Retire on $100,000 ($100k)? Is this possible?


Money growing over time!

My wife and I are recent early retirees at ages 51 and 48.  We’ve been slow traveling with our traveling companion Toby, a 13 pound Pomeranian dog since our retirement in August, 2020.  In between our travels, we’ve spent time with our family in North Carolina and New York City.

In this post, I’d like to share my perspective on the question ‘retiring on $100,000.’

This was a question I asked myself many times in what seems like a lifetime ago.  Around 2009 or so, I was searching for answers on how I could retire early and get off the rat race.

I started asking this question along with ‘how to retire early’, ‘get off the rat race’, and ‘how much do I need to retire.’  

I’m not going to sugar coat this answer.  Retiring on $100,000 is not going to be easy.  Believe me, I thought through this question and researched it thoroughly.  I asked myself what I could do, if there’s anything that can be done.

I thought maybe, if I really reduced my expenses per year that this could be possible.  But honestly, there was no way I could see my family (my wife, and our Pomeranian) living on $4,000 per year.  Why $4,000?  You can withdraw about 4% each year if your money is in the stock market, without running out of that money.  4% of $100,000 = $4,000 per year or $333 per month.  

Retiring on $100k will require you to work, UNLESS you have social security and/or pension coming in, AND you’re able to live really frugally.  There’s just no way around it.  Here’s how I think this could work.

  • You’re at age 62 or older and you can get social security.  As of January 2020, an average social security check was $1503 per month.  
  • You have a pension besides this $100k retirement savings.  Average private pension paid about $9,200 per year while federal government pension paid out about $22,000 per year.
If you get social security only:  You would have $1503 (social security) plus $333 (your $100k taking out 4%) equaling $1836.  

If you have both social security and pension:  Take $1,503 plus $766 (private pension) plus $333 equaling $2,602.

***Note:  If you can live on either of these amounts above each month, then you can quit working all together.  
  • If neither of the scenarios above are true, then you’ll need to work to supplement your income.
Depending on what you spend per year on expenses, it could mean working full time or part time.  There are examples of extreme early retirees like Jacob Lund Fisker (Early Retirement Extreme) who lived on $7,000 per year!  *I still can’t believe that one...

If you can live on $7,000 per year, then you just need to find a part time job that pays you about $3,000 per year.  I know I can’t live on this amount, but power to you if you can.

If you need to live on say $24,000 per year (this is a more doable number), then you’ll need to find a job that pays you around $20,000 per year.  

There are other strategies you can use to aid in this effort, regardless of whether you get social security and/or pension, or not.  

  • You can try moving to a lower cost of living area.  If you live near the coast, especially places like Los Angeles or New York City, then you may consider this option.  Google ‘cost of living comparison’ to figure out what each city costs.  I will tell you from personal experience that living in New York City and Hawaii was extremely expensive.  
In New York City, insurance (health, car) is much more expensive.  So are groceries, bridge/tunnel tolls, and housing.  Same for Oahu, Hawaii.  When we lived in Waikiki Beach, a gallon on milk was $7!  Everything is Hawaii has to be shipped in from elsewhere, so they cost more.  Things like appliances, groceries, books, gasoline, etc., are all examples.  I remember paying $4 per gallon while gas in New York City was around $2.50 at the time.  
  • Biggest expense per month is housing.  See if you can be creative and find cheaper accommodations. Such options include:  roommates, house sitting, staying with family/friends, and living in vans (Google ‘van life’).  
I’ve read people living in other peoples’ houses by house sitting while traveling in Europe.  Because they are not paying anything for housing, they can backpack on the cheap.  
  • Second biggest expense per month is transportation.  Being creative here could mean these options: walking/biking, using public transportation, etc.
I realize these options above are not possible if you don’t live near a city.  Why not consider moving near a city where you can commute by walking or biking or taking public transportation?  When we lived in Hawaii, I biked to work, while my wife walked to work.  This saved us easily $500-$700 per month as we didn’t have a car payment, car insurance, maintenance, gasoline, etc.

By not having a car, we were in the best shapes of our lives as an added bonus!

In conclusion:

Retiring on $100k is not going to be easy.  You’ll need to really hunker down to stick to your budget each month.  You’ll most likely need to get a job of some sort, unless you are getting a social security and/or pension.

Knowing how much you need to live on is always half of the equation when figuring out how much you’ll need to retire.  Figure out creative ways to cut costs.  If you can reduce your housing (biggest expense) to close to nothing, then you’ll have an easier time getting to that goal.

Thank you all for reading!


Jake

Wandering Money Pig 


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