Retire with $100k: a complete guide
This article covers everything you need to know about retiring with 100k, including how viable that choice is and how long that money will last.
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.
Figures suggest that the average American has savings over $100,000 in savings when they reach traditional retirement age.
With $100,000 at retirement age, you will likely have negligible retirement income taxes.
If you want to figure out your retirement finances, you should speak with a trusted financial advisor.
Can you retire on $100k?
Retiring with $100k poses a lot of challenges. For starters, should your annual spending come in at $20,000, your $100k in retirement savings would only last for five years.
However, it is worth noting answering the question "Can I retire on $100k?" depends on a host of influencing factors, including:
Your hopeful retirement age.
Your intended retirement lifestyle.
If you have any other sources of income available to you in retirement.
Any expenditures of a significant nature during your retirement.
The cost of living and the possible impact of inflation by the time you retire.
Your entitlement to other retirement benefits like Social Security.
The older you are when you retire, the less money you’ll need overall. The more frugal your retirement lifestyle, the less you’ll worry about covering your expenditures. Especially if your income will be boosted by, say, Social Security.
Conversely, if you have health problems already and anticipate that these will cost you in your later years, you’ll probably see your money failing to go as far as it does on paper.
How long will $100k last in retirement?
Let's say your annual spending in retirement is $20,000, equivalent to $1,666 monthly. In this scenario, $100,000 can last for only five years.
If you decide to reduce your annual spend, you can make your money stretch a bit further:
|How long $100k will last
The “How long will my money last in retirement?” question is best followed up with examples, as the answer can vary significantly from person to person. With scenarios to pull from and match up to your own, developing a likely timeframe in your own situation should be easier. Here are three different examples to compare:
You plan to retire at age 55 and enjoy a fancy, expensive retirement lifestyle. Setting your life expectancy at 80, you’ll need funds to cover you for 25 years, and you’ve calculated you’ll need at least $1,800 a month to cover your various living costs. This would require you to have around $540,000 in retirement savings, a figure far removed from $100,000.
You plan to retire at age 68, have paid off your mortgage and all significant financial burdens, and want a simple, frugal retirement lifestyle. Setting your life expectancy at 80, you’ll need funds to cover you for 12 years, and you’ve calculated you’ll need $900 a month to cover your living expenses. This would require around $129,600 in retirement savings, putting you far closer to the target if you currently have $100,000.
You plan to retire at age 60, but when you do, you want to start a part-time gardening business to give yourself some supporting income (and indulge in a hobby you’ve always enjoyed). Setting your life expectancy at 80 and accounting for a normal retirement lifestyle, you’ll need to cover 20 years, and you’re hoping to supplement your earned gardening income with about $400 a month. This will require $96,000 in retirement savings, just under the $100,000 figure.
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.
What is the average retirement saving?
This is one of the first questions most Americans ask when determining whether their retirement savings are adequate. You may also wonder if your retirement savings goals are realistic. A sense of the averages allows you to figure out where you fit in and what you might need to change.
According to Federal Reserve data from 2019, the numbers are as follows for different age groups:
|Average retirement savings balance
|Median retirement savings balance
|35 to 44
|45 to 54
|55 to 64
|65 to 74
Though these figures seem to suggest that the average American usually has savings over $100,000 when they reach traditional retirement age, the Federal Reserve only took their data from a pool of people who had retirement savings in the first place. As per The Penny Hoarder, citing 2021 Federal Reserve data, about 58 million working US adults don’t have any money saved for retirement.
What are the income taxes applicable to retirees with $100k?
With $100,000 at retirement age, you will likely have negligible retirement income taxes.
Federal income tax in the US is progressive across different brackets. If you’re hoping to spread $100k across 20 years of retirement, that’ll only be around $5,000 a year, putting you in the lowest bracket and seeing you taxed at 10 percent. The top income tax rate, comparatively, is 37 percent.
Don’t forget you’ll also have to account for state-level income tax. Some states have a graduated system, similar to the federal government, but others charge a flat rate that could see you paying more tax than anticipated.
Can you retire at 50 with $100k?
It’s certainly possible, but it won’t be easy. Suppose you hope to retire at 50 with $100k in retirement savings and plan for a life expectancy of 80 years. In that case, you’ll need that money to keep you afloat for 30 years, equating – without accounting for any other possible sources of retirement income such as Social Security – to $278 a month.
This figure could be higher if you do get income from other sources. Or if you can invest some of that money as a retiree and increase your wealth over time. But it could also be lower if, for instance, you have to cover more medical bills than expected.
Some people retire at 50 without a considerable savings pot by returning to work in some form after they retire, even if it’s part-time or in a completely different industry.
Can you retire at 60 with $100k?
Taking the same calculations as if you plan to retire at 50, suppose you plan to retire at 60 with $100k in savings, and you need this money to last for now 20 years until the age of 80. Without including income from other sources, this would leave you with a monthly income of just $417.
While this figure will be higher if you factor in income from other sources – such as Social Security, which, in 2022, was approximately $1,825 a month – this figure is still quite low.
If you choose to retire at 50 or 60, anything that will provide some supplementary ongoing income can be helpful in terms of balancing the books and increasing a fairly stringent budget for your golden years. Particularly when you remember that inflation and cost of living increases between now and your retirement age could further reduce how far your money can go.
Four tips for increasing your savings
If you’re hoping to retire on $100k but are still some years off your planned retirement age, consider how to increase your savings in your remaining working years (and, perhaps, beyond these years via passive income if you play your cards right). Look into:
Automated savings – Setting up automatic payments into savings once a week or once a month can ensure that you’re building your pension pot consistently. Spare pennies are banked to add up over time rather than wasted in the moment.
Improving your financial literacy – If you lack financial literacy, connecting with an experienced advisor and discussing everything could transform your approach to money and budgeting.
Investing – Suitable investment opportunities are available whether you’re in your 40s, your 50s or your 60s. Investing sensibly in stocks and shares, or even in something tangible like real estate, could significantly increase your savings.
Opening accounts designed to grow – From IRAs to 401(k)s, you should have some long-term retirement savings products to your name. These products tend to benefit from better interest rates and might be helpfully tax-advantaged.
You may feel too young to start thinking about your retirement. However, it’s never too early to start saving for retirement properly. You’re unlikely to regret the decision, though you might regret starting your savings journey too late.
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. But it’s also not impossible to make that much money work, provided you’re willing to be flexible.
Financial advisors are well-equipped to help maximize your money and organize your finances – for now and retirement. Connect to the right advisor today with Unbiased.
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.