Is it possible to approach the Golden Years with $100,000 in savings in the bank?
“If you look at the 4% Rule that’s $4,000 a year, plus an average of $18,000 a year from Social Security, I think that‘s going to be a very difficult challenge, especially in the United States,” says Michael Smith, president of Houston STA Wealth Management.
Smith subscribes to the 4% rule, which states you can withdraw 4% in the first year and adjust for inflation in following years, estimated to last 30 years. But not with much to scrape by on, he says. The standard assumption of $1,000,000 in savings is a better bet, but even a million dollars in retirement isn’t what a lot of people think it is. “I do a lot of planning for people, and those that are a million and under, factoring for inflation, still have a difficult time not running out of money when you process their goals.” Smith adds.
If you’re retiring with $100,000 in the bank, that’s only $4,000 a year, and with an average of $18,500 per year in Social Security benefits, that means living off less than $23,000 a year. No matter where you live, that could get rough.
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