Regarding retirement planning, most people think you need a million dollars or more to retire comfortably. But what if we told you that you could retire with just $500,000? It may sound too good to be true, but it’s not! This guide will discuss how you can achieve a comfortable retirement lifestyle with just half a million dollars. So, whether you’re just starting your career or nearing retirement age, read for some valuable advice!
Table Of Contents
- Can I Retire With $500k? Is It Enough Money?
- How Long Will $500,000 Last In Retirement?
- How To Make $500k Last A Lifetime In Retirement, Guaranteed.
- Can I Retire On $500k Plus Social Security?
- How To Retire On $500K, Starting Immediately.
- Living Off The Interest On $500,000
- How Much Income Does $500,000 Generate?
- Why Use Annuities For Retirement?
- Keeping Up With Inflation
- Things To Consider When Retiring
- Next Steps
- Frequently Asked Questions
- Retirement Income Guides
- Request A Quote
Can I Retire With $500k? Is It Enough Money?
Is half a million enough to retire on? The quick answer is “yes”! With some planning, you can retire comfortably with $500k. Remember, however, that your lifestyle will significantly affect how long your savings will last. For example, 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.
For help with budgeting, we recommend the following:
How Long Will $500,000 Last In Retirement?
The 4% rule is a guideline often used by financial advisors to help clients plan for retirement. The 4% rule suggests that retirees can safely withdraw the amount equal to 4 percent of their savings during the year they retire and then adjust for inflation each subsequent year for 30 years.
The basic idea is that if you retire with $500,000 in assets, you should be able to withdraw $20,000 per year for 30 years (or longer).
However, this rule has been debunked in recent years, and the appropriate withdrawal rate is roughly 2.8%.
How To Make $500k Last A Lifetime In Retirement, Guaranteed.
The only way to guarantee you don’t run out of money in retirement is to purchase an annuity with a lifetime income rider. This will guarantee that you receive a certain amount of money each month for the rest of your life, no matter how long you live.
For example, if a 55-year-old person purchases a $500,000 annuity with a lifetime income rider and wants to retire in 10 years at age 65, that person would receive roughly $58,680 per year for the rest of their life. If you live for 30 years in retirement, you will receive $1.76 million in payments. When the annuity owner dies, the remaining balance passes down to beneficiaries in a lump sum.
Can I Retire On $500k Plus Social Security?
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. The data will be based on the following:
- Social Security Benefits will be based on couples at $3,086 total.
- $500,000 annuity with an income rider providing a monthly income for life.
- The starting point will be age 62 since this is the earliest age to collect SSI.
How To Retire On $500K, Starting Immediately.
The table below illustrates how muchmonthly income can be generated immediatelywith a combination of annuity payments and Social Security Income (SSI).
ADDITIONAL READING:How Much Does A $500,000 Annuity Pay?
Living Off The Interest On $500,000
Some retirees like to withdraw interest from a fixed-interest savings account like afixed annuity or CD. For example, the interest onfive hundred thousand dollarsis$125,461 over seven yearswith afixed annuity,guaranteeing 3.25% annually.
Find all thecurrent fixed annuity rates here.
How Much Income Does $500,000 Generate?
For a person planning for the future, the following table will estimate how muchguaranteedincome a $500,000 annuity will pay outannually for the rest of a person’s life. The “Age” column is the age a person purchases the annuity with income starting now or in the future. Income amounts do not include Social Security.
|Age||Immediately||In 5 Years||In 10 years||In 20 Years|
Why Use Annuities For Retirement?
Annuities are the only retirement plan in the United States that provides a guaranteed income for a lifetime, even if the plan runs out of money. As a result, the annuity is a money management tool in retirement, taking all the guesswork in budgeting your day-to-day expenses. By utilizing this financial plan, a retiree will never have toworry about running out of money.
Understanding Lifetime Income Riders
Estimate Your Retirement Income Payments
Take advantage of 17 different annuity calculators to generate estimates, then request a quote.
Keeping Up With Inflation
Some annuities offer a guaranteed lifetime income that can increase regularly to keep up with inflation. Once the income increases, the payment amount is locked in and can never go backward from that point forward.
Things To Consider When Retiring
- Inflation is rising whether you like it or not.So plan accordinglyor decrease your lifestyle.
- Per the U.S. Department of Health and Human Services, you have a 70% chance of going into a Nursing Home, Assisted Living Facility, or Home Health Care. So buylong-term care insurancenow.
- There is a 100% chance you will die, buyaffordable life insurance or at the minimum,burial insurancefor funeral expenses.
Although saving for retirement can seem complicated, it is doable with some planning and self-discipline. And if you want to ensure you won’t outlive your savings, consider purchasing an annuity with a lifetime income rider. Contact us today for a quote, and let us help you get started on the road to a comfortable retirement. Thanks for reading!
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Frequently Asked Questions
Can I retire at 55 with $500k?
Yes, you can retire at 55 with five hundred thousand dollars. At age 55, an annuity will provide a guaranteed income of $24,688 annually, starting immediately for the rest of the insured’s lifetime. The income will stay the same and never decrease.
If the annuitant selected the increasing income option, they would receive $21,000 annually initially, with the income amount increasing over time to keep up with inflation.
At age 62, you can start Social Security Benefits. Combining the two sources of income could provide a fixed income stream for the rest of your lifetime.
Either lifetime income option will continue to pay the annuitant even after the annuity has run out of money. At the time of the annuitant’s death, the designated beneficiary will inherit the remainder of the annuity.
Can I retire at 65 with $500K?
Yes, you can retire at 65 with five hundred thousand dollars. At age 55, an annuity will provide a guaranteed income of $30,938 annually, starting immediately for the rest of the insured’s lifetime. The income will stay the same and never decrease.
If the annuitant selected the increasing income option, they would receive $25,000 annually initially, with the income amount increasing over time to keep up with inflation.
Retirement Income Guides
- How Much Money Do I Need To Retire?
- Is $5 Million Enough To Retire?
- How To Retire With $4 Million
- Is $3 Million Enough To Retire?
- Can I Retire With 2 Million Dollars?
- Can I Retire Comfortably With $1.5 Million?
- Is $1 Million Enough To Retire?
*Disclosure: Some of the links in this article may be affiliate links. I may receive a commission at no cost if you purchase a policy. It helps us keep the lights on!
How long will $500 000 last in retirement? ›
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.Can I retire at 70 with $500 K? ›
The bottom line is that you can retire at 70 with $500k if you are comfortable with the resulting lifestyle. Your savings will provide you with approximately $20k per year, and the average Social Security benefit will add another $18k or so.What is the average 401k balance for a 65 year old? ›
Many U.S. workers retire by the time they reach 65. Vanguard's data shows the average 401(k) balance for workers 65 and older to be $279,997, while the median balance is $87,725.What is a good monthly retirement income? ›
A good retirement income is about 80% of your pre-retirement income before leaving the workforce. For example, if your pre-retirement income is $5,000 you should aim to have a $4,000 retirement income.Can I retire at 60 with 500k? ›
Generally speaking, you can retire at 60 with $500,000, but you may not like how much income you have or it may not be enough for your needs. However, some people can retire on less.Is 500k enough to retire at 62? ›
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.Can you retire on 500k and Social Security? ›
Can I Retire On $500k Plus Social Security? 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.How much money should a 70 year old have to retire? ›
How Much Should a 70-Year-Old Have in Savings? Financial experts generally recommend saving anywhere from $1 million to $2 million for retirement.What is a decent amount of money to retire with? ›
The Final Multiple: 10-12 times your annual income at retirement age. If you plan to retire at 67, for instance, and your income is $150,000 per year, then you should have between $1.5 and $1.8 million set aside for retirement.How much do I need to retire if my house is paid off? ›
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.
What is the average Social Security check? ›
That's based on the agency's estimate that the average annual benefit was $29,806 for Social Security recipients who are age 65. The average yearly benefit for 65-year-olds in 2023 has risen to $30,708, or $2,559 a month.What is a healthy 401k balance? ›
Fidelity says by age 40, aim to have a multiple of three times your salary saved up. That means if you're earning $75,000, your retirement account balance should be around $225,000 when you turn 40. If your employer offers both a traditional and Roth 401(k), you might want to divide your savings between the two.How much does the average American retire with? ›
The above chart shows that U.S. residents 35 and under have an average of $30,170 in retirement savings; those 35 to 44 have an average $131,950; those 45 to 54 have an average $254,720; those 55 to 64 have an average $408,420; those 65 to 74 have an average $426,070; and those over 70 have an average $357,920.Can you live on 3000 a month in retirement? ›
Whether you want to retire in a big city or a small town, you can live comfortably in some places for $3,000 a month or less.Can I retire at 62 with $400,000 in 401k? ›
Can I Retire At 62 with $400,000 in a 401(k)? Yes, you can retire at 62 with four hundred thousand dollars. At age 62, an annuity will provide a guaranteed level income of $25,400 annually starting immediately for the rest of the insured's lifetime.What is a good amount of money to retire with at 65? ›
Retirement experts have offered various rules of thumb about how much you need to save: somewhere near $1 million, 80% to 90% of your annual pre-retirement income, 12 times your pre-retirement salary.How much monthly income will 500k generate? ›
So for instance, at age 55 a $500,000 annuity would pay $1,825 per month or $21,900 annually with payments beginning immediately. If you are 70 a $500,000 annuity would pay you $2,605 per month beginning immediately.What is a good amount of money to retire at 60? ›
How much should I have saved for retirement by age 60? We recommend that by the age of 60, you have about eight times your current salary saved for retirement. So, if you earn $75,000 a year, you would have between $525,000 to $600,000 in retirement savings by 60.What is a good amount of money to retire with at 62? ›
If you're looking to retire comfortably and still have a good lifestyle, you'll need to save some money. Experts typically recommend having at least $500,000 saved up before you retire.How much interest does $500 000 earn in a year? ›
Most competitive money market accounts offer APYs between 1.6% and 1.8%. A 1.8% APY would mean you earn $9,074.62 in the first year after depositing $500,000.
How much should a 62 year old have saved for retirement? ›
Suggested savings: The general guidelines recommend having eight times your annual salary saved by 60. The median income for a 55-year-old is about $57,500, which means having $460,000 saved for retirement. The average savings for those 55-65 is $197,322.Can I retire at 62 with $600,000? ›
Say that you plan to retire at 62 with $600,000 saved. You expect to withdraw 4% each year, starting with a $24,000 withdrawal in Year One. 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.Do rich retirees get Social Security? ›
Although to some degree it might seem as if billionaires and millionaires in the U.S. shouldn't be collecting Social Security, the truth is there is no law against it, and mathematically it makes sense. Social Security isn't simply a welfare program, with money handed out to anyone who asks.What is the average return on $500 000 investment? ›
However most estimates suggest that you can expect average returns up to 14%.Which is the biggest expense for most retirees? ›
Housing. Housing—which includes mortgage, rent, property tax, insurance, maintenance and repair costs—is the largest expense for retirees. More specifically, the average retiree household pays an average of $17,472 per year ($1,456 per month) on housing expenses, representing almost 35% of annual expenditures.How much does average retiree live on? ›
Average Retirement Income in 2021
According to the United States Census Bureau, the median annual income for individuals ages 65 and older is $47,620, while the mean annual income is $75,254. A few other income data points for people of retirement age are illustrated below.
The short answer is yes—$500,000 is sufficient for many retirees. The question is how that will work out for you.Is it smart to pay off your house when you retire? ›
Paying off your mortgage early frees up that future money for other uses. While it's true you may lose the tax deduction on mortgage interest, you'll have to reckon with a decreasing deduction anyway as more of each monthly payment applies to the principal, should you decide to keep your mortgage.Should I pay off my house with my 401k when I retire? ›
Paying off your mortgage may not be in your best interest if: You have to withdraw money from tax-advantaged retirement plans such as your 403(b), 401(k) or IRA. This withdrawal would be considered a distribution by the IRS and could push you into a higher tax bracket.Should I retire before my house is paid off? ›
Paying off your home mortgage before you retire is a major financial achievement, but you don't necessarily have to eliminate all housing debt in order to retire well. Low mortgage interest rates mean it can make financial sense to continue to make mortgage payments during your retirement years.
What changes are coming to Social Security in 2023? ›
The most impactful change in 2023 is the 8.7% cost of living adjustment, or COLA, which takes effect this month. For instance, if you receive $2,000 a month from Social Security, the monthly payout will rise to $2,174 per month.What is the lowest Social Security payment? ›
For 2021, the minimum earnings threshold was $15,930, and it increased to $16,380 in 2022. For 2022, a worker with 11 years of coverage receives a special minimum Social Security benefit of $45.50 per month, while a worker with 30 years of coverage gets a special minimum benefit of $950.80 per month.What is the average SS check at 62? ›
At age 62: $2,572. At age 65: $3,279. At age 66: $3,506. At age 70: $4,555.What is a good 401k balance at age 60? ›
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. So, for example, if you're earning $75,000 per year, you should have $750,000 saved.How much should I have in my 401k when I retire? ›
How much should I have in my 401(k)? A general rule is to have six to eight times your salary saved by age 60, though more conservative estimates may skew higher. The truth is that your retirement savings plan hinges on your individual goals and financial situation.What is the average 401k balance for a 61 year old? ›
|Age||Average 401(k) balance||Median 401(k) balance|
Retiring on $4,000 a month will give the average American plenty of options for a fulfilling retirement—and leave some room to splurge on the grandkids and travel.What is the number 1 place to retire in the world? ›
You'd need to save at least $480,000 before retirement if you want $2,000 per month.How long will 400k last in retirement? ›
Safe Withdrawal Rate
Using our portfolio of $400,000 and the 4% withdrawal rate, you could withdraw $16,000 annually from your retirement accounts and expect your money to last for at least 30 years.
Can you retire comfortably with $500 K? ›
The short answer is yes—$500,000 is sufficient for many retirees.What is a good amount of money for a person to retire and live comfortably? ›
This question is problematic because it depends on many things, such as your pre-retirement annual income, expenses, and retirement goals. However, in general, $150,000 is a good retirement income. This will allow you to cover most of your living expenses and leave some money for leisure activities and travel.Where to invest $500,000 right now? ›
- Stocks & ETFs. One of the most common ways to start investing is to build a portfolio of various stocks and exchange-traded funds (ETFs). ...
- Work With a Financial Advisor. ...
- Real Estate. ...
- Mutual Funds. ...
- Use a Robo-Advisor. ...
- Invest in a Business. ...
- Alternative Investments. ...
- Fixed-Income Investments.
At age 60–69, consider a moderate portfolio (60% stock, 35% bonds, 5% cash/cash investments); 70–79, moderately conservative (40% stock, 50% bonds, 10% cash/cash investments); 80 and above, conservative (20% stock, 50% bonds, 30% cash/cash investments).How much do I need to retire at 62? ›
Experts typically recommend having at least $500,000 saved up before you retire. Of course, everyone's retirement goals are different. Some people are content with a more modest lifestyle, while others want to continue living the lifestyle they did before they retired.How many millions do you need to live off the interest? ›
How much do I need to invest in living off interest? The amount you need to invest in living off interest will depend on your lifestyle and financial goals. However, most experts recommend having at least $1 million in savings to generate a reliable stream of interest-based income.Is $500 000 a lot of money? ›
“For the average working American, $500,000 would be plenty of money,” said certified financial planner Dave Totah, a senior wealth advisor at Exencial Wealth Advisors in Frisco, Texas.How long can you live off the interest of 1 million dollars? ›
Assuming you will need $40,000 per year to cover your basic living expenses, your $1 million would last for 25 years if there was no inflation. However, if inflation averaged 3% per year, your $1 million would only last for 20 years.