You'll need to bring savings with you into retirement if you want your senior years to be comfortable, financially speaking. And the higher your IRA or 401(k) balance, the more you might get to enjoy retirement once you're ready for that stage of life.
Recent data from Northwestern Mutual shows that the average 30-something has $67,400 saved for retirement. So if you're sitting on a $100,000 savings balance at age 30, it means you're ahead of the game.
But is having $100,000 by age 30 enough for you to stop pumping money into your IRA or 401(k)? You may decide that it is, or that it's not -- it depends on how much financial freedom you want later in life.
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More money means more options
Over the past 50 years, the stock market has delivered an average annual return of 10% (before inflation), as measured by the performance of the S&P 500. So let's say you have a $100,000 IRA that's invested in S&P 500 stocks or ETFs. If your anticipated retirement age is 65, that gives you 35 years to grow that $100,000 into a larger sum. And at an average annual 10% return, you'll be looking at a nest egg worth $2.8 million by the time retirement kicks off -- even if you don't contribute another dollar.
It would not be unreasonable to say that you're more than happy with a savings balance that high. But before you make the decision to stop funding your nest egg, recognize a few things.
First, just because the stock market's performance over the past 50 years has resulted in an average annual 10% return doesn't mean that's the performance it will deliver over the next 50. If the market only delivers an average annual 7% return, for example, and that's the return you snag in your IRA, you'll be sitting on a little less than $1.1 million by age 65, not $2.8 million. That's still a fair amount of money in its own right. But it may not buy you the retirement you want.
What's more, if you have the ability to keep funding your IRA for the remainder of your career, you could conceivably retire with well more than $2.8 million. And the more money you have as a retiree, the more options you have. A $3.8 million nest egg versus $2.8 million could make it so you're able to spend six months out of the year traveling, as opposed to just three months.
Plus, you might appreciate having the option to help out your grown kids or future grandkids in retirement. Let's say part of the reason you were able to build up a $100,000 nest egg by age 30 was that you graduated college without any debt because your well-off grandparents picked up the tab. Wouldn't you like the option to be able to do the same for your grandkids?
Feel good about where you're at, but don't necessarily give up on saving more
To have $100,000 in retirement savings by age 30 is an extremely impressive feat, and one you should feel proud of. But frankly, if you were able to sock away enough money to have $100,000 by age 30, then you're probably in a position to keep funding your IRA or 401(k) to some degree. So you might as well take advantage of that option if it doesn't negatively impact your life in other ways.
Also, realize that it's okay to pause your retirement plan contributions temporarily to meet other goals. If you have $100,000 in retirement savings by age 30, you may decide to spend the next seven years putting all of your spare cash toward a down payment on a home. If that's the case, then resume retirement plan contributions in your late 30s.
There are so many options you can play around with. So take advantage of your strong start and do what works best for you.
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FAQs
Recent data from Northwestern Mutual shows that the average 30-something has $67,400 saved for retirement. So if you're sitting on a $100,000 savings balance at age 30, it means you're ahead of the game.
How much should be in my retirement account at age 30? ›
By age 30, Fidelity recommends having the equivalent of one year's salary stashed in your workplace retirement plan. So, if you make $50,000, your 401(k) balance should be $50,000 by the time you hit 30.
How much will 100k be worth in 30 years? ›
Answer and Explanation: The amount of $100,000 will grow to $432,194.24 after 30 years at a 5% annual return. The amount of $100,000 will grow to $1,006,265.69 after 30 years at an 8% annual return.
Can I retire with only $100 000 in savings? ›
“With a nest egg of $100,000, that would only cover two years of expenses without considering any additional income sources like Social Security,” Ross explained. “So, while it's not impossible, it would likely require a very frugal lifestyle and additional income streams to be comfortable.”
How much should a 30 year old have saved? ›
Fidelity Investments recommends saving 1x your salary by 30. At the end of 2021, the average annual salary was $49,920 for 25 to 34-year-olds and $58,604 for 35 to 44-year-olds. So the average 30-year-old should have $50,000 to $60,000 saved by Fidelity's standards.
Is $100,000 in retirement at 30 good? ›
To have $100,000 in retirement savings by age 30 is an extremely impressive feat, and one you should feel proud of. But frankly, if you were able to sock away enough money to have $100,000 by age 30, then you're probably in a position to keep funding your IRA or 401(k) to some degree.
How many people have $1,000,000 in retirement savings? ›
In fact, statistically, around 10% of retirees have $1 million or more in savings. The majority of retirees, however, have far less saved. If you're looking to be in the minority but aren't sure how to get started on that savings goal, consider working with a financial advisor. What Does the Average Retiree Have Saved?
How many 30 year olds have 100K saved? ›
Here's how many Americans have more than $100,000 saved for retirement (by age): Age 18-24: 2.1% Age 25-34: 4% Age 35-44: 11.5%
Is 100K a lot to have saved? ›
There's no one-size-fits-all number in your bank or investment account that means you've achieved this stability, but $100,000 is a good amount to aim for. For most people, it's not anywhere near enough to retire on, but accumulating that much cash is usually a sign that something's going right with your finances.
Is 100K a year considered wealthy? ›
Earning more than $100,000 per year would put you well ahead of the median American household, which brings in $74,784 as of 2021. Assuming you're an individual without dependents, that salary would qualify you as upper class, according to three different definitions (Brookings, Urban Institute and Pew Research).
Most American households have at least $1,000 in checking or savings accounts. But only about 12% have more than $100,000 in checking and savings.
How long will 100k last in retirement? ›
Bottom Line. With $100,000 you should budget for a retirement income of around $5,000 to $8,000 on top of Social Security, depending on how you have invested your money. Much more than this will likely cause you to run out of money within 25 – 30 years, which is potentially within the lifespan of the average retiree.
How much income will $100,000 pay you in retirement? ›
After analyzing many scenarios, we found that 75% is a good starting point to consider for your income replacement rate. This means that if you make $100,000 shortly before retirement, you can start to plan using the ballpark expectation that you'll need about $75,000 a year to live on in retirement.
What is a good salary at 30? ›
What is the median salary by age in the United States?
| Age | Median Salary |
|---|
| 30 | $50,000.00 |
| 31 | $54,000.00 |
| 32 | $52,000.00 |
| 33 | $55,000.00 |
51 more rowsOne common benchmark is to have two times your annual salary in net worth by age 35. So, for example, say that you earn the U.S. median income of $74,500. This means that you will want to have $740,500 saved up by age 67. To reach this goal, at age 35 you may want to have about $149,000 in savings.
How much 401k should I have at 30? ›
However, the general rule of thumb, according to Fidelity Investments, is that you should aim to save at least the equivalent of your salary by age 30, three times your salary by age 40, six times by age 50, eight times by 60 and 10 times by 67.
How much money do you need in the bank to retire at 30? ›
The pacing angle — a multiple of your annual income at your current age. At age 30, some financial professionals suggest accumulating the equivalent of your current annual income. By age 40, you should have accumulated three times your current income for retirement.
Can I retire at 62 with $400,000 in 401k? ›
If you have $400,000 in the bank you can retire early at age 62, but it will be tight. The good news is that if you can keep working for just five more years, you are on track for a potentially quite comfortable retirement by full retirement age.
How much should I have in my 401k at 35? ›
So to answer the question, we believe having one to one-and-a-half times your income saved for retirement by age 35 is a reasonable target. By age 50, you would be considered on track if you have three-and-a-half to six times your preretirement gross income saved.
Is 20K in savings good? ›
While $20K may not let you quit your job, it's enough to start building financial security, whether you max out your retirement accounts, invest in fine art, or divide your cash between multiple investments.
