It's important to fund an IRA or 401(k) throughout your career so you can retire with a nice chunk of money. But according to Northwestern Mutual, the average retirement savings plan balance across workers of all ages is $89,300. And among people in their 60s who are likely on the cusp of retirement, the average balance is $112,500.
As such, if you're heading into retirement with a nest egg worth $100,000, your savings may be roughly in line with what the average near-retiree has socked away. But that doesn't mean that a $100,000 balance will get you very far.
Why $100,000 isn't so great
A $100,000 savings balance could do a lot for you in the context of your emergency fund. But in the context of a retirement nest egg, it's unfortunately just not a lot of money.
For many years, financial experts thought that tapping retirement savings to the tune of 4% a year was a good bet. Due to increased life expectancies and other factors, many experts are now saying that a lower withdrawal rate, like 3%, may be more appropriate.
But even if we stick with 4%, for a $100,000 nest egg, that results in $4,000 of annual income a year. Meanwhile, the average Social Security benefit as of earlier this year was $1,827 a month. So if that's the benefit you're in line for and you're only able to get $4,000 a year out of your nest egg, you're looking at an annual income of about $26,000. It's hard to live comfortably on that even if your home is paid off and you're used to being frugal.
Set yourself up for a much larger nest egg
A big reason some people wind up with limited retirement nest eggs is that they don't start saving and investing early on in their careers, but rather, wait until their 40s or 50s to begin growing long-term wealth. But if you're able to start young, you may find that you're able to easily retire with far more than $100,000, even if your monthly contributions to your IRA or 401(k) plan are quite modest.
Let's say you start funding your retirement savings at age 27 and retire at age 65. Let's also assume you're only able to set aside $200 a month during that time.
The stock market has, over the past 50 years, delivered an average annual 10% return, as measured by the S&P 500's performance. So if you're able to snag that same return, you'll end up with almost $874,000. That gives you an annual income of about $35,000 from your savings alone if you follow the 4% withdrawal rule. Add in another $22,000 or so from Social Security, and you could be in pretty decent shape.
Coming into retirement with $100,000 in savings is far better than not having any savings at all. But the reality is that $100,000 just isn't a ton of money for what could easily be 20 years of retirement or more. So if you want to avoid feeling cash-strapped later in life, start funding your IRA or 401(k) as early as you can.
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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.”
Can I retire with 100k and Social Security? ›
Add in another $22,000 or so from Social Security, and you could be in pretty decent shape. Coming into retirement with $100,000 in savings is far better than not having any savings at all. But the reality is that $100,000 just isn't a ton of money for what could easily be 20 years of retirement or more.
How much money does a 70 year old couple need to retire? ›
How Much Should a 70-Year-Old Have in Savings? Financial experts generally recommend saving anywhere from $1 million to $2 million for retirement.
How many Americans have $100,000 in savings? ›
How many Americans have $100,000 in savings? About 26% of U.S. households had more than $100,000 in savings in retirement accounts as of 2022, according to USAFacts, a nonprofit organization that analyzes data from the Federal Reserve and other government agencies.
Can you live off 100k for the rest of your life? ›
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.
How long does 100k last in retirement? ›
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.
What is the average Social Security check at age 62? ›
According to the SSA's Office of the Actuary, retired-worker beneficiaries who were 62 years old in December 2023 received an average check of $1,298.26. As for 67-year-old retired-worker beneficiaries, the average payout was a more robust $1,883.50.
What is considered a good monthly retirement income? ›
Many retirees fall far short of that amount, but their savings may be supplemented with other forms of income. According to data from the BLS, average 2022 incomes after taxes were as follows for older households: 65-74 years: $63,187 per year or $5,266 per month. 75 and older: $47,928 per year or $3,994 per month.
How much do most Americans retire with? ›
NerdWallet reports that those between 65 and 74 hold an average of $609,230 in retirement savings, with a median of $200,000. This figure is still far below the $1 million target, and many retirees need to adjust their lifestyle expectations significantly.
What is the average 401k balance for a 65 year old? ›
Average and median 401(k) balances by age
| Age range | Average balance | Median balance |
|---|
| 35-44 | $76,354 | $28,318 |
| 45-54 | $142,069 | $48,301 |
| 55-64 | $207,874 | $71,168 |
| 65+ | $232,710 | $70,620 |
2 more rowsMar 13, 2024
Many retirees with little to no savings rely solely on Social Security as their main source of income. You can claim Social Security benefits as early as age 62, but your benefit amount will depend on when you start filing for the benefit. You get less than your full benefit if you file before your full retirement age.
What is it like to retire on almost nothing? ›
Roughly one in seven Social Security recipients ages 65 and older depend on their benefits for nearly all their income, according to an AARP analysis. Unable to maintain the lifestyle of their working years, they trim their already trim budgets, move into smaller homes, or rely on the kindness of relatives to get by.
How many people live paycheck to paycheck? ›
How Many Americans Are Living Paycheck to Paycheck? A 2023 survey conducted by Payroll.org highlighted that 78% of Americans live paycheck to paycheck, a 6% increase from the previous year.
How much Social Security will I get if I make $100,000 a year? ›
If your pay at retirement will be $100,000, your benefits will start at $2,026 each month, which equals $24,315 per year. And if your pay at retirement will be $125,000, your monthly benefits at the outset will be $2,407 for $28,889 yearly.
Is 100k considered wealthy? ›
Earning more than $100,000 per year would put you well ahead of the median American household, which brings in $74,784 as of 2021. Assuming you're an individual without dependents, that salary would qualify you as upper class, according to three different definitions (Brookings, Urban Institute and Pew Research).
What is a good income to survive? ›
While California ranks third-most expensive for a single adult to live comfortably at $113,652, it only ranks fifth-most expensive for two working adults raising two children. The total family income should be at least $276,724 in the latter case.
What is the maximum income you can make while on Social Security? ›
If you will reach full retirement age in 2024, the limit on your earnings for the months before full retirement age is $59,520. Starting with the month you reach full retirement age, there is no limit on how much you can earn and still receive your benefits.
Is $300000 enough to retire on with Social Security? ›
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.
Do retired millionaires get Social Security? ›
The amount a person receives in Social Security benefits is not directly affected by their current income or wealth. Therefore, even if someone is a millionaire or billionaire, they can still receive Social Security benefits if they have a qualifying work history.
Can I retire on 500k plus Social Security? ›
Can I retire on 500k plus Social Security? As we have established, retiring on $500k is entirely feasible. With the addition of Social Security benefits, this becomes even more of a possibility. In retirement, Social Security benefits can provide an additional $1,900 per month, on average.
