Wondering, “Can I retire at 60 with $500K? For so many people, this is the million-dollar question.
We all hope to retire comfortably one day, but what does that really mean? For some people, retirement might mean quitting their job, downsizing their homes, and living on savings for the rest of their life. For 48% of retirees, it could mean working part-time, traveling the world, and spending more time with family and friends.
No matter what your retirement dreams entail, one thing is for sure – you’ll need to have a decent nest egg saved up to make it happen. Unfortunately, the majority of Americans aren’t saving nearly enough money for their end-of-work life (according to a PwC study, one in four workers say they have no savings at all).
So, can you retire with 500k? How long will your savings last?
Keep reading to find out some important steps to take for retirement.
Factors to Consider
Financial planners frequently use the 4% rule as a formula to assist their clients in making retirement plans.
According to the 4% rule, pensioners can withdraw 4% of their savings when they stop working and then adjust their withdrawals for inflation each successive year for 30 years.
The underlying premise is that if you can live on $20,000 annually, you ought to be able to retire with $500,000 in assets for 30 yrs (or longer) after you stop working. But the reality check here is that you might not be able to survive (and be happy) on $20,000, depending on your circ*mstances and preferred way of life.
Let’s look at some of the factors that can affect how much you spend after stopping work:
Your Lifestyle
Lifestyle plays a huge role in retirement spending. Depending on your preferences, yours may be more expensive or less expensive than someone else’s. For example, if you’re like 70% of American workers who prefer to spend some of their end-of-work life traveling, then you will probably spend more than others who do not enjoy traveling as much.
The State Where You Live
Another factor that impacts spending is the state where you live. The cost of living can vary widely from one state to another. If you live in a state like Hawaii, which is the most expensive state to live in 2022, then this will result in higher retirement spending compared to someone who lives in a lower-income state with lower taxes and lower cost of living expenses.
Your health conditions can also impact retirement spending. If you have a chronic condition such as heart disease or diabetes, your doctor may recommend that you take medication that can affect your ability to save money at any age.
Cost of Property
According to the Bureau of Labor Statistics, housing is one of the biggest retirement costs for older households, accounting for $16,219 annually (32.9 percent of annual expenditure). Mortgage, housing, and property maintenance for retirees are large expenses and can add up quickly, which is why most retirees prefer to downsize after stopping work.
Cost of Food
The cost of food is another big factor that affects retirement spending. In fact, according to the Bureau of Labor Statistics, older adults spend as much as $6,066 on food annually. This is 12.3% of most people’s annual expenditure.
Inflation
Retirees tend to spend more of their money on services and items that are significantly influenced by inflation, such as healthcare, housing, and food. Plus, inflation has surged at an extremely rapid rate, forcing consumer prices to rise by 9.1% from June 2021 to June 2022. This means that your money will not go as far as it did when you initially stopped working.
Financial planners normally recommend assuming an annual inflation rate of 3% when budgeting for retirement.
Are you thinking about the future and how to protect your legacy? It’s never too early to start planning. At Interactive Wealth, we offer comprehensive estate planning services designed to ensure that your hard-earned assets are preserved and passed down according to your wishes.
Don’t leave your estate’s fate to chance. Learn more about how we can help you prepare for the future, reduce uncertainty, and avoid potential legal pitfalls.
Learn more
Is $500 000 Enough for a Single Person to Retire On?
For many people, the answer to this question is a resounding “no”.
After all, 500,000 dollars isn’t a lot of money when you consider the costs of healthcare, housing, and other basic necessities. Plus, a current belief among Americans is that they will need $1.25 million for a decent retirement, according to a 2022 Northwestern Mutual research.
But the truth is, it is possible to retire on $500,000 if your expenses are less than about $20,000 per annum. In fact, a recent GOBankingRates poll found that 38% of Americans think that $500,000 retirement is doable. Only 14% of respondents think you need between $1 million and $5 million to retire, while 30% think you can do it with between $500,000 and $1 million.
However, remember that there are a lot of variables when it comes to determining how much you will need after stopping work — such as your age, health, and lifestyle.
Can a Couple Retire with 500,000 Dollars?
It’s no secret that retirement can be expensive. But is $500,000 for retirement okay for a couple?
Census.gov data shows that in 2020, the average retirement income for married couples over 65 was $101,500. While things may have changed a lot since then, a couple may just be able to stop working on $500,000 today.
But keep in mind that how long your savings endure will depend greatly on your lifestyle. You can stretch your $500k far further, for instance, if you’re willing to live simply and don’t intend to make major life changes (like traveling or establishing a business).
Obviously, this is only a general recommendation. Depending on your particular situation, you will require this amount or a lot more money. To be on the safe side, it is recommended that you aim for a monthly income of at least 70% of your pre-retirement income if you want a comfortable retirement, whether you are a single person or a couple.
Can I Retire on $500,000 Plus Social Security?
You’ve probably asked yourself this question a million times: is $500,000 enough for retirement plus social security? The answer, unfortunately, is not a cut-and-dry yes or no.
Social Security payments are received by 90% of people aged 65 and over and account for 50% or more of the family income for at least half of them. This is different from your 401k. As a result, your Social Security payout is an essential component of your retirement planning.
According to the Social Security Administration, the average monthly payout for people receiving Social Security at the age of 62 in 2022 is around $2,364. This amounts to $28,368 annually. If you add $28,368 from social security benefits to the $20,000 benchmark retirement savings from your $500k nest egg, you could probably stop working on $500K plus social security.
But you’ll need to organize a spending plan for your retirement income that reduces taxes, as well as maximize your budget, investment returns, and Social Security benefits.
The best way to figure out what to do with your social security benefits is to consider social security tax planning so that you can optimize your income. But in the meantime, half a million dollars is a good start.
How Long Will $500,000 Last in Retirement by State
How long do retirement savings last? This is a question that comes up often, and it’s one of the first things people think about when they want to retire, especially when they look at the cost of living in their state.
For example, you can’t retire on $500,000 if you live in Alaska or Hawaii and expect this money to last for a long time. But where can you retire and how long will your money last there?
Here are some of the best states to live in retirement, and some of the worst too. Find out how long $500k will last in retirement by state.
State
Duration
Annual Expenditure
Alabama
11 years, 11 months, and 16 days
$41,821.94
Alaska
8 years, 3 months, and 7 days
$60,472.91
Arizona
10 years, 2 months, and 6 days
$49,101.53
Arkansas
11 years, 6 months, and 23 days
$43,249.31
California
7 years, 4 months, and 22 days
$67,657.34
Colorado
9 years, 11 months, and 23 days
$50,100.69
Connecticut
8 years, 7 months, and 20 days
$57,856.06
Delaware
9 years, 8 months, and 26 days
$51,337.74
Florida
10 years, 5 months, and 23 days
$47,721.74
Georgia
11 years, 9 months, and 29 days
$42,250.15
Hawaii
5 years, 5 months, and 8 days
$91,970.21
Idaho
10 years, 3 months, and 15 days
$48,578.16
Illinois
11 years, 1 month, and 19 days
$44,867.00
Indiana
11 years, 7 months, and 6 days
$43,106.57
Iowa
11 years, 8 months, and 8 days
$42,773.52
Kansas
12 years, 1 month, and 23 days
$41,155.84
Kentucky
11 years, 3 months, and 15 days
$44,296.05
Louisiana
11 years, 3 months, and 19 days
$44,248.47
Maine
9 years, 1 month, and 19 days
$54,715.85
Maryland
8 years, 5 months, and 19 days
$58,997.96
Massachusetts
7 years, 9 months, and 11 days
$64,231.65
Michigan
11 years, 6 months, and 5 days
$43,439.63
Mississippi
12 years, 7 months, and 13 days
$39,633.31
Missouri
11 years, 8 months, and 12 days
$42,725.94
Montana
10 years, 5 months, and 9 days
$47,912.05
Nebraska
11 years, 2 months, and 21 days
$44,581.52
Nevada
9 years, 10 months, and 20 days
$50,576.48
New Hampshire
9 years, 6 months, and 22 days
$52,289.32
New Jersey
9 years, 1 month, and 12 days
$54,811.01
New Mexico
11 years, 6 months, and 19 days
$43,296.89
New York
7 years, 1 month, and 1 day
$70,512.08
North Carolina
10 years, 11 months, and 23 days
$45,533.10
North Dakota
10 years, 8 months, and 12 days
$46,722.58
Ohio
11 years, 6 months, and 5 days
$43,439.63
Oklahoma
11 years, 11 months, and 16 days
$41,821.94
Oregon
8 years and 29 days
$61,900.28
Pennsylvania
10 years and 3 months
$48,768.48
Rhode Island
8 years, 11 months, and 19 days
$55,762.59
South Carolina
11 years, 2 months, and 24 days
$44,533.94
South Dakota
10 years, 4 months, and 25 days
$48,054.79
Tennessee
11 years, 9 months, and 22 days
$42,345.31
Texas
11 years, 4 months, and 29 days
$43,820.26
Utah
10 years, 7 months, and 10 days
$47,103.21
Vermont
8 years, 11 months, and and 4 days
$55,667.43
Virginia
10 years, 3 months, and 26 days
$48,435.42
Washington
9 years, 5 months, and 1 day
$53,098.16
West Virginia
11 years, 7 months, and 10 days
$43,059.00
Wisconsin
10 years, 10 months, and 24 days
$45,866.16
Wyoming
11 years, 1 month, and 19 days
$44,867.00
How Much Income will $500K Generate?
For a person planning for the future, you may not feel comfortable just dipping into your nest egg. You want it to be invested so that it earns you interest for the rest of your life.
For some people, this means investing in fixed-interest savings accounts like a fixed annuity or CD. But how much income does $500,000 generate from annuities?
If you invest $500k in an annuity when you are 60 and start earning immediately, you can expect to generate approximately $26,256 in annual income. This income is paid out monthly, so you can expect to receive approximately $2,188 a month from your annuity.
If you retire at 65 and invest the $500k, you will receive $2,396 per month, and if you buy the annuity at 70, you will earn $2,605.
Of course, the exact amount of income you’ll receive from your annuity will depend on other factors including the type of annuity you choose and the current interest rate. This is where you need asset protection retirement planning, so that you don’t make a wrong choice.
Looking for a smarter way to manage your wealth? Interactive Wealth has the expertise and personalized strategies to help you meet your financial goals and optimize your wealth. Don’t just dream about financial stability and prosperity, take the next step. Discover our Wealth Management Services today and let us guide you on your path to financial success.
Get in touch
Frequently Asked Questions
Is It Possible to Retire at 45 With $500K?
The short answer here is maybe. With a $500K income, social security benefits, inexpensive living, and a little luck, this may be doable for some people, but not everyone.
However, bear in mind that unless you get a financial windfall (in this case, be sure to hire a windfall financial planner), retiring at 45 would prevent you from entering your peak earning period, which might potentially raise your social security benefit.
Can You Retire with $500k at 50?
Yes. For many people, retiring on $500k is adequate.
Using the 4% rule of thumb, a $500K nest egg plus a source of income like Social Security, and reasonably moderate expenditure should be enough to maintain a $20K per annum lifestyle (before taxes, if any) for at least 20 years.
You can stretch it more if your expenses are less than $20,000. But while retiring at 50 with $500k may work for a single person, it may not work for couples.
Can You Retire On $500k at 55?
Yes, you can retire at 55 with $500k. According to the 4% rule, if you retire with $500,000 in assets, you should be able to take $20,000/ yr for a 30-year or longer.
Additionally, putting the money in an annuity will offer a guaranteed annual income of $24,688 to those retiring at 55. This interest will particularly come in handy for older couples with a single source of end-of-work-life income.
Will You Be Able To Retire at 60 with $500,000?
Retiring at 60 with 500k is doable if you plan to downsize, live a minimalist lifestyle, and supplement your savings through a pension plan, annuity, or Social Security benefit. At the age of 60, an annuity will offer a guaranteed income of $30,500/ yr for the remainder of the insured’s life.
No matter your age, the amount of money you need to stop working will be determined entirely by your circ*mstances.
The Final Word
Hopefully, this guide has taught you how to retire with $500k.
It’s important to remember though that what works for one person may not work for another. And there’s no one-size-fits-all answer to the question of how to invest or how much money you’ll need for your golden years.
That being said, if you’re looking for some guidance on whether or not retiring with $500k is possible, the best thing to do is speak with a financial advisor. They can help you determine what’s realistic for you based on your individual circ*mstances.
Interactive Wealth Advisors (IWA) is a holistic wealth management firm that specializes in retirement planning. If you are worried about whether the size of your current nest egg is enough to accommodate your end-of-work life, IWA’s team of financial advisors can answer all your questions.
We have a team of experienced financial advisors who can help you create a plan that fits your unique needs and goals.
Yes, you can retire at 55 with $500k. According to the 4% rule, if you retire with $500,000 in assets, you should be able to take $20,000/ yr for a 30-year or longer.
If you retire with $500k in assets, the 4% rule says that you should be able to withdraw $20,000 per year for a 30-year (or longer) retirement. So, if you retire at 60, the money should ideally last through age 90. If 4% sounds too low to you, remember that you'll take an income that increases with inflation.
According to the Schroders 2023 U.S. Retirement Survey, working Americans age 45 and older expect they will need about $1.1 million in savings in order to retire, but only 21% of people in that age group expect to have even $1 million. That's down slightly from the 24% in 2022 who said they expected to save that much.
With some planning, you can retire at 60 with $500k. Remember, however, that your lifestyle will significantly affect how long your savings will last. If you're content to live modestly and don't plan on significant life changes (like travel or starting a business), you can make your $500k last much longer.
How much do people save for retirement? In 2019, about 50% of households reported any savings in retirement accounts. Twenty-one percent had saved more than $100,000, and 7% had more than $500,000.
Few Americans have saved more than $200,000: 4% have between $200,000 and $350,000, 4% more have $350,001 to $500,000 and a little more than 5% have more than $500,000.
The national average for retirement savings varies depending on age, but according to the Economic Policy Institute, the median retirement savings for all working age households in the US is around $95,776. This figure includes both employer-sponsored retirement accounts and individual retirement accounts (IRAs).
The majority of retirees are not millionaires but it's possible to reach $1 million in savings if you're strategic in your approach. Getting an early start can be one of the best ways to reach your goal, as you'll have more time to benefit from compounding interest.
There are 5.3 million millionaires and 770 billionaires living in the United States. Millionaires make up about 2% of the U.S. adult population. While an ultra-high net worth will be out of reach for most, you can amass $1 million by managing money well and investing regularly.
More than one quarter of Americans have no money saved for retirement, according to a new survey. Almost one in five people age 59 and older said they didn't have a retirement account, which compared to a quarter of Generation X respondents.
The rule essentially states that you can withdraw 4% annually from a well-diversified retirement portfolio, adjust your 4% every year for inflation, and expect your money to last for at least 30 years.
You might need $5 million to $10 million to qualify as having a very high net worth while it may take $30 million or more to be considered ultra-high net worth. That's how financial advisors typically view wealth.
One rule of thumb is that you'll need 70% of your pre-retirement yearly salary to live comfortably. That might be enough if you've paid off your mortgage and are in excellent health when you kiss the office good-bye.
According to data from the BLS, average incomes in 2021 after taxes were as follows for older households: 65-74 years: $59,872 per year or $4,989 per month. 75 and older: $43,217 per year or $3,601 per month.
Yes, you can! The average monthly Social Security Income in 2021 is $1,543 per person. In the tables below, we'll use an annuity with a lifetime income rider coupled with SSI to give you a better idea of the income you could receive from $500,000 in savings.
Experts advice to have 10x of your annual salary saved by retirement age at 65. The average person aged 65-74 has $1,217,700 in net worth. The median net worth is $266,400.
Somewhere around 4,473,836 households have $4 million or more in wealth, while around 3,592,054 have at least $5 million. Respectively, that is 3.48% and 2.79% of all households in America.
What's better, the 2018 Retirement Savings assessment shows 16 percent of Americans have $300,000 or more saved; 10 percent have $200,000 to $299,999; and 12 percent have $100,000 to $199,999. Twenty percent of survey respondents report having somewhere between $10,000 and $100,000 in their nest egg so far.
The average net worth of Americans aged 65 to 74 hovers around $1.2 million. The median net worth is lower, at $164,000. The typical 70-year-old has around $105,000 in debt, including mortgages, home equity loans, credit cards and student loans, as measured by the Fed's data.
According to the Social Security Administration (SSA), the average monthly retirement benefit for Security Security recipients is $1,781.63 as of February. Several factors can drag that average up or down, but you have the most control over the biggest variable of all — the age that you decide to cash in.
People ages 65 and older had an average income of $55,335 in 2021. Average annual expenses for people ages 65 and older totaled $52,141 in 2021. 48% of retirees surveyed reported spending less than $2,000 a month in 2022. 1 in 3 retirees reported spending between $2,000 and $3,999 per month.
At least 53% of Americans admit they don't have an emergency fund, according to a recent poll conducted by CNBC and Momentive. That figure skyrockets to at least 74% for those with a household income below $50,000 per year.
Nearly Three-Quarters of Retired Americans Have Non-Mortgage Debt. Because so many retirees have little to no savings, it's not too surprising that the majority are carrying debt. The most common types of debt held by retirees are credit card debt (49%), mortgages (24%), car payments (20%) and medical bills (18%).
A new survey shows that America's highest earners don't plan on retiring until they are at least 70 years old. Lower-income groups—and even those considered "affluent"—plan to retire much younger, according to the study from Spectrem Group, a wealth research firm.
Additionally, statistics show that the top 2% of the United States population has a net worth of about $2.4 million. On the other hand, the top 5% wealthiest Americans have a net worth of just over $1 million. Therefore, about 2% of the population possesses enough wealth to meet the current definition of being rich.
This is according to a study conducted by Ramsey Solutions, which is the largest study of millionaires to date. The average age of a millionaire is 49 years old, which means it takes them over 27 years of saving and investing to reach this status. This may seem daunting, but the truth is, it's never too late to start.
How old is the average millionaire? The average millionaire is 57 years old. This is because it takes smart financial decisions, hard work, and wise investments to become a millionaire, most of which don't fully pay off until around the age of 50 or 60.
The median baby boomer household isn't doing much better, with $134,000 in retirement savings in 2019, the most recent federal data. That's about one-third of the average retirement savings in that age group, $408,420, a figure inflated by the super-rich.
Across those 50 metros, an average of about 19% of homeowners who are 65 and older still have a mortgage. We also found that homes owned by people in this age group tend to be less valuable than those owned by the general population — and that their monthly housing costs tend to be lower.
The 4% rule for retirement is a guideline that suggests withdrawing 4% of your savings each year in order to have a 95% chance of not running out of money. This amount is adjusted for inflation, so you can live comfortably in retirement without fear of outliving your money.
By age 40, you should have three times your annual salary already saved. By age 50, you should have six times your salary in an account. By age 60, you should have eight times your salary working for you. By age 67, your total savings total goal is 10 times the amount of your current annual salary.
Many experts recommend saving at least $1 million for retirement, but that doesn't take your individual goals, needs or spending habits into account. In turn, you may not need anywhere near $1 million to retire comfortably. For instance, if you have $500,000 in your nest egg, that could be plenty for your situation.
Your money earns a 5% annual rate of return while inflation stays at 2.9%. Based on those numbers, $600,000 would be enough to last you 30 years in retirement.
Data from the Federal Reserve shows that the average savings in the United States at retirement age is just $255,200. So if you find yourself with $400,000 in assets at retirement age, congratulations! You're doing much better than average.
Many have graduate degrees with educational attainment serving as the main distinguishing feature of this class. Household incomes commonly exceed $100,000, with some smaller one-income earners household having incomes in the high 5-figure range.
However, one measure that many overlook is net worth. Your net worth represents how much wealth you have, measured by assets like a house, cars, 401(k), jewelry or cash in the bank, minus the debt obligations you have, or what you owe.
Many Retired People Don't Expect to Pay Off Mortgages
Traditionally, homeowners looked forward to paying off their mortgage before retirement and living out their golden years without the heavy burden of a monthly house payment. But that scenario is becoming less common, according to a recent survey.
While most Americans expect to have their mortgage paid off by retirement, more than one in five of those individuals are still paying off their homes at age 75. Click here to check out 23 other investing statistics from Financially Simple.
Key Takeaways. Paying off a mortgage can be smart for retirees or those just about to retire if they're in a lower-income bracket, have a high-interest mortgage, or don't benefit from the mortgage interest tax deduction. It's generally not a good idea to withdraw from a retirement account to pay off a mortgage.
With some planning, you can retire at 60 with $500k. Remember, however, that your lifestyle will significantly affect how long your savings will last. If you're content to live modestly and don't plan on significant life changes (like travel or starting a business), you can make your $500k last much longer.
First, let's look at some statistics to establish a baseline for what a solid retirement looks like: Average monthly retirement income in 2021 for retirees 65 and older was about $4,000 a month, or $48,000 a year; this is a slight decrease from 2020, when it was about $49,000.
Total Portfolio After 10 Years: If you invest in REITs and other securitized assets, given the index average of 5.65%, you should expect a portfolio worth $866,293. If you buy a house, hold it and sell it, you should expect a portfolio worth $920,000.
However, there are some general guidelines you can follow. If you want a comfortable retirement, you should aim for a retirement nest egg of at least $500,000. This will give you a monthly income of $2500, enough to cover basic expenses and live a modest lifestyle. Of course, this is just a general guideline.
Once you have $1 million in assets, you can look seriously at living entirely off the returns of a portfolio. After all, the S&P 500 alone averages 10% returns per year. Setting aside taxes and down-year investment portfolio management, a $1 million index fund could provide $100,000 annually.
So as a general rule, experts recommend counting on needing 70% to 90% of your current expenses. Next, you will have to choose an interest rate. Banks have paid under 1% in recent years, while they used to pay in the high single digits in the early 1990s. If you want to be conservative, you could go with 1% to 3%.
The Federal Reserve's most recent data reveals that the average American has $65,000 in retirement savings. By their retirement age, the average is estimated to be $255,200.
Many people are worried about how they will survive financially after retirement. According to a United States Census Bureau report, Social Security income accounts for over 50% of retirees' total monthly income. Only 17.2% of earnings come from retirement accounts.
Across those 50 metros, an average of about 19% of homeowners who are 65 and older still have a mortgage. We also found that homes owned by people in this age group tend to be less valuable than those owned by the general population — and that their monthly housing costs tend to be lower.
First, let's look at some statistics to establish a baseline for what a solid retirement looks like: Average monthly retirement income in 2021 for retirees 65 and older was about $4,000 a month, or $48,000 a year; this is a slight decrease from 2020, when it was about $49,000.
Introduction: My name is Greg Kuvalis, I am a witty, spotless, beautiful, charming, delightful, thankful, beautiful person who loves writing and wants to share my knowledge and understanding with you.
We notice you're using an ad blocker
Without advertising income, we can't keep making this site awesome for you.