How Much Money Do You Need to Retire with $100K a year Income? — IWA Blog (2024)

Will you be able to retire if you make 100k a year? Well, a recent survey by TransAmerica center shows that nearly 77% of American employees are saving in preparation for retirement through various strategies, such as employer-sponsored plans, or even through retirement consulting in Portland.

However, as easy as it might sound, planning for retirement with a good salary can be pretty demanding if not daunting.

That’s why 64% of Americans aren’t prepared for retirement, while 48% simply don’t care about what will happen to them when that time comes.

Nonetheless, planning for retirement comes with a ton of benefits, such as continuous income that can come in handy during emergencies.

If you save enough, you might be able to enjoy financial freedom in retirement. But how much is enough?

A plan that gives you up to 100k per year during retirement sounds like one, right?

Here is everything that you need to know about living on $100,000 a year in retirement. Keep reading to stay updated.

Is $100,000 a good salary?

A $100K salary is what most Americans dream of, if not envy, given that the average salary in the US is about $53,490 dollars a year or $1,020 per week.

However, as good as $100k sounds, it might not be enough for financial independence if you’re the primary breadwinner and have a family with children, a spouse and maybe even Fido, your pet poodle.

There are plenty of joys that come with a family, but you’ve got to plan for a bigger budget for utilities, a mortgage, food, and medical bills.

However, if you can generate a $100k retirement income you’re probably in good financial shape, especially if you can access the services of a reputable financial advisor for retirement planning in Portland guiding along the way.

A reputable advisor can give you expert guidance on how to set up a spending plan, including cutting non-essential expenditures so that your overall expenses don’t exceed your income. Even better, a retirement specialist can help you maximize your income so you can achieve a legacy, like creating generational wealth for your heirs.

Here are a few ways to maximize your salary to help you achieve your goals: you can:

• Save Wisely

Your $100K income should be enough to pay down debts fully, or partially in a relatively shorter period of time. Once your debts are under control, you can start saving for your future, especially if you turn your former monthly debt payments into your new monthly savings goal. By doing this you’ll accomplish two things. First, you’ll reinforce your habit of living below your means. Second, you’ll turbo-charge your savings rate and reach your goals faster without having to change your lifestyle.

• Spend Comfortably

Did you know that 56% of Americans can’t cover unexpected bills of at least $1,000 with their savings? This is surprisingly true across all income levels.

On the brighter side, with proper planning you can live comfortably on a six-figure income since you have a higher spending power, especially if you’re doing the steps above.

With proper budgeting you should be able to plan for expected and unexpected expenses like repairs, vacations, or even hospital bills.

• Consider a Microbusiness

Another way to maximize your income is by your or your spouse starting a profitable business. You can start a microbusiness in the U.S. with less as $3,000 a year, which is just a fraction of your monthly income. Do you have a particular hobby, talent or skill that others might appreciate? Youtube is a fun way to earn some extra cash doing the things you love. Assuming you planned your microbusiness well, it could even be a source of fun and income in retirement.

What taxes should you expect to pay for a $100K salary?

The amount of taxes on a $100,000 salary depends on various factors, including whether you are married or your state of residence.

You can use the IRS withholding calculator to determine how much you owe Uncle Sam every year.

To put it into better perspective, the effective tax rate for Oregon state residents is about 25%, meaning you’ll remit up to $24,680 to the IRS every year if you are earning $100,000.

This includes a 24% marginal tax rate that will eat your immediate additional income. You’ll also pay a state income tax of about $9,671, which is an effective tax rate of 9.67%, or a marginal tax rate of 9.90%. From these calculations, your after-tax income in Oregon state will likely be $75,320.

Can You Retire with 100k in Savings?

Is it possible to retire with $100k in your savings account? That may not sound like enough, even though nearly a third of Americans have less than $100,000 in their savings account for retirement. However, what you do with the money thereafter determines whether it will last longer or serve you only for a short period. That’s why it can be helpful if you reach out to a trusted investment firm in Portland, Oregon to help you plan for your financial strategies during retirement.

But all the same, 100k in retirement can last up to 30 years if you stick to the general 4% thumb rule of financial planning during retirement. This rule suggests that retirees 65 and older should withdraw at most 4% of their savings during the first year of retirement. You’ll then need to adjust the subsequent withdrawals accordingly to the prevailing inflation rates, such that your withdrawals can be about $4,000 a year. Although this rule doesn’t apply to everyone, thanks to varying expense needs, it’s a good benchmark to ensure that your retirement savings last long enough.

What is the Best Way to Invest $100,000?

If you’re researching what to do with an extra $100,000 or where to invest $100,000 then congratulations on having the right kind of financial problem!

The investing opportunities with this ‘money problem’ on the table are endless.

However, your best options, as an expert wealth management advisor might recommend, include:

1. Real Estate

Real estate is arguably one of the best ways of investing your $100,000 retirement savings.

Besides giving you a steady and predictable cash flow, real estate is a long-term investment and the assets can serve your immediate family members for generations to come.

Other benefits of real estate investing include tax incentives as expenses incurred to maintain the property can be deducted to lower your taxes.

2. ETFs & Mutual Funds

Indexed ETFs & Mutual Funds investments, such as include a portfolio of stocks that have been carefully selected by an expert to withstand the test of inflation and market volatility for long-term gains. Investment diversity is enough to give you solace that your $100,000 will definitely yield reliable and predictable returns in the long haul.

3. Individual Stocks

If you’re comfortable taking on more risk, then individual stock investing can be very rewarding. With $100K at your disposal, you can acquire shares in multiple companies of your choice, spread across various industries using the latest fractional shares programs offered at major custodians.

Just like ETFs and mutual funds, you’ll want to prioritize diversity in your stock portfolio, so you’ll have better long-term growth opportunities.

4. IRAs

IRAs are an excellent investment vehicle when you are planning for retirement, and some are even tax-free when the time finally comes to spend your profits.

For instance, Roth IRA investment exempts you from remitting income tax once you retire. On the other hand, a traditional IRA investment will give you tax incentives on your contribution to the retirement saving plan.

This means you can maximize your savings and even end up with more than 100k after retirement.

5. Lending

Lending is increasingly becoming a popular way of making an income, especially if you have significant cash at your disposal, such as $100,000.

You can lend money to your peers and charge them a monthly interest rate, or even weekly, depending on the agreement and the creditworthiness of the borrower.

However, this strategy will only be helpful if the borrowers give you collateral to hold against the loan. That way, you can always reclaim your money, or at least part of it if they default.

How Can You Save $100,000 and More in 5 Years?

Saving $100,000 and more in 5 years can be achievable if you are earning a six-figure salary and following some of our suggestions.

Actually, you can even do it in less time, probably even two or three years, especially if you know how to make 100,000 dollars. But what if you are earning less than $100k?

Well, here are some tips on how to save 100,000 in 5 years.

Prioritize Your Retirement Savings Account

If you have a plan and are motivated, saving $100k should be doable. Your retirement savings account can be the plan to steer you towards achieving a $100K goal in five years or less. Even better, many employers offer matching on their retirement plans of 4% or more. That’s a 100% rate of return on your investment dollars and will help you realize your financial goal faster.

Minimize Your Expenses

Widening the gap between your disposable income and the amount you really spend can be a game-changer. Avoid impulse shopping and if possible buy basic commodities in bulk to get discounts. Remember, a dollar saved in your account is better off than a dollar spent on an unnecessary item.

Pay Debts and Invest

Debts can weigh you down in many ways. Instead of focusing on how much money goes out of your pockets every month, concentrate on how you can use that money to derive income. The lower the debts, the more you can invest and leave a sizable estate to your family, even post-retirement. The good news is that you don’t have to figure everything out on your own once you make it. Professional Portland estate planning advisors will always be at your disposal to help you protect what you strained to save for years when the time comes.

Get a Side Hustle

Recent Census statistics show that at least 9.1% of women and 6.6% of men in the US are working at least two jobs to supplement their income. These people are driven by various reasons, such as attaining financial independence. Let them inspire you and you’ll be well on your way to $100,000 or more in savings, within 5 years.

Start a Business

Alternatively, instead of getting a side hustle job, you can start a business altogether to supplement your income. As noted earlier, it will take you upward of $3,000 to start a microbusiness in the US. However, investing for small business owners can be pretty daunting, especially if it’s your first time. That said, don’t hesitate to seek professional help.

How Can You Generate a $100K a Year Income for Retirement?

You can retire on $100k per year if you know how to generate that amount in the first place. It’s also worth noting that this amount will only be useful if it’s consistent, for a relatively long period of time, say 30 years. In that case, you’ll need at least $2.9 million in your retirement investment portfolio to earn up to 100k, especially if you adhere to the 4% yearly withdrawal rule. All the same, it will still help if you seek the advice of professional sudden wealth management services to accurately gauge your odds of succeeding with this plan.

Wrapping It Up

Everyone looks forward to retiring because of the freedom, reduced stress and adventure of a new journey.

Research “where can you retire with 100k” on the internet and you’ll find a list of endless destinations, away from the city’s hustle and bustle that compliment old age peace and tranquility. But before that, you need a plan.

Professionals, such as Interactive Wealth Advisors can help you plan better for your retirement.