Bottom Line. With $100,000 you should budget for a retirement income of around $5,000 to $8,000 on top of Social Security, depending on how you have invested your money. Much more than this will likely cause you to run out of money within 25 – 30 years, which is potentially within the lifespan of the average retiree.
The rule of thumb is that to you'll need about 80 percent of your pre-retirement income to maintain your lifestyle in retirement, although that rule requires a pretty flexible thumb.
Living comfortably on $100,000 a year in retirement is certainly possible, but whether it's achievable depends on several factors, including your current age, your desired retirement age, your lifestyle, and your location.
Summary. If your annual spending amounts to $20,000, $100k will last you for five years. How much you need to retire depends on a number of factors, including retirement age, intended lifestyle, other income sources, and expected expenditures.
How much do people save for retirement? In 2022, about 46% of households reported any savings in retirement accounts. Twenty-six percent had saved more than $100,000, and 9% had more than $500,000. These percentages were only somewhat higher for older people.
The average retirement savings for all families is $333,940 according to the 2022 Survey of Consumer Finances. Taken on their own, those numbers aren't incredibly helpful. There are a variety of decent retirement savings benchmarks out there, but how much money other people have isn't one of them.
Financial planners often recommend replacing about 80% of your pre-retirement income to sustain the same lifestyle after you retire. This means that, if you earn $100,000 per year, you'd aim for at least $80,000 of income (in today's dollars) in retirement.
The average American spends $4,345 per month in retirement, according to the Bureau of Labor Statistics. That's $52,141 per year.
“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.”
If you earned around $50,000 per year before retirement, the odds are good that a $300,000 retirement account and Social Security benefits will allow you to continue enjoying your same lifestyle. By age 55 the median American household has about $120,000 saved for retirement, and about $212,500 in net worth.
One well-known method is the 80% rule. This rule of thumb suggests that you'll have to ensure you have 80% of your pre-retirement income per year in retirement. This percentage is based on the fact that some major expenses drop after you retire, like commuting and retirement-plan contributions.
If you retire with no money, you'll have to consider ways to create income to pay your living expenses. That might include applying for Social Security retirement benefits, getting a reverse mortgage if you own a home, or starting a side hustle or part-time job to generate a steady paycheck.
First, the earlier you retire the longer your money has to last. If you retire at age 40 and expect to live to age 90, for example, you'll need to save enough money to last a half-century. Waiting until you're 65 to retire, on the other hand, can ease some of the pressure to save.
Key Takeaways
Depending on the year you were born, postponing taking Social Security until age 66 or 67 will allow you to receive full benefits. Men retire at an average age of 64.6 years, while women remain at work until age 62.3. Retirees at the age of 65 qualify for Medicare benefits.
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.
As of 2022, the median household income in the U.S. was $74,580, according to the U.S. Census Bureau. Assuming a middle-class retiree earned this salary and retired at age 65 — specifically 65 and 11 months — their Social Security benefit would be $1,867 per month.
Nearly 2 in 5 Retirees Have No Retirement Savings
The survey found that about 37% of retirees say they have no retirement savings, up from 30% in 2022, and only about 12% have at least the recommended $555,000 in savings.
At its most basic, net worth is everything you own minus everything you owe. To calculate your net worth, tally the value of all or your assets, including bank accounts, investments, and perhaps the value of your home or vacation home.
When it comes to saving for retirement, the common advice is to aim for $1 million. This number has been cited so often that investors may feel as if they're failing if they don't reach it. But that shouldn't be the case. In fact, statistically, just 10% of Americans have saved $1 million or more for retirement.
If you're an average earner, Social Security will only replace about 40% of your former income. So if you retire without any savings, you might end up effectively taking a 60% pay cut. At the start of 2023, the average Social Security benefit was $1,827 a month. That's an annual income of a little less than $22,000.
Without enough retirement savings, you will likely need to make drastic lifestyle changes. This could mean selling a home, if you have one, or moving to a lower cost of living area. It could also mean giving up life's little luxuries you've come to enjoy.