You may be hoping to retire with $1 million or more in the bank. But many of us are not likely to end up with a million dollars at the rate we're going. Here's a look at how you might do retiring with, say, $250,000. I chose that number because of the data below, from the 2025 Retirement Confidence Survey:
|
Amount in savings and investments* |
Percentage of workers |
|---|---|
|
Less than $1,000 |
16% |
|
$1,000 to $9,999 |
9% |
|
$10,000 to $24,999 |
7% |
|
$25,000 to $49,999 |
7% |
|
$50,000 to $99,999 |
12% |
|
$100,000 to $250,000 |
13% |
|
$250,000 or more |
37% |
Data source: 2025 Retirement Confidence Survey.
*excluding the value of a primary home
Fully 63% of workers don't have $250,000 socked away, and a third of them, 32%, have saved less than $25,000. They're not retirees yet, so many may end up retiring with much more, but plenty will not. So let's assume a retirement with $250,000.
Social Security
Social Security benefits are likely to be vital to these retirees. On average, as of January, retirees have been collecting $2,075 per month from Social Security, which is nearly $25,000 for the year. Anyone who earned more than average, though, can expect benefits that are higher than average -- and vice versa.
Dividends and interest
Our hypothetical $250,000 might be invested in dividend-paying stocks and/or in interest-bearing securities.
Let's say it's all in great dividend payers, with an overall average dividend yield of, say, 4% -- which is fairly generous. If so, that will generate about $10,000 per year. And since healthy and growing dividend payers tend to increase their payouts over time, that $10,000 should increase over time, too.
If it's all in CDs or bonds, it might be earning around 4% or possibly more these days. But interest rates do fluctuate. That won't be a problem if they're holding an investment to maturity, but if they're planning to buy more, they may face lower rates.
Image source: Getty Images.
What to do
You can see that this hypothetical $25,000 and $10,000, combining for $35,000 in annual income (nearly $3,000 per month) may not be sufficient. If you're seeing yourself in this scenario, take a deep breath -- and know that as long as you're still working, there's still time to improve your financial condition. Here are some things you might do:
- Save more aggressively and be sure you're investing effectively (such as in an S&P 500 index fund) via a regular, taxable brokerage account, a 401(k), and/or an IRA, among other options.
- Consider working a few more years, if possible, so that your nest egg can grow bigger and it will have to support you for fewer years.
- Try to delay claiming Social Security until age 70, if you can. For most people, age 70 is the best age at which to claim your benefits in order to maximize them.
- Perhaps take on a part-time job for your first few years of retirement -- or a side gig such as making and selling things or giving music or language lessons.
A little research can turn up more ideas.
