New Jersey consistently ranks among the top five most expensive states to retire in. Property taxes are the highest in the nation. Healthcare costs run above average. And while NJ does not tax Social Security income, it taxes most other retirement income until age 62.
So how much do you actually need?
The Basic Math
A common rule of thumb is that you need 25 times your annual expenses saved to retire comfortably. If you plan to spend $60,000 per year in retirement, you need roughly $1.5 million.
That math assumes a 4% annual withdrawal rate — a figure derived from historical market returns that has held up reasonably well over time. But it comes with caveats.
It assumes your portfolio stays invested in a mix of stocks and bonds. It assumes you can stomach significant account value swings. And it does not account for a major healthcare event or long term care need, which can easily run $100,000 to $300,000 in New Jersey.
What Actually Eats Retirement Income in NJ
Property taxes — the average NJ homeowner pays over $9,000 per year. If you own your home outright in retirement, this is still a significant fixed expense.
Healthcare — before Medicare at 65, health insurance can cost $1,000 to $2,000 per month for a couple. After Medicare, out-of-pocket costs still add up — the average retiree spends $6,000 to $10,000 per year on healthcare.
Long term care — nursing homes in NJ run $9,000+ per month. Most people have no plan for this.
Inflation — a 3% annual inflation rate doubles the cost of living every 24 years. A retirement that feels comfortable at 65 may feel tight at 80.
Why Guaranteed Income Changes the Math
The risk with a pure investment portfolio is sequence of returns — if the market drops 35% in your first year of retirement and you are withdrawing 4%, you may never fully recover. You are selling shares at depressed prices to fund living expenses.
Guaranteed income — whether from Social Security, a pension, or an annuity — eliminates this risk for that portion of your income. You know the check is coming regardless of what markets do.
A retiree with $40,000 per year in guaranteed income only needs their investment portfolio to cover the gap above that — which means they can hold more in growth assets or maintain a more conservative drawdown rate.
A Realistic Retirement Framework for NJ
Rather than chasing one big number, think in layers:
Layer 1 — Non-negotiables: Your fixed monthly expenses — housing, utilities, food, insurance. These should be covered by guaranteed income: Social Security, pension, and/or an income annuity.
Layer 2 — Lifestyle: Travel, dining, hobbies. This can come from a portfolio or a more flexible income source.
Layer 3 — Protection: Long term care, major healthcare, unexpected expenses. A hybrid LTC annuity or significant liquid reserves belong here.
Layer 4 — Legacy: What you want to leave behind. Life insurance or the death benefit from an annuity can serve this role without requiring you to hoard liquid assets.
The Bottom Line
There is no single magic number for retiring in New Jersey. But if you are planning to rely entirely on a portfolio without any guaranteed income component, you are carrying more risk than you need to.
If you have questions about how a fixed annuity could fit into your retirement income plan — or if you just want to compare what your savings could earn versus what they are earning now — reach out for a free conversation.
Have questions about this topic?
Devin Shave is an independent annuity advisor based in Brielle, NJ. Free consultations, no obligation, no pressure.
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