How Much Money Would You Need Invested to Produce a $100,000 Retirement Income?

Using the popular 4% rule, you'd need $2.5 million invested to withdraw $100,000 per year in retirement.

But it's important to remember, $100,000 in retirement income doesn't necessarily have to come entirely from your investment portfolio. Most retirees have multiple income streams, and many also spend less than they think.

Here's what to consider.

How the 4% rule actually works

The 4% rule comes from a 1994 study by financial planner William Bengen, who looked at historical stock and bond returns.

He wanted to find a "safe withdrawal rate" that would allow a portfolio to last through a 30-year retirement, even during downturns like the Great Depression or 1970s stagflation.

The idea is simple: you withdraw 4% of your portfolio in the first year of retirement, then adjust that amount each year for inflation to maintain your spending power.

Based on this rule, here's how big your portfolio needs to be to support different retirement income goals:

Keep in mind, the 4% rule is just a general guideline, not a hard-and-fast rule.

In real life, most retirees don't spend the exact same amount every year. Some years might bring big trips or major expenses, while others are quieter and cheaper.

The 4% rule also assumes your money stays invested in a balanced mix of stocks and bonds and that you want your money to last at least 30 years. But depending on your lifestyle, health, and goals, your ideal withdrawal rate might be lower -- or higher.

Don't forget other income sources

Your investment portfolio typically isn't your only source of retirement income.

Here are a few others that could reduce how much you need to withdraw from investments:

• Social Security: The average retiree check in mid-2025 is around $2,000 per month, or $24,000 per year. For a couple with dual benefits, that could be $48,000+ in combined annual income.
• Pensions: If you're lucky enough to have one, this could be a major boost.
• Rental income: Properties you own can provide passive income.
• Part-time work or consulting: More retirees are working by choice (sometimes for purpose, sometimes for pay). Every $10,000 you earn in a year means not having to withdraw that money from your investments.

Here's how that math shifts once you add in extra income sources.

Let's say you expect $30,000 per year from Social Security and $10,000 from a small pension.

That's $40,000 already covered. You'd only need $60,000 from your investments, which drops your portfolio target to $1.5 million under the 4% rule.

The more income you have from other sources, the less pressure there is on your nest egg.

If you want professional guidance on your retirement plan, SmartAsset can help you find a financial advisor. Take SmartAsset's free quiz to get matched with up to three advisors who serve your area.

Retirement expenses: higher or lower than you expect?

Many people assume they'll spend less in retirement -- and they often do. No more commuting to a job, buying new work clothes, or saving for retirement itself.

But other expenses can sneak up on you, like:

• Travel (especially early retirement bucket-list trips)
• Healthcare and long-term care
• Helping adult children or aging parents
• Home renovations or downsizing costs

Guessing your exact future spending down to the penny is almost impossible. So the best way to approach retirement planning is to get a rough idea of your specific needs, then build in a cushion.

Playing catch-up and trying to build faster

As of mid-2025, the average worker's 401(k) balance was $137,800, according to Fidelity.

That's a solid start, but it's still a far cry from what most people will need to generate $100,000 a year in retirement income.

If you're feeling a little late to the party, it doesn't mean you're out of the game. You can still build serious momentum -- especially if you focus on the stuff that actually moves the needle:

1. Max out your retirement accounts. If you're 50 or older, you can put in extra catch-up contributions into your 401(k) or IRAs. Any extra tax-advantages can help a lot.
2. Dial back lifestyle creep. A few small cuts to spending can free up hundreds per month for investing.
3. Keep your money working. Stay invested and avoid jumping in and out of the market. Automating your investments helps remove the emotional side which can derail your growth.
4. Talk with an advisor: A quick check-in with a pro can help you run the numbers, adjust your strategy, and spot any blind spots. Just make sure they are a fiduciary and obligated to work in your best interest (not just trying to sell you investments for their gain).

Every dollar you put away now is buying you freedom later. Even if you're starting later than you wanted, you've still got time to build something solid.