I Have $100,000 in Retirement Savings and I’m 30 Years Old. Am I All Set?

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A $100,000 nest egg is a great start for a 30-year-old. But read on to see why it pays to try to build on that sum. 

You’ll need to bring savings with you into retirement if you want your senior years to be comfortable, financially speaking. And the higher your IRA or 401(k) balance, the more you might get to enjoy retirement once you’re ready for that stage of life.

Recent data from Northwestern Mutual shows that the average 30-something has $67,400 saved for retirement. So if you’re sitting on a $100,000 savings balance at age 30, it means you’re ahead of the game.

But is having $100,000 by age 30 enough for you to stop pumping money into your IRA or 401(k)? You may decide that it is, or that it’s not — it depends on how much financial freedom you want later in life.

More money means more options

Over the past 50 years, the stock market has delivered an average annual return of 10% (before inflation), as measured by the performance of the S&P 500. So let’s say you have a $100,000 IRA that’s invested in S&P 500 stocks or ETFs. If your anticipated retirement age is 65, that gives you 35 years to grow that $100,000 into a larger sum. And at an average annual 10% return, you’ll be looking at a nest egg worth $2.8 million by the time retirement kicks off — even if you don’t contribute another dollar.

It would not be unreasonable to say that you’re more than happy with a savings balance that high. But before you make the decision to stop funding your nest egg, recognize a few things.

First, just because the stock market’s performance over the past 50 years has resulted in an average annual 10% return doesn’t mean that’s the performance it will deliver over the next 50. If the market only delivers an average annual 7% return, for example, and that’s the return you snag in your IRA, you’ll be sitting on a little less than $1.1 million by age 65, not $2.8 million. That’s still a fair amount of money in its own right. But it may not buy you the retirement you want.

What’s more, if you have the ability to keep funding your IRA for the remainder of your career, you could conceivably retire with well more than $2.8 million. And the more money you have as a retiree, the more options you have. A $3.8 million nest egg versus $2.8 million could make it so you’re able to spend six months out of the year traveling, as opposed to just three months.

Plus, you might appreciate having the option to help out your grown kids or future grandkids in retirement. Let’s say part of the reason you were able to build up a $100,000 nest egg by age 30 was that you graduated college without any debt because your well-off grandparents picked up the tab. Wouldn’t you like the option to be able to do the same for your grandkids?

Feel good about where you’re at, but don’t necessarily give up on saving more

To have $100,000 in retirement savings by age 30 is an extremely impressive feat, and one you should feel proud of. But frankly, if you were able to sock away enough money to have $100,000 by age 30, then you’re probably in a position to keep funding your IRA or 401(k) to some degree. So you might as well take advantage of that option if it doesn’t negatively impact your life in other ways.

Also, realize that it’s okay to pause your retirement plan contributions temporarily to meet other goals. If you have $100,000 in retirement savings by age 30, you may decide to spend the next seven years putting all of your spare cash toward a down payment on a home. If that’s the case, then resume retirement plan contributions in your late 30s.

There are so many options you can play around with. So take advantage of your strong start and do what works best for you.

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