You'll often hear that it's important to consistently save in an IRA or 401(k) so you can carry a large pile of savings with you into retirement. But it's hard to prioritize retirement plan contributions when you have a mortgage loan to pay, kids to feed, and medical bills to cover.
If you're nearing retirement with a nest egg worth $100,000, you're reasonably on par with the average 60-something today. Americans in their 60s have an average retirement savings balance of $112,500, reports Northwestern Mutual.
Unfortunately, though, you may not get a ton of annual income out of a $100,000 nest egg. So it's important to do what you can to supplement your income as needed.
Breaking down a $100,000 savings balance
When you see the number $100,000, it reads like a big one. But remember, that money has to last throughout your retirement. And your retirement could easily end up being 20 or 25 years long.
Financial experts have long suggested withdrawing from retirement savings at a rate of 4% per year to help ensure that money doesn't run out. But at 4%, a $100,000 nest egg only gives you $4,000 of annual income.
Now, you'll most likely have Social Security on top of that. And the average monthly benefit today is about $1,850. By the time you retire, it might be even higher. So that's a good amount of income right there.
But all told, a $100,000 retirement savings balance isn't a lot of money. So if that's what you're looking at retiring on, you may need to make an effort to work as a senior, and get creative with your home.
Your retirement isn't necessarily doomed
A $100,000 retirement savings balance is far better than having $0 to your name. If you're willing to continue working in some capacity and are able to monetize your home at the same time, you may find that you're able to live quite comfortably as a retiree.
Let's talk about the former first. It used to be that working in retirement would mean doing things like taking a boring desk job or committing to bagging groceries at a supermarket three days a week. Thanks to the gig economy, working in retirement now looks very different.
You could take a hobby you love, like crafting, and turn it into an income source. Or you could do something like catering or pet care if you enjoy doing that.
Meanwhile, if you own a home as a retiree, perhaps you have an opportunity to turn it into an income source. Rent out a finished basem*nt or garage if you no longer need the space. Or if you have a two-car driveway and only one car, rent one of your spaces out.
You can even rent out portions of your home for storage if you don't want someone living under your roof. There are many options to consider.
Retiring on $100,000 isn't ideal. But it's not a terrible thing, either -- especially if you're willing to continue working in some capacity and get creative with your living space.
Of course, if you want to set yourself up to retire with more than $100,000, start early -- ideally in your 20s -- and aim to invest aggressively by loading up on stocks in your brokerage account. But if you've already missed that boat, don't despair, because all certainly isn't lost.
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FAQs
“With a nest egg of $100,000, that would only cover two years of expenses without considering any additional income sources like Social Security,” Ross explained. “So, while it's not impossible, it would likely require a very frugal lifestyle and additional income streams to be comfortable.”
What is a good retirement figure? ›
The first thing to decide is your desired retirement income. How much pension do you need to live comfortably? For a quick estimate, try the '50-70' rule. This suggests that you should aim for an annual income that is between 50% and 70% of your working income.
What is considered a good retirement amount? ›
10x your annual salary by 67
To fund an “above average” retirement lifestyle—where you spend 55% of your preretirement income—Fidelity recommends having 12 times your income saved at age 67, which is the normal Social Security retirement age.
What is an excellent retirement income? ›
A good monthly retirement income is typically 80% of pre-retirement income; advisors often suggest a range between 70% and a more conservative 90%. Median income for households headed by someone over 65 was $50,290, or $4,191 per month, in 2022 according to the U.S. Census Bureau. U.S. Census Bureau.
How much income will $100,000 pay you in retirement? ›
After analyzing many scenarios, we found that 75% is a good starting point to consider for your income replacement rate. This means that if you make $100,000 shortly before retirement, you can start to plan using the ballpark expectation that you'll need about $75,000 a year to live on in retirement.
Is $100000 a year good for retirement? ›
While this is a simplistic example, it does show that it's possible to retire with $100,000 a year—though it may require working a few years longer than anticipated or ramping up your savings early in your career.
What is the 70% rule for retirement? ›
The 70% rule for retirement savings says your estimated retirement spending will be 70% of your pre-retirement, post-tax income. Multiplying your post-tax income by 70% can give you an idea of how much you may spend once you retire.
What is a good average monthly retirement income? ›
The average retirement income for U.S. adults 65 and older is $75,020. The median income for that age group is $50,290, according to data from the Census Bureau and Bureau of Labor Statistics. On a monthly basis, the average income for U.S. adults 65 and older is $6,252. The median monthly income is $4,191.
What is the average 401k balance for a 65 year old? ›
What is the average Social Security check? ›
Social Security offers a monthly benefit check to many kinds of recipients. As of December 2023, the average check is $1,767.03, according to the Social Security Administration – but that amount can differ drastically depending on the type of recipient. In fact, retirees typically make more than the overall average.
In a world in which the average monthly Social Security benefit is just over $1,792, it may seem like a pipe dream to live off $10,000 per month in retirement. But the truth is that with some preparation, dedication and resolve, many Americans can reach this impressive level of retirement income.
What is the $1000 a month rule for retirement? ›
One example is the $1,000/month rule. Created by Wes Moss, a Certified Financial Planner, this strategy helps individuals visualize how much savings they should have in retirement. According to Moss, you should plan to have $240,000 saved for every $1,000 of disposable income in retirement.
Where can you retire with 100k? ›
10 countries where you can retire on just $100,000
- Costa Rica. Galyna Andrushko / Shutterstock. ...
- Portugal. Sean Pavone / Shutterstock. ...
- Mexico. IR Stone / Shutterstock. ...
- Morocco. Balate Dorin / Shutterstock. ...
- Panama. Cris Young / Shutterstock. ...
- Colombia. doleesi / Shutterstock. ...
- Ecuador. FOTOGRIN / Shutterstock. ...
- Peru.
For most individuals and small families, the answer to “Is $100,000 a good salary?” is a resounding “yes.” Cost of living and family size can affect how far $100,000 will go, but generally speaking, you can live comfortably on $100,000 a year.
What is the ideal retirement amount by age? ›
Key takeaways. Fidelity's guideline: Aim to save at least 1x your salary by 30, 3x by 40, 6x by 50, 8x by 60, and 10x by 67. Factors that will impact your personal savings goal include the age you plan to retire and the lifestyle you hope to have in retirement.
How long will $400,000 last in retirement? ›
Safe Withdrawal Rate
Using our portfolio of $400,000 and the 4% withdrawal rate, you could withdraw $16,000 annually from your retirement accounts and expect your money to last for at least 30 years. If, say, your Social Security checks are $2,000 monthly, you'd have a combined annual income in retirement of $40,000.
Is $500,000 enough to retire at 70? ›
The short answer is yes, $500,000 is enough for many retirees. The question is how that will work out for you. With an income source like Social Security, modes spending, and a bit of good luck, this is feasible. And when two people in your household get Social Security or pension income, it's even easier.
Is $1,000,000 enough to retire at 55? ›
If you hope to retire early with $1 million, it's certainly doable, but you should have a sound understanding of what your expenses and income in retirement will look like. Plan ahead and bring in an expert if needed so you can enjoy your retirement without any significant financial surprises.
