I'm Retiring With $200,000. Am I in Good Shape?

A lot of us worry about whether we have enough retirement savings. An April 2024 AARP survey found that 61% of Americans are concerned they won't have enough savings to support themselves in retirement.

If you're planning to retire on a $200,000 nest egg, you may be wondering: Is that enough to retire on? Let's break down what kind of retirement you can expect with $200,000 in savings.

Is $200,000 in retirement savings enough?

Many financial advisors recommend replacing about 80% of your pre-retirement income in your senior years. In other words, if you earn a $60,000 salary, you'd want an annual retirement income of at least $45,000.

That income can come from a number of sources, including:

• Withdrawals from retirement accounts, like individual retirement accounts (IRAs) and 401(k)s
• Cash savings in a bank account
• Social Security benefits
• Pensions
• A reverse mortgage
• Rental income
• Passive income from sources like bonds and dividends
• Earnings from a part-time job

If your $200,000 is in a retirement account, your first step is to figure out a safe withdrawal rate. An oft-cited guideline is that retirees should limit their withdrawals to 4% of their nest egg during the first year of retirement, then adjust the amount for inflation each year after that. So if you're retiring with $200,000, you could afford to withdraw $8,000 the first year in retirement.

Of course, $8,000 a year isn't enough to retire on. But let's assume you're aiming to have $45,000 a year in retirement. We can imagine how you might get there with various sources of income.

• $8,000 from annual retirement account withdrawals
• $24,000 from Social Security, or $2,000 per month (in January 2025, the average monthly benefit for retired workers will be $1,976/month)
• $6,000 from a reverse mortgage ($500 per month), assuming you have substantial home equity
• $7,000 annually (or $583 per month) from working a part-time job or gig work, like driving for Uber or delivering groceries for Instacart

Total: $45,000

In our example, $200,000 is enough to retire on because you're still willing to work a bit, you're getting a decent Social Security benefit, and you can draw on your home equity for income. But if your Social Security benefit will be a lot lower, you don't own your home, or you can no longer work, retiring on $200,000 could be a challenge.

But keep in mind that the 75% income replacement guideline isn't appropriate for everyone. If you live frugally and you're retiring with no debt in a low-cost state, you may need less than that. Conversely, if you're retiring with a mortgage and other debt, you want to travel extensively or spoil the grandkids, or you're retiring to a high-cost state, you may need more.

What if $200,000 isn't enough?

If you're still working and you want to beef up your $200,000 nest egg, look for opportunities to save more. If you want to supplement your workplace savings and have access to a huge range of investment options, check out our picks for the best IRA accounts.

You can also adjust your savings rate if you have a 401(k) or another workplace plan. If you can afford to, take advantage of catch-up contributions, which are additional contributions people 50 and older can make. In 2025, you can contribute:

• Up to $7,500 for most workplace plans if you're between the ages of 50–59, or you're 64 or older.
• Up to $11,250 to most workplace plans if you're ages 60–63.
• Up to $1,000 to an IRA if you're 50 or older.

Often, the best solution when your retirement savings is lacking is to work longer. That doesn't mean working forever, but staying on the job for just another couple of years can make a big difference in your retirement security.

Suppose you have $200,000 in retirement savings at 65, which is when you planned to retire. Instead, you decide to keep working for two more years. You save an additional $1,000 per month in your retirement accounts while you're still working.

By working those two extra years, you save more, plus your $200,000 has extra time to compound. If you earned 8% annual returns, you'd have about $260,000 after two more years. Not only do you have more savings, but that money doesn't need to last quite as long since you shortened your retirement by two years.

If you also delayed your Social Security benefit until 67, which is the full retirement age for those born after 1959, you'd also increase your benefit by over 13%. If working longer isn't an option, you may need to downsize your retirement plans by moving to a cheaper area or a smaller residence.

No matter how much you have saved, retirement planning requires some flexibility. Saving a bit more or working just a little longer can make a big difference to your bottom line during your golden years.