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
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 much should 30 year old have saved for retirement? ›
By age 30: Have the equivalent of your current annual salary saved. If you earn $50,000, you should have $50,000 saved for retirement at this age. By age 40: Have three times your annual salary saved. If you now earn $60,000, you're on track if you have $180,000 saved for retirement by 40.
How much will $100 000 grow in 30 years? ›
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. Where, FV = Future value of the amount invested today on maturity.
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 many people have $1000000 in retirement savings? ›
However, not a huge percentage of retirees end up having that much money. In fact, statistically, around 10% of retirees have $1 million or more in savings.
Is $100,000 in retirement at 30 good? ›
Based on the median income for Americans in this age bracket, $100K between 25-30 years old is pretty good; but you would need to increase your savings to reach your age 40 benchmark.” “The current level of your income makes a big difference in determining if you're on track for retirement,” added Cox.
Where should I be financially at 30? ›
By age 30, people should aim to eliminate as much debt as possible, whether it be from credit cards, student loans, or car loans. Focus on paying off the high-interest debt first, then work your way through. Negotiate your bills. Look at your current bills and see which ones you could negotiate.
How much will $100,000 grow in 25 years? ›
Passive Growth Over 25 Years
For example, a 10% average annual rate of return could transform $100,000 into $1 million in approximately 25 years, while an 8% return might require around 30 years.
What age should you have 100k saved? ›
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“By the time you hit 33 years old, you should have $100,000 saved somewhere,” he said, urging viewers that they can accomplish this goal. “Save 20 percent of your paycheck and let the market grow at 5% to 7% per year,” O'Leary said in the video.
How long does it take to grow 100k into 1 million? ›
1: Simply let compounding work its magic. Over the long haul, the stock market has provided average annual total returns somewhere in the neighborhood of 10%. If the future ends up like the past, $100,000 would grow into $1 million in just over 24 years from compounding alone.
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 much Social Security if you make $100 000 a year? ›
If your pay at retirement will be $100,000, your benefits will start at $2,026 each month, which equals $24,315 per year. And if your pay at retirement will be $125,000, your monthly benefits at the outset will be $2,407 for $28,889 yearly.
How long can you live off $100 K? ›
How long will $100k last in retirement?
| Annual spend | Monthly spend | How long $100k will last |
|---|
| $18,000 | $1,500 | 5.5 years |
| $15,000 | $1,250 | 6.6 years |
| $12,000 | $1,000 | 8.3 years |
| $10,000 | $833 | 10 years |
1 more rowWhat is the average and median retirement savings? The average retirement savings for all families is $333,940 according to the 2022 Survey of Consumer Finances.
What net worth is considered rich? ›
While having a net worth of about $2.2 million is seen as the benchmark for being rich in America, it's essential to remember that wealth is a subjective concept. Healthy financial habits and personal perspectives on money are crucial in defining and achieving wealth.
How many Americans have no retirement savings? ›
55% of non-retirees have a 401(k) or 403(b), 25% have no retirement savings. That only 55% of non-retirees have a 401(k) or 403(b) and 25% don't have any retirement savings at all is troublesome.
How much does the average 30 year old have in their 401k? ›
The average 401(k) balance by age
| Age | Average 401(k) | Median 401(k) |
|---|
| 20s | $74,460 | $29,753 |
| 30s | $160,517 | $69,718 |
| 40s | $344,182 | $151,274 |
| 50s | $558,740 | $247,338 |
3 more rowsIf 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.
Can I retire at 50 with 300k? ›
Can You Retire at 50 With $300k? It may be possible if you have low expenses and income from other sources. Assuming a 4% withdrawal rate, the funds might generate $12,000 of annual income. That's probably not enough for most people, and you typically don't get Social Security until your 60s.
