The latest data from the Federal Reserve indicates that households of Americans aged 55 to 64 have a median of $185,000 in their retirement accounts.
That might be enough to retire on if you’re open to living frugally and depending on Social Security for most of your income. But it’s not nearly enough to spend $10,000 a month.
That’s not to say you need tens of millions of dollars to live a comfortable life during your golden years. Spending $10,000 a month without running out of money during retirement may be possible for you with some careful planning.
As you try to work out how much you’ll need in savings to retire with the spending rate you want, gather information on all the sources of income you’ll have once you stop working.
For many folks, Social Security payments tend to be a large chunk of income. According to Gallup’s 2024 Economic and Personal Finance survey, around 59% of retirees say that Social Security makes up a large portion of their retirement income.
Many may also have other sources, like employer-sponsored retirement accounts like 401(k)s, annuities, pensions and IRAs.
You’ll also need to consider factors that will affect this income.
For one, how much you pay into Social Security will affect how much you receive, as well as when you choose to receive benefits. If you claim your benefits starting at age 62, the amount you receive will be lower than someone who starts claiming them at 67 or 70.
Your portfolio allocation — the types of investments you hold — in your retirement or brokerage accounts could also affect how much you will have by the time you’re ready to retire.
Read more: Rich, young Americans are ditching the stormy stock market — here are the alternative assets they’re banking on instead
While investing in more volatile investments may give you an opportunity to earn more in returns, you could also risk more losses as well. Once you stop investing in these accounts, any market downturns may have a huge impact, since you don’t necessarily have time to recover from them.
Let’s not forget when you retire will have an impact on what it’ll take for you to comfortably take out $10,000 a month without running out of money. The average retirement can last decades, so the earlier you retire, the more you may need to have invested to make your money last.
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