Key Points
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You’ll need $2.5 million in retirement savings to spend $100,000 in your first year of retirement, according to the 4% rule.
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Realistically, you’ll be able to get by with less because Social Security will cover some of your costs.
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A budget of $100,000 a year may not go as far as you expect if you’re still decades away from retirement.
- The $23,760 Social Security bonus most retirees completely overlook ›
A $100,000 annual income was once enough to make an American feel fairly wealthy, but these days, it’s more common than you might expect. It’s no longer enough to buy an ultra-luxurious lifestyle, but it still buys a comfortable one in many places, especially for retirees who are no longer saving for retirement or caring for children.
If that’s your annual retirement income target, you might need to save a bit more than you imagined to pull it off. Here’s the nest egg you’d need, based on the 4% rule.
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How much you need to save to spend $100,000 per year in retirement
The 4% rule is a guideline devised in the 1990s by financial planner William Bengen, who was looking to determine how much retirees could withdraw from their nest eggs each year without worrying that they’d run out of money.
He found that you can safely withdraw 4% of your retirement savings in your first year of retirement. Then, in subsequent years, you can adjust that amount upward to account for inflation. In theory, if you do that consistently, your nest egg is nearly certain to last 30 years or more, but your mileage may vary.
So if you know what you want your annual retirement income to be in the first year of your retirement, you can multiply that number by 25 to figure out how much you’ll need to have in your accounts at that point. In our example, that would give you a savings target of $2.5 million. But this assumes you’re saving for retirement entirely on your own, which often isn’t the case.
You will likely qualify for Social Security benefits, which will cover a decent chunk of your expenses. The average monthly retirement benefit as of July 2026 is $2,086. That adds up to just over $25,000 a year. If we subtract this from your $100,000 savings target, you’d only need to come up with $75,000 on your own. So your actual savings target would be $1.875 million. That’s still a lofty goal, but it’s easier to reach than $2.5 million.
You could need even less set aside if you expect to have other regular income sources, such as from a pension or a part-time job in retirement. Don’t forget to subtract these expected income sources from your $100,000 target, too, as you figure out how much you’ll have to save on your own.
$100,000 might not go as far in retirement as you expect
Tens of millions of retired people are managing on far less than $100,000 per year, but that doesn’t mean that $100,000 is more than enough for you. You have to consider the lifestyle you’re aiming for, where you plan to live, and when you plan to retire to decide on your savings target.
Moreover, there’s inflation to consider: A $100,000 annual income might be enough for a comfortable retirement today, but if you’re 30 or more years away from retirement, that sum will buy a more modest lifestyle. Don’t forget to plan for inflation when estimating how much money you’ll need to cover the retirement you desire.
The $23,760 Social Security bonus most retirees completely overlook
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