Retirement on $100 a Day: Is It Possible in Today’s Economy? Here’s What Experts Say
Written by
Daria Uhlig
Edited by
Amber Barkley
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American wallets have been hit hard by rising costs over the last few years, and few groups feel the pinch as acutely as those living on fixed incomes.
Data from the U.S. Bureau of Labor Statistics shows that Americans age 65 and older have an average income of $58,969 after taxes, and they spend nearly $52,000 of it in essential categories. But nearly 50% live on less than $40,000 in income — before taxes. The average for the highest income bracket in that group — $30,000 to $39,999 — is $34,858, which works out to $2,904 per month, or $96.80 per day.
Is that enough for a comfortable retirement?
Can You Retire on $100 a Day?
Retiring on $100 per day is possible, but federal retirement counselor Cliff Ambrose, founder and wealth manager at Apex Wealth, told GOBankingRates it requires careful consideration and strategy.
“For a client planning to retire on $3,000 per month, my primary concern would be ensuring that this income is sufficient to cover their essential expenses and lifestyle choices throughout retirement,” he said.
How To Make It Work
A good way to start planning is with a list of your current expenses. Begin with necessities like food, housing, utilities, healthcare, transportation, insurance and clothing and personal care. Then list discretionary spending on hobbies, entertainment and non-essential purchases.
Next, use your current expenses to create a retirement budget based on how your spending might change after you retire. But rather than stop at your first year’s expenses, try to forecast them several years out.
“Spending habits often evolve as individuals age; for instance, while some may find their discretionary spending decreases due to lifestyle changes, others may face rising medical expenses,” Ambrose noted. “It’s important to account for these shifting priorities, potentially allocating more towards healthcare and less towards travel or entertainment in later years.”
Ambrose recommended using the months or years leading up to retirement to increase your savings rate, pay off debt and evaluate your investment strategy to ensure it aligns with your investment goals. If you don’t already have an emergency fund for unforeseen expenses, this is a good time to start one.
Plan To Cut Costs
Also consider how you might stretch your necessary-expenses budget further, starting with what typically is retirees’ largest expense — housing.
While many retirees cut housing costs by downsizing and/or moving to less-expensive areas, some are taking those measures a step further by offering themselves up as “boommates” — baby boomer roommates — to share housing costs.
“Some are empty nesters looking for help with the bills, and others have downsized or moved to a new area and want to find a place with people at the same stage of their lives,” Marissa Almeida, head of marketing at the roommate platform Roomies.com, told GOBankingRates.
Other ways to cut costs include exploring local utility assistance programs and reviewing your medical expenses to see if you might have more affordable options, Ambrose noted. Also consider whether your household has cars it won’t need after you retire. And if you plan to remain in your home, with or without roommates, tackling repairs and improvements while you’re still working can save you money and major headaches later.
Necessities have to take first priority in your retirement planning, but ideally, your budget will also have room for fun. Without work demands filling your schedule, you’ll be free to travel, go to the movies and attend performances when prices are lowest, and get more use out of free venues like museums and parks.
Retiring on $100 a day — $3,000 a month — poses challenges, to be sure. But they’re not insurmountable if you plan carefully and stick with your budget.
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