There's no one-size-fits-all number in your bank or investment account that means you've achieved this stability, but $100000 is a good amount to aim for. For most people, it's not anywhere near enough to retire on, but accumulating that much cash is usually a sign that something's going right with your finances.
In other words, how much do you need to retire comfortably? By now, you've likely heard the conventional wisdom: that you should aim to have a nest egg of $1 million to $1.5 million. Or that your savings should amount to 10 to 12 times your current income. This includes everything (house, IRA, cash, etc.).
For many years, a common objective for individuals was to save a nest egg of at least $1 million in order to live comfortably in retirement. Reaching that sum would, in theory, allow the individual to sustain themselves on their retirement investment income generated annually.
According to a 2024 survey from Northwestern Mutual, most Americans believe they need an average of $1.46 million to retire comfortably. But the actual average retirement savings? Just $88,400. That gap shows many Americans are far from feeling financially secure about their golden years.
A good rule of thumb is to grow your nest egg to a level where you can live off a 4% annual withdrawal rate. For example, if your nest egg is $1 million, you should be able to spend $40,000 each year and never run out of money.
Rich retirees: In the 90th percentile, with net worth starting at $1.9 million, this group has much more financial freedom and is able to afford luxuries and legacy planning.
If you retire at 62, you can reasonably expect to live to 82 if you're a man or almost to 85 if you're a woman, according to data from the Social Security Administration. That means your $1.5 million portfolio needs to last at least 20 years, but it can also grow. Time is every investor's friend.
One example: the 4% rule, which assumes that someone who withdraws 4% of their nest egg in their first year of retirement, then adjusts that amount annually for inflation, will have enough money to last 30 years.
There are guidelines to help you set one if you're looking for a single number to be your retirement nest egg goal. Some advisors recommend saving 12 times your annual salary. 12 A 66-year-old $100,000-per-year earner would need $1.2 million at retirement under this rule.
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.
If you're naturally frugal and you plan to live a low-key, minimalist lifestyle in retirement then $150,000 might serve you well. On the other hand, if you'd like to enjoy a more lavish lifestyle or you have a serious health issue that results in high out-of-pocket costs, $150,000 may not go that far at all.
The 4% rule is a popular retirement withdrawal strategy that suggests retirees can safely withdraw the amount equal to 4% of their savings during the year they retire and then adjust for inflation each subsequent year for 30 years.
$100,000 is a major savings milestone, but it's unlikely to be enough to get you through retirement—especially in the US. If you have no debt, plan to keep a part-time or consulting job, and have enough in Social Security benefits, it's possible to make $100,000 work for a short retirement timeframe.
Probably 1 in every 20 families have a net worth exceeding $3 Million, but most people's net worth is their homes, cars, boats, and only 10% is in savings, so you would typically have to have a net worth of $30 million, which is 1 in every 1000 families.
If you're raising a family of four in 2024, you'll need a six-figure income in 26 U.S. states. That's more than half of America where you'll need to earn $100,000 or more annually to budget for and comfortably raise a family.
While $1 million may be one goal for nest eggs, in 2045 you might need almost $2.2 million to have the same purchasing power that $1 million did just a few years ago (assuming 3% annual inflation.).
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.
According to estimates based on the Federal Reserve Survey of Consumer Finances, a mere 3.2% of retirees have over $1 million in their retirement accounts. The number of those with $2 million or more is even smaller, falling somewhere between this 3.2% and the 0.1% who have $5 million or more saved.
Monthly Income From $1.5 Million Retirement Fund
If you retire at 62 with $1.5 million saved, applying the 4% rule suggests an annual withdrawal of $60,000 or about $5,000 per month. This rule assumes an annual withdrawal rate of 4%, adjusted for inflation, to sustain your savings for 30 years or more.
The ideal monthly retirement income for a couple differs for everyone. It depends on your personal preferences, past accomplishments, and retirement plans. Some valuable perspective can be found in the 2022 US Census Bureau's median income for couples 65 and over: $76,490 annually or about $6,374 monthly.
If you retire with $500k in assets, the 4% rule says that you should be able to withdraw $20,000 per year for a 30-year (or longer) retirement. So, if you retire at 60, the money should ideally last through age 90. If 4% sounds too low to you, remember that you'll take an income that increases with inflation.
Middle class is defined as income that is two-thirds to double the national median income, or $47,189 and $141,568. By that definition, $100,000 is considered middle class. Keep in mind that those figures are for the nation. Each state has a different range of numbers to be considered middle class.
How Much More Social Security Do the Richest Retirees Get Compared to the Average American? Rich retirees get more Social Security than those who didn't earn as much throughout their career. And that makes sense since benefits are based on your earnings history.
The top 10% of earners have an average net worth of $2.65 million. Even if you're squeaking into the upper class (the 80-90% range), you're looking at about $793,000. Moving down to the middle class, things get a bit more varied. The upper-middle class folks have an average net worth of around $300,800.