A growing number of Americans are heading into retirement with a troubling financial outlook, according to a new analysis from Seniorly.
Retirees in 41 states and Washington, DC, are projected to outlive their savings, facing an average shortfall of $115,000 between what savings they’ll need and what they’re expected to have. In high-cost states like New York, California, and Hawaii, that gap can stretch well into the mid-six figures.
For older adults hoping to age in place, it’s a wake-up call. Housing is often the single largest monthly expense in retirement, and unlike travel or dining out, it’s not something most people can cut back on. Even for homeowners who have paid off their mortgage, rising property taxes, unexpected home repairs, and other hidden costs can unexpectedly erode even the most carefully planned nest egg.
Why housing costs can make or break your retirement
Housing is as much a financial anchor as it is a place to live for retirees. For those who own their home, mortgage payments, property taxes, insurance premiums, and ongoing maintenance can add up quickly, especially in markets where home values have soared. For those who rent, price instability can be just as challenging, with annual increases often outpacing fixed incomes and offering little long-term security.
That’s part of why retirees in high-cost states like New York, California, Hawaii, and Washington, DC, are facing the steepest shortfalls, according to Seniorly’s analysis. In these states, even retirees with strong incomes and sizable savings might still come up short because the cost of living is so high.
And while many older homeowners are house rich, they’re often cash poor. Their wealth is tied up in home equity, not liquid assets they can easily spend. That can create major challenges when fixed costs rise (like home insurance premiums or property taxes) or unexpected expenses (like a necessary HVAC repair) hit. Without a plan to convert that equity into accessible funds, a comfortable retirement can become financially fragile.
The 5 worst states for retirees’ financial security
Some states stand out for just how tough it is to stretch retirement savings, according to Seniorly’s report. In the five worst-ranked states, seniors face massive gaps between what they’ll need to maintain their standard of living and what they’re likely to have. And in nearly every case, housing plays a central role.
New York
Facing the biggest shortfall in the country, seniors in New York are expected to run nearly $448,000 short throughout their retirement. High housing costs—especially in downstate areas—combine with steep property taxes, elevated health care expenses, and a high cost of living across the board.
Hawaii
With the nation’s highest life expectancy at age 65 (20.6 more years on average) and the highest overall cost of living, Hawaii seniors face a projected shortfall of $417,000. Even with the largest average nest egg in the country ($1.32 million), it’s not enough to cover typical retirement costs, which top $1.74 million.
Washington, DC
The nation’s capital combines some of the country’s highest housing costs with a long life expectancy and expensive health care. The result is an estimated gap of $407,000 between what retirees have and what they likely need.
Alaska
Though housing costs vary by region, overall expenses in Alaska are high, especially for essentials like health care, utilities, and food. Seniors there face a $342,000 shortfall, even with slightly above-average retirement income.
California
With its high home prices, property taxes, and cost of care, California isn’t an easy place to retire on a fixed income. Seniors are projected to fall $337,000 short over their retirement years, despite relatively strong Social Security and investment returns.
Why homeowners aging in place need a backup plan
For many older adults, aging in place is the goal. Surveys consistently show that the vast majority of retirees want to remain in their homes for as long as possible, but that desire doesn’t always align with the financial reality.
For one, only about 10% of America’s housing stock is equipped for senior living, according to the AARP. The costs of updating a home to meet these requirements—which include a step-free entry, at least one bedroom and bathroom on the first floor, and at least one bathroom with accessibility features like a grab bar—can quickly sink a nest egg. Likewise, the variable costs of maintaining a home can just as easily crack a retirement budget wide open.
Still, many seniors remain in homes that no longer serve them physically or financially because moving seems out of reach. Downsizing can come with emotional and logistical hurdles, and relocating to a more affordable area might mean leaving behind a support system. In some cases, homeowners might feel “locked in” by the affordability challenges that all homebuyers are facing today.
But a backup plan that includes sizable funds for future repairs, shared housing options, or flexibility for a move later in life can help older homeowners stay both safe and solvent.
Home equity: Lifeline or last resort?
For retirees facing a financial shortfall, home equity can be a much-needed safety net. But turning equity into income isn’t always straightforward, and the options that can help come with trade-offs.
Reverse mortgages can erode inheritance and carry strict eligibility rules. Home equity loans (HELOCs) require strong credit and can be risky without a reliable cash flow. Selling and relocating might free up funds, but could also mean facing high home prices in new markets, steep transaction costs, and the emotional toll of leaving a longtime home.
There’s also a timing challenge. Many retirees delay making a move until they’re in crisis, or when a medical event, home repair, or unexpected expense forces their hand. At that point, the choices might be fewer and the financial pressure much greater.
That’s why experts urge homeowners to treat home equity as part of their long-term strategy, not just a last-ditch solution. Planning ahead—whether through gradual downsizing, renting out part of the home, or setting up financial tools early—can turn housing wealth into a flexible buffer rather than a final fallback.
Where seniors are best positioned to retire securely
While many states present financial challenges for retirees, a handful stand out for offering a more stable path. In these five top-ranked states, seniors are least likely to outlive their savings, and in some cases, they’re projected to finish retirement with money left over.
What they have in common is that these states combine moderate living costs with solid average retirement income. That balance allows savings to stretch further and helps seniors avoid the kinds of trade-offs that lead to housing instability, delayed care, or financial stress in later life.
Washington
Topping the list, seniors in Washington are expected to enjoy a $146,000 surplus throughout their retirement. Strong household incomes and solid nest eggs, paired with manageable living costs, give retirees in the Evergreen State a clear edge.
Utah
With projected income nearing $1 million and retirement expenses closer to $873,000, Utah seniors have a $121,000 cushion to work with. The state also boasts relatively low taxes and a growing reputation as a retirement-friendly destination.
Montana
A modest cost of living and high rate of homeownership help Montana retirees stay ahead. On average, they’re projected to end retirement with a $43,000 surplus—small, but meaningful breathing room.
Colorado
Colorado offers a blend of financial and lifestyle advantages, from decent retirement incomes to tax breaks for older residents. Seniors here are expected to stay $38,000 in the black.
Iowa
Iowa might fly under the radar, but it ranks high for retirement security. Low housing costs and stable expenses allow seniors to hold onto a $32,000 surplus, even without the sky-high incomes seen in coastal states.
What homeowners can do now to protect themselves
For many older adults, the home is both their most valuable asset and their most costly responsibility. It also carries deep emotional weight, which can make financial decisions even more complicated. But with a proactive, housing-savvy strategy, homeowners can turn that equity into a tool to support long-term stability.
Start by budgeting realistically for long-term homeownership. That means accounting not just for mortgage payments, but for rising property taxes, insurance, utilities, and the inevitable repairs that come with aging homes.
If you suspect your current home or location won’t be affordable in the years ahead, it’s wise to consider relocating before it becomes a crisis. Moving while you’re still financially and physically able allows you to make decisions on your terms, rather than being forced into a stressful sale or hasty move.
Finally, more retirees are exploring alternative housing models that can reduce costs while preserving independence. Multigenerational living, accessory dwelling units, and senior co-housing communities can offer both financial relief and social connection.
With thoughtful planning, homeowners can turn their largest expense into one of their biggest retirement advantages.