The average retirement savings for a person about to retire are approximately, $225,000, equal to $450,000 combined for a couple that has saved equally. Following the conservative rule of thumb and withdrawing 4% a year will provide this couple with another $1,500 monthly or $18,000 a year.
Key Takeaways
Estimating your retirement expenses, including healthcare costs until you become eligible for Medicare at 65, is crucial to ensuring financial stability. Experts suggest saving eight to ten times one's annual income by age 62, but many Americans must catch up, making careful planning necessary.
According to data from Edward Jones, by age 62 you should have $435,000 to $530,000 in savings. Since your net worth is more than just your savings, you can add to that base amount (and subtract liabilities) based on your lifestyle and what you think it'll look like in retirement.
Is $1.5 million enough to retire at 62? Yes, you can retire at 62 with one million five hundred thousand dollars. At age 62, an annuity will provide a guaranteed income of $95,250 annually, starting immediately for the rest of the insured's lifetime.
Your net worth is what you own minus what you owe. It's the total value of all your assets—including your house, cars, investments and cash—minus your liabilities (things like credit card debt, student loans, and what you still owe on your mortgage).
The $1,000 per month rule is designed to help you estimate the amount of savings required to generate a steady monthly income during retirement. According to this rule, for every $240,000 you save, you can withdraw $1,000 per month if you stick to a 5% annual withdrawal rate.
Just 16% of retirees say they have more than $1 million saved, including all personal savings and assets, according to the recent CNBC Your Money retirement survey conducted with SurveyMonkey. In fact, among those currently saving for retirement, 57% say the amount they're hoping to save is less than $1 million.
Here's how the maximum Social Security retirement benefit breaks down in 2024: Retired at earliest retirement age (62): $2,710 per month. Retired at full retirement age: $3,822 per month. Retired at age 70: $4,873 per month.
If you retire with no money, you'll have to consider ways to create income to pay for 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.
By the time you reach your 30th year of retirement, your portfolio would need to generate around $125,000 in interest to meet your spending needs and leave the principal untouched.
The average American spends $4,345 per month in retirement, according to the Bureau of Labor Statistics. That's $52,141 per year. Retirement planning means making sure you can afford your lifestyle after you stop working.
“It gives you higher monthly Social Security benefits, allows you to wait to go on Medicare for health insurance, allows your 401(k) to build if you have that, allows you time to pay off your mortgage on your house and reduces the number of years you have to support yourself with your accumulated retirement assets.”
According to the 2020 Census, the yearly average retirement income for couples is less than $101,500. However, it's important to note that the average income and median income are different. Median retirement income for a couple is lower – at only $72,800.
For example, if you plan to travel frequently in retirement, you may want to aim for 90% to 100% of your pre-retirement income. On the other hand, if you plan to pay off your mortgage before you retire or downsize your living situation, you may be able to live comfortably on less than 80%.
“Retiring on $2,000 per month is very possible,” said Gary Knode, president at Safe Harbor Financial. “In my practice, I've seen it work. The key is reducing expenses and eliminating any market risk that could impact your savings if there were a major market downturn.
How long will $300,000 last in retirement? If you have $300,000 and withdraw 4% per year, that number could last you roughly 25 years. That's $12,000, which is not enough to live on its own unless you have additional income like Social Security and own your own place. Luckily, that $300,000 can go up if you invest it.
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In 2024, Americans stated that the average net worth they consider “wealthy” is $2.5 million.
When you consider what you own, only account for things that have significant value (like a car or house) and do not depreciate (lose their value) too quickly. Things like your TV and furniture aren't often included in your net worth because they lose their value relatively quickly.
Your home is likely your most valuable asset, and the value that you assign to it will have a great impact on your net worth calculation. A qualified real estate professional can give you an estimate of your home's value, or you can research online real estate aggregators such as Trulia or Zillow.
If your spouse dies, do you get both Social Security benefits? You cannot claim your deceased spouse's benefits in addition to your own retirement benefits. Social Security only will pay one—survivor or retirement. If you qualify for both survivor and retirement benefits, you will receive whichever amount is higher.
Starting in the month you hit your full retirement age, there is no longer an earnings limit. Your benefits will no longer be reduced regardless of how much income you have.
You would not be required to file a tax return. But you might want to file a return, because even though you are not required to pay taxes on your Social Security, you may be able to get a refund of any money withheld from your paycheck for taxes.