Can you retire on $300,000?
This articles explores how long $300k will last in retirement, the tax implications worth considering, and whether it makes sense to seek professional financial advice.
$300,000 can last for roughly 26 years if your average monthly spend is around $1,600.
Social Security benefits help bolster your retirement income and make retiring on $300k even more accessible.
It’s often recommended to have 10-12 times your current income in savings by the time you retire.
If you want to retire early with $300k, you may need to make some adjustments, as your monthly income will be significantly reduced.
Consulting with a trusted financial advisor is the best next step to ensure your retirement savings align with your goals.
Can you retire on $300k?
The short answer to this question is "Yes". If you’ve managed to save $300k successfully, there’s a good chance you’ll be able to retire comfortably, though you will have to make some compromises and consider your plans carefully if you want to make that your final figure. You should consider:
Your planned retirement age – How will this stretch your $300k? Will it be possible to align with the 4% rule? Have you built any flexibility into this age in case something happens that you didn’t plan or contend for?
Your planned retirement lifestyle – Will any costly elements of your life as a retiree eat into your $300,000? Or will you live more relaxed, calm and moderately during your golden years?
Your other sources of income – Will you receive additional benefits to boost your total figure, such as gifted support from a family member or Social Security payments? Have you remembered to factor these things in?
The cost of living in your intended retirement location – From place to place, the cost of living can change a lot. Some states provide retirees with financial incentives and tax breaks, while others do not.
How long will $300k last in retirement?
Let's say your annual spending in retirement is $20,000, equivalent to $1,666 monthly. In this scenario, $300,000 can last for roughly 26 years.
The length of time that you can make $300,000 last as a retiree is best determined by looking at your intended retirement lifestyle and likely monthly and annual outgoings.
Assuming an average annual return of 6% before taxes and a 22% federal tax rate, the table below offers a detailed breakdown of how long $300k can last across various annual spending scenarios:
|Spending Per Year||Years It Will Last||Total Interest||Total Withdrawal||Total Taxes|
To ensure your retirement savings align with your goals and lifestyle, it's highly recommended to consult with a financial advisor who can provide personalized guidance tailored to your specific needs.
Can you retire with $300k and Social Security?
As mentioned, if you have $300,000 in savings, you are likely in a comfortable position for retirement if you plan appropriately. Adding Social Security benefits here can only help bolster your retirement income and make retiring on $300k even more accessible.
According to the US Government, in 2022, the average monthly Social Security benefit was $1,825. However, how much you receive varies from person to person.
It’s important to note that while you can retire at any age, your full benefits only become available once you reach “full retirement age.” For those born during or after 1960, this is 67. You can start receiving Social Security retirement benefits as early as 62. However, these will be at a reduced amount.
How much tax you pay on Social Security benefits will depend on your home state, with some states opting not to tax the benefit whatsoever.
How much money do you need to retire?
Financial advisors often recommend having savings equivalent to 10-12 times your current income by the time you retire, providing a reasonable level of confidence in your financial security.
However, this varies depending on how much you intend to spend. Let's say you want to retire at 60 with a life expectancy of 85, you'll need to cover 25 years. To guarantee $20,000 yearly ($1,666 monthly) over 25 years, you'll need roughly $288,462 in total retirement savings.
Considering an average annual return of 6% before taxes and a 22% tax on interest earnings, the table below provides a breakdown of the initial savings required, total taxes paid, and total interest earned for various spending scenarios.
|Annual Spending||Required Initial Savings||Years Covered||Total Taxes||Total Interest|
It's important to note that individual financial circumstances can vary significantly, making answering the question "How much money do I need to retire" a bit difficult. Factors like healthcare costs, inflation, and unexpected expenses play crucial roles in long-term financial planning.
If you want some guidance on how to plan for your financial future, talking to an expert is your best bet. At Unbiased we connect people with expert, trusted financial advisors to help them plan for retirement. Find your financial advisor and get a free first consultation here.
Can I retire at 50 with $300k?
Most of us have, at one time or another, played around with the idea of retiring early. But is it viable for you to retire at 50 on $300,000? The answer depends on how much you’d be comfortable receiving as a monthly income.
Let’s walk through the scenario. With $300,000 planned for your use as a retiree, a retirement age of 50, and an anticipated life expectancy of 85 years, you need that money to last you 35 years. This should mean that your yearly income is around $8,571, and your monthly payment is around $714.
Though $714 might be enough for some, it won’t make ends meet for others. If you decide to do the math based on your unique circumstances, don’t forget to factor in:
Any other types of retirement income you haven’t added to the total yet.
Any plans you have to invest, replenish and grow your $300k during retirement.
Any significant expenses that would impact the viability of living on $714 per month.
What are the income taxes applicable to retirees with $300k?
Retirement income taxes on $300k aren’t massively high, especially if you’re spreading distributions of that money across 20–25 years or more.
Without adding complexities like inflation and the fluctuating money market into the mix, $300,000 over 25 years of payments equates to $12,000 a year. This would put you in the second-lowest federal income tax bracket, meaning you’d be charged a marginal tax rate of 12 percent. You also need to account for:
Other sources of income like Social Security, 85 percent of which could be taxed depending on your overall income and filing status.
How you’re receiving your retirement income, be it a pre-tax 401(k) or an after-tax Roth IRA.
The state-level income taxes apply where you live. This will vary depending on where you live.
What is the average retirement saving among working-age Americans?
When researching and hoping to determine your ideal retirement savings amount, you’ll soon run into many figures stated to be the average for US adults. These figures will differ from source to source, primarily due to the following three factors:
The age of the data and the impact, noted or unnoted, of the COVID-19 pandemic and high inflation rates.
Whether the data pool includes all Americans or solely Americans who have retirement savings in the first place, Federal Reserve data regarding household economics tells us that around 60 million working-age Americans either have nothing saved for retirement or aren’t keeping track of this figure.
Whether the data pool is giving an average across all ages or narrowing things down by age group, accounting for the fact that people save more for retirement as they get closer to retirement age.
You can certainly look to the averages for some ideas, and if you do, you’ll see that $300k is often considered above average and will likely put you in a good position. The Economic Policy Institute, for example, puts the national average at roughly $95,776 across all working ages.
Four tips for increasing your savings
There’s every chance you’d like to keep growing and increasing your retirement savings pot.
You may even think of aspects of retirement planning you hadn’t yet considered, and you may now have to re-adjust accordingly. If you’re in that position, wondering how to increase your savings, here are four tips to consider:
Make room for better budgeting – If there’s room to improve how you save and spend each month, now’s the time to commit to those adjustments.
Speak with a financial advisor – Even when you think you’ve exhausted all possibilities, an advisor can usually introduce you to new routes to financial success. You can find a qualified, SEC-regulated financial advisor here.
Seek out the right places for your savings – Don’t leave your retirement savings pot sitting in a low-interest account. Get the most out of your money.
Invest spare cash with an eye on the future – Avoid spending what’s left over at the month’s end on unnecessary short-term enjoyment. Invest, instead.
The bottom line
You're already in a good position if you’re putting $300k towards your retirement. If you have some time to further increase this amount between now and your later years of rest and relaxation, you’re in an even better position. You can do much to raise that $300,000 figure, even in a year or two.
For some advice on how to do just that or any other aspect of retirement planning that you might need help with, an experienced financial advisor is well-placed to assist. Matching with a financial advisor perfectly suited to meet your needs is just a few clicks away. Get started here.
Senior Content Writer
Rachel is a Senior Content Writer at Unbiased. She has nearly a decade of experience writing and producing content across a range of different sectors.