Thinking about retirement? Longing for the days without alarm clocks and all that aggravation at work? You’re ready to retire…but you just haven’t reached your savings goal…you’ve only got 100k in your retirement accounts. Buuuut…is it possible that 100k is enough to retire on? In this post, we’ll be answering your question of “How long will my money last in retirement?” And, if you have just $100k, we’ll be targeting your question exactly, which is “How long will 100k last in retirement?”
Have we got you curious yet? I’ve nearly got myself curious!
Let’s dig in and figure out how far that 100k will go in retirement.
What is a Good Average Retirement Income?
Before we look at the exact 100k figure, let’s first put that amount into perspective.
How much should you have in your retirement fund before you retire? And what is a good average retirement income?
According to the US Census Bureau, the average income for a 75+ year-old household was $58,684 per year.
So let’s say you earn roughly the average retirement income. Is that good?
Well, let’s first look at the low-end of what you’d want. ie. What’s the poverty level for a family of two in the U.S. right now?
Poverty Level for a Family of Two
According to the US Department of Health and Human Services, the poverty level for a family of two is $17,420 a year. So $58k is WAY more than that.
Class Rank Based on Income
Next, let’s look at what class you’re in based on a $58k income. With this income, are you lower class? Middle class? Upper class?
According to US News…
- Lower Class Income: Less than $52,200
- Middle Class Income: $52,200 – $156,600
- Upper Class Income: $Over $156,600
So, if you’re earning $58k in retirement, you’re juuuuust above the lower class figures. You just barely squeaked your way into middle class.
How Much Income Should You Have Each Year For a Good Retirement?
I don’t know about you, but based on the classes, $58k per year doesn’t sound all that great. I’d want to at least be in the middle of the middle income class…which equates to roughly $100k a year.
In my opinion, if you want a good retirement income, you’d want to target an income of nearly $100,000 a year.
So your question about whether $100k is enough for retirement…If you want to retire like me, it’s not.
But, if you don’t mind living super frugally and just want to be done the whole working thing, then read on!
You want to know if you can live off 100k in retirement. We’ll get to that. But first, how much do most people have in their retirement accounts at 65 years old?
According to Personal Capital, the average 401k balance of a 65 year old is $255,151.
So, if you have just $100k in your retirement and you’re looking to love off that amount, you may have a tough time. Based on the average income and the average 401k balance, I’d venture a guess and say that with that 100k you have in retirement, you have less than half of the average household.
But, having said that, I still believe it is possible to retire with 100k! (We’ll get to this later in the post!)
What is the Interest on 100k?
If you have a decent pile of money (let’s say it’s a hundred grand in this scenario) that you’re going to put to work for you, it’s only natural to wonder…what is the interest on 100k?
How much will 100k earn you per year?
- If you earn 5%: $5,000 per year
- If you earn 10%: $10,000 per year
- And, if you rock it and earn 20%: $20,000 per year
As you can tell, the interest on 100k isn’t great… Even if you find an amazing investment and get a 20% return on your 100k each year, you’re still barely breaching those poverty numbers we discussed earlier in this post.
Can You Live Off 100,000 Dollars?
So here’s the big question… Can you live off 100,000 dollars? In other words, can you invest 100k and live off the interest for life? How long can 100k last?
Let’s say you invest your money well and you earn a consistent 10% a year (which has been the historic record of an S&P 500 Index by the way). This yields you $10,000 a year. Can you live off that?
Well, it puts you under the poverty level, but let’s explore this scenario anyway.
With $10,000 of income a year, that’s roughly $833 a month.
How could you live on $833 a month?
Want to know how to live on 10k a year? It’s certainly not easy, but I do think it’s possible.
First off, you’d need to be completely debt free. Your house and cars would need to be paid for, you couldn’t have any student loan debt or credit card debt. You should have no required debt payments whatsoever if you want to live on just $833 a month.
- No dining out
- Shop at discount grocery stores
- Only buy healthy foods, no snacks
- Live somewhere where you don’t need a car
- Grow as much of your own food as you can
- Set up your house with alternate power sources (solar, wind, etc.)
- Limit your subscription services (cell phone, internet, cable, other TV apps, etc.)
The biggest expenses in life are your house, your car, and food. If you want to live on 10k a year, it’d be best if you had a small house (that needed very little maintenance and heat), drive no car, and grow your own food.
If you followed this plan, I bet you could live off LESS than $10k a month!
How long can you live off 100k?
Soooo…how long can you live off 100k? How long would $100,000 last if you retire early?
If you’re trying to live life like most people, you’d spend roughly $50,000 a year. Even if you invested your money and earned 10% per year, your money would still only last less than 3 years.
In other words, if you stopped working at age 50 and you tried to live on $50k a year with $100k in investments, you would be out of money before your 53rd birthday! Chances are you’re still very much alive and healthy….but now you’re broke. Not good!
But, if you were able to spend just $10,000 a year like we mentioned in the paragraph above, your 100k would (in theory) last forever!
There are people out there that want to know how to live off $100,000 for the rest of your life.
So is it possible? Can you retire early with 100k?
Yes, I believe it is possible.
Is it going to be easy? No.
Is it a little risky? Yes!
After all, you could have a major medical emergency or come down with cancer and your savings would quickly be depleted. At that point, you could be old, unemployable, and living on the streets.
So, it’s pretty obvious that I don’t recommend this plan (I personally plan on having at least $3 million in retirement before I decide to do absolutely nothing), but could you retire early with 100k and perhaps make it work? Yup, I think so.
How to Retire With 100k
In all of the above paragraphs, the assumption was that you’re a younger individual trying to figure out how to live off 100k. That’s certainly not easy. But let’s say you’re 70 years old…Now there’s another factor at play. Social Security income!
So, now the question is, “Can you retire with 100k and Social Security income?” And then, how long will 100k last in retirement?
Is 100k enough for retirement?
Average Social Security Per Month at 70
If you’re 70 years old, what can you expect for a Social Security check? How much is the average Social Security security check each month?
Motley Fool has some great info on this. According to them, the average 70 year old can expect a monthly Social Security check of $1,602. That’s roughly $19,000 a year. Not a ton, but certainly helpful!
Your check could be more or less, depending on how much you’ve earned over your working life.
Can You Retire With 100k and Social Security?
Alright. So you’ve got $100k and that Social Security income. If you invest the $100k and earn 10%, you’ll earn $10,000 per year. Pair that with your $19,000 Social Security income, and that’s $29,000 a year.
Is that enough? Will 100k and Social Security last you for the rest of your life?
Like I said before, it’s not a ton, but I do believe this amount of money can last you for the rest of your life.
- Live extremely frugally
- Do something you love that earns you some money
- Live somewhere that’s super cheap (perhaps even internationally)
Live Extremely Frugally
If you’re 70 years old in retirement, I would expect that you’d be completely debt free. No house payment, no car payment, no credit card debt, no medical debt. No nothing! This will help you live as frugally as possible in your retirement years.
So how long would 100k last in retirement if you were super frugal? If you spend less than $29k a year, it could last forever!
I gave some frugal suggestions in the sections above – tips like don’t dine out, shop at discount grocery stores, live in an energy efficient home, and limit your subscription services.
Even at $29,000 a year, you’re still going to need to live simply and watch every penny you spend.
Here’s what I imagine a monthly budget should look like for a couple in retirement, trying to live on $29k a year:
- Medical: $11,400/year (out-of-pocket average for a retired couple, according to RBC Wealth Management)
- Home costs: $5,000/year (taxes and maintenance)
- Food: $5,000/year ($400/month in groceries)
- Transportation: $4,000/year (gas, insurance, maintenance)
- Utilities: $2,000/year
- Phones: $1,000/year
- Clothing: $500/year
- Entertainment: $100/year
Phew! That’s a pretty tight budget when you consider the likely medical costs in retirement! But, it is doable.
Want to tighten it even more? Ditch the car. Hop on a bus when you need a ride. Or, pay a friend to drive you around once in a while. You’ll almost certainly save money per year when you don’t need to pay for maintenance, car insurance, and gas.
So How Far Will 100k Go In Retirement?
It could last forever! But, you’ll have to abide by the budget I outlined above. There’s not much fluff there, but the important part to realize is that it IS possible!
Is that budget still a little too tight for you? (Yeah, it would be for me too!)
So what can you do about it?
If I were you, I’d look to earn money with your passion in retirement!
- What did you do for a career when you were younger? Can you do a bit more of that in your elderly years and still make money?
- Maybe become an advisor?
- Build things/fix things?
- Become a counselor?
- It could be anything!
- What do you LOVE to do? Could you make some money with it?
- Do you love to write? Maybe starting a blog could earn you some money! Maybe you could write a book or e-book!
- Enjoy music? Maybe you can write some! Or give music lessons!
- Do you love to bake? Sell some baked goods at your local farmer’s market!
- Or, maybe you just love being around people and being useful. Then get a part-time job anywhere doing anything!
If you could earn an extra $10,000 in retirement and bump up your annual earnings to $39,000 instead of $29,000, that would be HUGE!! This means that you could adhere to the $29k budget above, but then have a cushion of $10,000 every year!
If you’re asking, “How long would 100,000 last in retirement?”, it could easily last forever if you invest it well, earn Social Security, and make just $10k a year on the side!
You can do that. I’m sure of it!
Super Cheap Places to Live in Retirement
It’s pretty expensive to live from year to year for anyone. But what if you lived somewhere else? Could you reduce your budget substantially if you just picked it up and moved to another state? Or maybe another country? Where are the cheapest places to live in retirement?
Said another way… “Where Can I Retire with 100k?”
If you want to retire on 100k, you may want to relocate somewhere else. Here are the best places to make your 100k last the longest!
Where are the cheapest places to retire in the US?
According to GO Banking Rates…
- Cleveland, Ohio
- Toledo, Ohio
- Buffalo, New York
- Fort Wayne, Indiana
- Greensboro, North Carolina
…and there’s a list of 45 other places on their page! These locations offer cheap housing, cheap food, and cheap medical costs! If you truly want to make your 100k last forever, these places might be worth looking into.
Where are the cheapest places to retire in the world?
Are you wondering, “Where can I retire with 100k…even if I need to live abroad?”
According to SmartAsset, these are the top cheapest countries for retiring:
- Costa Rica
Not only are these places cheap, most are safe AND tropical!
How Long Will 100k Last in Retirement? In Summary
So…getting down to it here. How far will 100k go in retirement? And, said another way, how long will $100,000 last in retirement?
Basically, the answer all depends on you.
If you want to spend $50,000 a year, your money will only last 5 or 6 years, even if you do invest it well and earn a Social Security income.
If you want your 100k to last forever in retirement, you could either…
- Commit to spending just $29,000 a year, or
- You could work a little, earn $10k/yr, and then be able to spend $39,000 a year!
Even if you live abroad, you’re honestly still probably looking at roughly the same expenses. The only bonus is that you might get to see some more sunshine throughout the year!
So what do you think? Will you retire on 100k? Or will you keep savings and try to add a little more cushion into your retirement savings?
AUTHOR Derek Sall
Derek has a Bachelor's degree in Finance and a Master's in Business. As a finance manager in the corporate world, he regularly identified and solved problems at the C-suite level. Today, Derek isn't interested in helping big companies. Instead, he's helping individuals win financially--one email, one article, one person at a time.