Saving enough to retire comfortably can be incredibly challenging. Around 65% of Americans have less than $100,000 saved for retirement, according to a report from the Employee Benefit Research Institute. And of that group, more than one-quarter have less than $1,000 socked away.
If your retirement savings are falling short, it can be hard to catch up. But how much do you actually need to retire? If you reach retirement age with $100,000 in the bank, just how far will that money go?
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Stretching every dollar in retirement
Everyone's financial needs will be different, so how far $100,000 will go will largely depend on your lifestyle. Some retirees may spend that much in a year, while others could make it last longer.
A general rule of thumb to consider when planning for retirement is the 4% rule. According to this guideline, you can withdraw 4% of your total savings during the first year of retirement, then adjust each withdrawal after that to account for inflation. By sticking to this rule, your savings should last roughly 30 years.
The 4% rule isn't perfect, but it is a good benchmark to get an idea of roughly how much of your savings you can withdraw each year. According to the 4% rule, if you retired with $100,000 in savings, you could withdraw just about $4,000 per year in retirement.
It's nearly impossible for anyone to survive on $4,000 per year, but the majority of retirees will also be entitled to Social Security benefits. The average beneficiary receives around $1,543 per month, or around $18,500 per year, according to the Social Security Administration.
Unless you have access to a pension or other source of income in retirement, you may need to survive on your savings and Social Security alone. In this case, that amounts to around $22,500 per year in retirement income.
What if that's not enough?
While some retirees may be able to pay the bills with $22,500 per year, many people will need substantially more to live comfortably. Fortunately, there are a few things you can do to boost your retirement income.
One option is to hold off on claiming Social Security benefits. The longer you wait to claim (up until age 70), the more you'll receive each month. You can boost your benefits by up to 32% when you wait until age 70 to claim, which can amount to hundreds of dollars more per month.
If you still have some time before you retire, you may choose to pick up a second job and put that money toward your savings. You may also consider moving to a more affordable city or downsizing to a smaller home to save money. It may still be challenging to live on $22,500 per year no matter where you live, but reducing your expenses as much as possible can help your money go further.
Finally, you may choose to invest in dividend stocks to boost your retirement income. Dividend stocks are investments that pay a percentage of the stock price back to shareholders every year or quarter. For example, if a stock costs $100 per share and pays a 5% annual dividend, you'll receive $5 per year in dividend payments. That doesn't sound like much, but if you own hundreds of shares of stock, those payments can add up.
Of course, it's still important to invest wisely and not throw all your money behind one or two individual stocks. But when dividend stocks are part of a well-diversified portfolio, they can help increase your retirement income.
It's not easy to prepare for retirement, especially if you're falling behind on your savings. But no matter where you are financially, there are steps you can take to enjoy a more comfortable retirement.
FAQs
The bottom line. The biggest factors affecting how far your money will go if you retire on $100k are retirement age and retirement lifestyle. $100,000 is not the ideal figure to aim for as a retirement savings amount, especially if you have the time and ability to save more.
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.
What is a realistic amount of money for retirement? ›
By age 35, aim to save one to one-and-a-half times your current salary for retirement. By age 50, that goal is three-and-a-half to six times your salary. By age 60, your retirement savings goal may be six to 11-times your salary. Ranges increase with age to account for a wide variety of incomes and situations.
How many Americans have $500,000 in retirement savings? ›
Believe it or not, according to the 2022 Survey of Consumer Finances, only 9% of American households have saved half a million dollars or more for retirement. That's right, less than one in 10 families has reached this milestone. It's an impressive feat, but it also highlights the challenges many people face.
How many people have $1000000 in retirement savings? ›
You're not alone if your retirement account balances are far from the $1 million mark. While many people may aim for that goal, most don't reach it. Employee Benefit Research Institute (EBRI) data estimates that just 3.2% of Americans have $1 million or more in their retirement accounts.
What is the minimum wealth to retire? ›
For a 25-year retirement, you'd need just over $2 million in Hawaii — the most of all states by far. That's followed by Massachusetts, California and New York, along with 12 other states where you'd need at least $1 million saved up to retire.
How do people retire with no savings? ›
Individuals who have not saved for retirement and who still own homes can turn to their homes as a source of income. For some, this could mean renting a portion of their space as a separate apartment. Another option is to take a reverse mortgage on a home, although doing so can be costly and complicated.
How much money do most people retire with? ›
The average retirement savings for all families is $333,940, according to the 2022 Survey of Consumer Finances. The median retirement savings for all families is $87,000.
What age should you have 100K saved? ›
“By the time you're 40, you should have three times your annual salary saved. Based on the median income for Americans in this age bracket, $100K between 25-30 years old is pretty good; but you would need to increase your savings to reach your age 40 benchmark.”
How much do I need to retire if my house is paid off? ›
If you pay off your mortgage and debts before retiring, you could live on smaller portion of your preretirement income. Based on this rule, if your annual preretirement income was $100,000, you need $80,000 a year in retirement to cover your expenses.
Average Monthly Retirement 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.
What is the average social security check? ›
According to data from the Social Security Administration, as of January 2024, the average monthly retirement benefit payment was $1,909.01, which comes to about $22,322 per year.
Is 100k a lot in savings? ›
Having $100,000 in your savings account is an impressive achievement, and it's far more than what most people have saved. The median savings account balance is $1,200, according to a study last year by The Motley Fool Ascent.
Is $100,000 too much to have in a savings account? ›
For anything further out than that, such as retirement, investing is the better choice for the higher returns it offers. If you're going to need $100,000 or more in the near future, then it's fine to have that much money in your savings account.
How long will $100 000 last in retirement? ›
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.
Can I live off the interest of $100,000? ›
Interest on $100,000
If you only have $100,000, it is not likely you will be able to live off interest by itself. Even with a well-diversified portfolio and minimal living expenses, this amount is not high enough to provide for most people.
How much do you really need saved for retirement? ›
Someone between the ages of 36 and 40 should have 1.9 times their current salary saved for retirement. Someone between the ages of 41 and 45 should have 2.8 times their current salary saved for retirement. Someone between the ages of 46 and 50 should have 3.9 times their current salary saved for retirement.
