sylvest Wealth Management in Dallas, said he has seen a similar trend among his clients.

"If you are family-oriented, the No. 1 retirement location goal is to be within 30 minutes of your grandchildren," Murphy said. "Everything else is secondary. If you are not family-oriented, the desired location can include many factors including climate, state tax rate, cost of living [and more]."

For a retiree looking to get the most out of every dollar in retirement, advisers say moving to a low-cost-of-living state might make sense. But for retirees with enough savings, other factors often take precedent.

"Affordability usually becomes an issue when the client hasn't prepared properly and is really trying to stretch their retirement dollar," Power said. "The least costly places are, in many cases, less desirable as well. They may be short on amenities, social activities or medical facilities and resources. Those factors are important for clients as they age."

To determine how far a healthy retirement nest egg could go in each state, GoBankingRates created state-level annual expenditure estimates by multiplying the national average annual expenditures for people 65 and older by each state's overall cost-of-living index for 2024 from the Missouri Economic Research and Information Center.

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For each state, they then divided $1.5 million by the annual expenditures estimate for a state after subtracting Social Security income. 

The calculation assumes that the full $1.5 million is taken out all at once, which misses out on appreciation that retirees would likely see in the real world. But since that's the case regardless of which state a retiree lives in, the relative comparison between states is still accurate.

Enough methodology — here's what they found.