The Only 3 States Where Retirees Actually Have Enough Money

The general rule of thumb is that when you retire, you need to replace at least 70 percent of the income you had when you were working. But in a Bankrate.com report released Monday only seniors in three states are meeting that threshold.

The real kick in the pants is which states -- Hawaii, Alaska and South Carolina, of all places!

“These numbers help illustrate how underprepared many Americans are for retirement,” said Greg McBride, CFA, Bankrate.com’s chief financial analyst, in a press release. “It’s especially important for millennials to save aggressively because they face the biggest retirement savings burden of any generation in American history.”

To come up with these results, Bankrate.com examined the U.S. Census Bureau's 2014 American Community Survey. For each state and Washington, D.C., Bankrate divided the median annual household income for those who are 65 and older by the median annual household income for those between 45- and 64-years-old.

"Income" was defined as wages, salaries, tips, Social Security, interest and dividends, pensions, income from defined contribution retirement plans (such as 401(k)s and IRAs, rental properties, royalties and other sources.

Not having enough money in retirement has become something of a rallying cry to encourage younger people to start saving earlier for their own retirement.

Almost 33 percent of Americans have no retirement savings at all and 23 percent say they have less than $10,000 saved.

What makes the Bankrate study interesting is that the three states in which seniors are doing better aren't the states with the lowest cost of living. But once you scratch away the surface, the reasons why retirees do so well in these three states becomes clearer.

In Alaska, where the income replacement ratio is 71.12 percent, according to Bankrate, there is a public pension system that pays an annual 10 percent bonus to retired Alaskan state workers if they stay in-state after they retire. That policy won't apply to those who began working for the state after 2006, but for those enjoying it now it's a great benefit.

Alaskans also receive annual dividends from the state's Permanent Fund, which distributes among residents surplus revenues from the state's oil and gas reserves. Last year, every resident received $2,072 -- so more than $4,000 for a retired couple. And while the cost of living in Alaska is high, the state's population is low -- meaning that retirees can find part-time work more easily. Plus Alaskans are a hardy and self-sufficient lot. Many fish and hunt to keep their freezers full.

Hawaii, where the cost of living is the highest in the U.S., is a real head-scratcher to see on the Bankrate list. There are some programs where seniors do receive tax breaks, and health care costs for the elderly are a bit below the average. But that's not the primary reason seniors fare so well there.

About 20 percent of Hawaiian workers are union members, well above the national average of 11 percent, according to the U.S. Bureau of Labor Statistics. And, unlike many other states, Hawaii has retained a pension benefit for government workers.

The high cost of living makes multi-generational living extremely common in Hawaii. It isn't unusual to see three generations all living under the same roof to cut costs.

The state culture is also unique and tends to be less focused on spending money. People value experiences and activities over consumption of goods, Peter Kay, who writes a blog called Living in Hawaii, told Bankrate. They avail themselves of Hawaii's natural beauty, beaches and parks and opt for the simpler and less expenses choices for their entertainment.

As for South Carolina -- the third state with retirement income replacement above the 70 percent threshold -- the state had many manufacturing businesses in the 1960s and '70s that may still produce pension benefits today.

Transplants are another reason. People who accumulated their wealth in another state are moving here because of the lower cost of living. They have more money to start with and it stretches more in South Carolina. Taxes are low and the South Carolina weather allows people to garden and grow their own vegetables and fruit for much of the year.

Of course the best way to have enough money in retirement is to simply save it. Bankrate says that "putting money aside automatically through a workplace or individual retirement account is one of the simplest ways to make sure you're continuously adding to your nest egg."