Here’s How Much You Need Saved To Have $100K in Retirement Income Every Year
Written by
Sarah Li Cain
Edited by
Amber Barkley
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
Whether you’ve got decades or a few years until retirement, the thought of having enough to sustain your golden years is there. Of course you want to be able to take care of the necessities and have enough money for the fun stuff, too.
But how much do you need?
Having $100,000 per year in income during retirement sounds like a dream, right? But how much do you need to have saved to be able to spend that amount?
How Much You Need To Have Saved
The amount you need to have saved will depend on what your sources of income are and how you plan on withdrawing from your investment portfolio.
One of the most common ways to determine the amount you’ll need is through the 4% rule. Here, you’ll need enough to be able to withdraw 4% from your portfolio in your first year of retirement, and then the amount is adjusted for inflation each year. It also assumes you have a certain portfolio allocation and that you’ll be withdrawing from your accounts during a 30-year horizon.
Using the 4% rule, you’ll need to have $2.5 million saved by the time you retire.
If you’ve got time on your side and earn a high income, that could be the advantage you need to get to this number. However, if you’re closer to retirement or can’t save a large percentage of your paycheck, there’s no need to panic just yet.
This amount doesn’t take into account other potential sources of income, like your Social Security check. The amount you receive each month could make up for the shortfall.
What You Can Do To Reach Your Retirement Goals
Whatever you have saved now, consider using an investment or retirement calculator to see where you stand. You simply input information like your age, the amount you have saved, your goal income and other assumptions, like the rate of return on your investments. Then, you can have a clearer idea of whether you’re on track.
Aside from Social Security income, you can consider working part-time in retirement to ensure you maintain your standard of living. Also, although they could take considerable time and funding to set up, passive income sources, like real estate investments, could give you the income you need when you’re ready to retire.
While it would be great to have enough money saved to have $100,000 worth of retirement income each year, the truth is that you may not need that much at all to live comfortably. What’s important is to get clear on your expenses and what you want to do during retirement so that you have a specific income to shoot for. You never know, it could be less than you think.
In any case, it’s important to take care of your financial health now, like paying off high-interest debt, building up your emergency fund and reviewing your investment goals. That way, you have these healthy habits in place, whether you retire next year or 10 years into the future.
More From GOBankingRates
