An analysis from the National Institute on Retirement Security finds Americans in nearly every state are expected to fall far short on purchasing power in their golden years.  

The bleak findings are from the institute’s State Financial Security Scorecards research project, which gauges the retirement readiness of workers in all 50 states and the District of Columbia. Each state’s score is determined based on three primary factors, including anticipated retirement income; major retirement costs, such as housing and health care; and labor market conditions for older workers.

Unsurprisingly, scorecard findings show states struggle on worker retirement readiness when a poor labor market for older workers is combined with high costs for health care and housing. Take California, for example. With a three-out-of-10 score, the state ranks low due to a lack of potential retirement working income and low workplace retirement plan access, despite a relatively robust economy overall. South Carolina’s problem is somewhat different: Also scoring a three out of 10, the state’s generally sluggish economy brings low potential income during working years and retirement, even though housing and health care prices in the state may be lower than other markets.

According to the Scorecards project, the highest-ranking states include Wyoming, Alaska, Minnesota and North Dakota, due primarily to their relatively strong labor markets and lower retiree costs. During a webcast covering the findings, a panel of experts warned even these states show “weak outlooks in terms of potential retirement income for retirees.” Put another way, even workers in the top-ranked states have far less saved than they are likely to need to fund a comfortable retirement.

For example, North Dakotans, who scored an eight out of 10, only have an average defined contribution retirement account balance of only $27,700. This is “nowhere near the level of accumulated savings required to ensure self-sufficiency through retirement,” researchers explained.

Diane Oakley, executive director of the National Institute on Retirement Security, warned the retirement savings shortfall “has become increasingly important at the state level because policymakers know it can have a deep impact on strained state budgets. State programs must fill the gap and help Americans meet their most basic needs for food, shelter and medicine.”

NEXT: Policy interventions are needed 

The National Institute of Retirement Security says these state scorecards “are designed to serve as a tool for policymakers to identify areas of focus for state-based policy interventions that will strengthen Americans’ ability to financially prepare for retirement.” Researchers observe all states should take heed of this message, as no state ranks in the top group of states on all eight scorecard variables considered.

Indeed, for every state, “at least one indicator of potential retirement income is lower, one measure of retiree costs is higher, or one labor market variable is worse than in at least one other state." Beyond this, the data underlying the Scorecards project indicates key areas of trouble that affect most or all states. For instance, the highest ranking state for workplace retirement plan participation in 2012 had only 54% of private employees participating in a pension or 401(k). In addition, the number of states with more than 30% of older households experiencing a housing cost burden increased from 14 in 2000 to 31 in 2012.

Another expert called in to discuss the Scorecard project was Kathleen Kennedy Townsend, founder of the Georgetown University Center on Retirement Initiatives founder and former Maryland Lieutenant Governor.

“Out of crisis comes opportunity,” she said. “States now are trying different ways to make sure that middle class workers don’t fall into poverty once they stop working, which harms individuals and their families.” 

She said policymakers need to “get a better read on financial security issues in their state,” which should in turn lead to sensible policies to help Americans get back on track when it comes to preparing for retirement.

Hank Kim, executive director and counsel with the National Conference on Public Employee Retirement Systems, echoed those sentiments. He feels the Scorecard project “makes it abundantly clear that achieving financial security in retirement is an increasingly elusive goal for Americans.” 

Kim pointed specifically to the Secure Choice Pension initiative being rolled out in Illinois as a promising public policy approach to the retirement income crisis. The Secure Choice system will bring the “documented performance and efficiency of public sector pension management” to more private sector workers in the state, he said. Highlighting the scope of the retirement problem, Illinois still only scored a five out of 10 for average worker retirement readiness. Kim and the others interpreted this to mean both public policy and private employer action is required to fully fix the problem. 

These State Financial Security Scorecard project was conducted with support from AARP. The full state-by-state ranking is presented here.