I Have $100,000 in My IRA. Is That Enough for Retirement?

Socking money away for retirement is not an easy thing to do -- not when you have bills like car and mortgage payments to contend with. If you've managed to save $100,000 in your IRA account, you should be proud.

But are you all set for retirement with a $100,000 IRA balance? Well, that's questionable.

Your $100,000 balance may not go as far as you think

The average IRA balance as of the fourth quarter of 2022 was $104,000, according to Fidelity. So if you have $100,000 saved for retirement, you're pretty much on par with that. But while $100,000 is clearly a lot of money, you may be surprised by the relatively small amount of annual income it might translate into.

Your retirement savings have to last throughout your senior years. But it's hard to know how long you'll live once your career comes to an end. You might live 10 years, 15 years, 20 years, or longer. And so you'll want to withdraw from your savings very carefully to help ensure that you don't whittle your balance down to $0 early on.

For years, financial experts swore by the 4% rule in the context of retirement savings. This rule had you withdrawing 4% of your savings balance your first year of retirement and then adjusting subsequent withdrawals for inflation.

At this point, it's become pretty clear that the 4% rule is outdated, and that 4% is actually too aggressive a withdrawal rate. A safer rate of withdrawal for most seniors is probably somewhere in the 2% to 3% range.

But even if we go with a 4% withdrawal rate, when we apply that to an IRA with $100,000 in it, it results in just $4,000 a year of income. Now that $4,000 should be in addition to the benefits you're able to collect from Social Security. But right now, the average senior on Social Security only gets $1,827 a month.

That figure should rise in time due to inflation. But it might also be offset by Social Security cuts, which could be coming in a little more than a decade.

So all told, you'll probably want more than $4,000 of annual income to come from your retirement savings. And so if you're sitting on a $100,000 IRA, you may still have some work to do.

It pays to ramp up your retirement plan contributions

While $100,000 is far from pocket change, you may want a lot more money than that to have on hand for retirement. So if you still have a number of working years ahead of you, try your best to keep contributing to your IRA.

You may need to limit what you spend in certain expense categories to make that happen. But in exchange, you'll set yourself up to have more financial freedom later in life.

It could also pay to take a look at how your IRA is invested, and make sure you have assets in that account that lend to solid growth over time, like stocks. Playing it too safe in your IRA might force you to have to part with more money to grow your balance. But if you invest savvily, you might manage to turn your $100,000 IRA into a $200,000 IRA without having to contribute too much of your own earnings.