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 


If you missed the post ‘What’s it like to hand in your resignation...’, please click here.

If you missed the post ‘How to retire early...’, please click here.

If you missed the post ‘We sold our home during the pandemic...’, please click here.

If you missed the post ‘What is the FIRE (financial independence retire early) movement...’, please click here.

If you missed the post ‘Magic of compounding interest...’, please click here.

If you missed the post ‘Our minimalist update…’, please click here.

If you missed the post ‘Dangers of entitlement on your path to happiness…’, please click here.

If you missed the post ‘Get rid of debt to reach your goal of financial independence…’, please click here.

If you missed the post ‘Thinking of moving to Pennsylvania…’, please click here.

If you missed the post ‘Learn to say enough to be happy on your path to financial independence and to retire early…’, please click here.

If you missed the post ‘Why is downsizing/minimalism so difficult…’, please click here.

If you missed the post ‘Is America still a land of opportunity…’, please click here.

If you missed the post ‘Learn a skill that pays you well to retire early…’, please click here.

If you missed the post ‘Invest and not save for retirement…’, please click here.

If you missed the post ‘Learn to enjoy the moment for life and for FIRE…’, please click here.

If you missed the post ‘The correlation between consumerism and early retirement…’, please click here.

If you missed the post ‘Retire on $200,000 (200k)…’, please click here.

If you missed the post ‘Adapting to change for life and for FIRE…’, please click here.

If you missed the post ‘Thinking of moving to Hawaii…’, please click here.

If you missed the post ‘Tough childhood leads to success in later life…’, please click here.

If you missed the post ‘Thinking of moving to New York City…’, please click here.

If you missed the post ‘Importance of finding purpose in early retirement…’, please click here.

If you missed the post ‘What is the rule of 72…’, please click here.

If you missed the post ‘Retire on $100,000 (100k)…’, please click here.

If you missed the post ‘The importance of a significant other’s role in your path to FIRE…’, please click here.

If you missed the post ‘Save for retirement or pay off debt…’, please click here.

If you missed the post ‘How much do I need to retire…’, please click here.

If you missed the post ‘Early Retirement Manifesto…’, please click here.

If you missed the post ‘Pros and cons of early retirement…’, please click here.

If you missed the post ‘How to save money when traveling…’, please click here.

If you missed the post ‘What is the average 401k balance…’, please click here.

If you missed the post ‘Doing a garage sale during the pandemic…’, please click here.

If you missed the post ‘First few months after early retirement…’, please click here.

If you missed the post ‘Not caring too much equals happiness…’, please click here.

Please check out our YouTube channel ‘Wandering Money Pig’ showcasing our travels and our Pomeranian dog! https://www.youtube.com/channel/UC3kl9f4W9sfNG5h1l-x6nHw




Popular posts from this blog

AirBNB horror story: How we got a refund from AirBNB due to a noisy neighbor…

Image
  Letchworth State Park, NY My wife and I (and our Pomeranian Toby) have been slow traveling since our early retirement last August.  We rely on AirBnB or Vrbo when we travel, and this past April was no exception. We chose a monthly rental via AirBNB in the month of April, in a town called Claysburg, Pennsylvania.  The rental was a studio unit that has a bed, a futon, full kitchen and a private bath. On the day of our arrival (April 1st), we were greeted by snow falling at the condo.  It was a beautiful sight to behold! We checked in with no problems and slowly settled in.  The next three days were uneventful.  We did our usual unpacking, then we went shopping for food from a nearby supermarket the following day.  We enjoyed the sights nearby and were having a good time at a new location. By Monday of the following week, our luck had changed for the worse.  The neighbor upstairs did what sounded like to us, either deep cleaning and renovating! We heard loud music blasting, while heavy
Read more

Review of Fiore Suite and classic room at the Borgata, Atlantic City, NJ (New Jersey)

Image
  Classic Room at the Borgata, Atlantic City My wife and I have been going to the Borgata hotel and casino since its opening 18 years ago thanks to my dad.  My dad had a loyalty/player’s card which allowed free hotel stays (comped rooms).  We couldn’t resist free hotel rooms when my dad asked if we wanted to go! Fast forward to now. I now have a loyalty/player’s card that I use to take my parents to the same hotel for free.  Funny how roles switch...My dad used to treat us to free rooms, so now I’m treating him...Favor returned! Borgata Hotel & Casino was built in 2003 to huge fanfare when it opened.  Costing then $1.1 billion, it rivaled the best hotels in Las Vegas and New York City.  It features 2000 rooms, outdoor / indoor pools, a spa, a buffet, 3000+ slot machines, and many high end restaurants. Since its opening, it added the Water Club (a boutique hotel) in 2008 at a cost of $400 million, which added another 800 rooms to the available room capacity.  The casino is located
Read more

Review of Falls Lake Dam Recreation Area, Wake Forest, North Carolina

Image
  Falls Lake Dam Recreation Area, Wake Forest, NC After my wife and I sold our home at the end of August 2020, we headed down to Wake Forest, North Carolina.  This would mark the beginning of our early retirement.  We wanted to spend time with my brother in law and his family, who we haven’t seen in over a year.  It was during this visit that we discovered this fantastic recreation area. Falls Lake Dam Recreation Area is a man made reservoir located in the upper portion of the Neuse River Basin, nestled near North Carolina’s bustling Triangle Area.  The reservoir covers nearly 12,500 acres of water and is surrounded by 25,500 acres of public land.   The lake stretches 22 miles upstream to the confluence of three rivers: Eno, Flat, and Little Rivers. Falls Lake Dam Recreation Area boasts hiking trails, fishing, water sports, biking, wildlife viewing, etc. See my notes below when visiting the Recreation Area: The main entrance to the Recreation Area is accessible from the Falls of Neuse
Read more