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.
Read more: unlock best-in-class perks with one of these brokerage accounts
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.
Alert: our top-rated cash back card now has 0% intro APR until 2025
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a lengthy 0% intro APR period, a cash back rate of up to 5%, and all somehow for no annual fee! Click here to read our full review for free and apply in just 2 minutes.
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 does the average 30 year old have in savings and retirement? ›
Median retirement savings balance by age
| Age group | Median retirement savings balance amount |
|---|
| Under 35 | $18,880. |
| 35-44 | $45,000. |
| 45-54 | $115,000. |
| 55-64 | $185,000. |
2 more rowsMay 7, 2024
Financial Samurai 401k Savings Guideline
From the results, the average 30 year old should have between $100,000 – $350,000 saved up in their 401k, depending on company match and investment performance. If you're looking for a realistic goal, then focus on the Middle column all down the chart.
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.
How many people have $1,000,000 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.
What is a good savings at 30? ›
If you're looking for a ballpark figure, Taylor Kovar, certified financial planner and CEO of Kovar Wealth Management says, “By age 30, a good rule of thumb is to aim to have saved the equivalent of your annual salary. Let's say you're earning $50,000 a year. By 30, it would be beneficial to have $50,000 saved.
What's a good monthly retirement income? ›
Average Monthly Retirement Income
According to data from the BLS, average 2022 incomes after taxes were as follows for older households: 65-74 years: $63,187 per year or $5,266 per month. 75 and older: $47,928 per year or $3,994 per month.
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%
What is the average 401k balance for a 30 year old? ›
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 rows“By the time you're 40, you should have three times your annual salary saved. 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.”
Kevin O'Leary: By Age 33, You Should Have $100K in Savings — How To Get Started. If you're just starting out in your career, $100,000 might seem like a lot of money. After all, the median salary of a 20- to 24-year-old, according to Bureau of Labor Statistics data, is just $37,024.
Is 100k in savings a lot? ›
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.
How much money do I need to invest to make $4000 a month? ›
Making $4,000 a month based on your investments alone is not a small feat. For example, if you have an investment or combination of investments with a 9.5% yield, you would have to invest $500,000 or more potentially. This is a high amount, but could almost guarantee you a $4,000 monthly dividend income.
What is considered wealthy in retirement? ›
To be considered wealthy at age 65 or older, you need a household net worth of $3.2 million, according to finance expert Geoffrey Schmidt, CPA, who used data from the 2019 Survey of Consumer Finances (SCF) to determine the household net worth needed at age 65 or older to determine the various percentiles of wealth in ...
What percentage of Americans have $100000 for retirement? ›
In 2022, about 46% of households reported any savings in retirement accounts. Twenty-six percent had saved more than $100,000, and 9% had more than $500,000. These percentages were only somewhat higher for older people. Those ages 50 to 54 were the most likely to have a retirement account.
How long does $1,000,000 last after retirement? ›
Around the U.S., a $1 million nest egg can cover an average of 18.9 years worth of living expenses, GoBankingRates found. But where you retire can have a profound impact on how far your money goes, ranging from as a little as 10 years in Hawaii to more than than 20 years in more than a dozen states.
How much money do I need to retire at 30 years old? ›
Someone between the ages of 26 and 30 should have 0.5 times their current salary saved for retirement. Someone between the ages of 31 and 35 should have 1.1 times their current salary saved for retirement. Someone between the ages of 36 and 40 should have 1.9 times their current salary saved for retirement.
Is $50,000 in savings good? ›
“In today's times, $50,000 should really be looked at as an emergency fund, rather than something to spend on improving one standard of living,” Jania added. “Further, because inflation is still rampant, if one chooses to increase their standard of living, the cost of that will likely go up even more over time.”
Can I retire at 60 with 300k? ›
£300k in a pension isn't a huge amount to retire on at the fairly young age of 60, but it's possible for certain lifestyles depending on how your pension fund performs while you're retired and how much you need to live on.
