Can I Retire at 60 With 500K? [Answers and Suggestions]

While it may seem far off, financial security in retirement doesn’t just happen. It takes planning, commitment, and an active effort on your part. Now is the time to start asking yourself things like “can I retire at 60 with 500k or should I continue working?”.

In this article, you’ll be able to find everything you need to know – we have all the retirement advice you could possibly need!

How to Retire on 500k?

Retirement tends to be one of those subjects that aren’t at the forefront of our minds until we start approaching retirement age. This may sound unbelievable, but in 2020 alone, more than one-fourth of the workers who had access to a defined contribution plan (i.e. 401k) chose not to participate.

It’s generally recommended that you save 70% to 90% of your pre-retirement income to maintain your standard of living when you come to the age where you retire.

If you’re wondering how to retire with 500k in your 401(k) plan, you should consider two main things:

• your expenses
• your average retirement income

Understanding your living expenses will allow you to understand how much money you’ll need to maintain your lifestyle without having to rely on a state-run pension. Also consider any outstanding mortgage payments, rent, bills, and activities you enjoy.

When coming up with your budget, you should also consider potential sources of income and retirement income benefits during your retirement years, such as Social Security Income (SSI), sale of assets, withdrawals, and other contributions. This will all help you to determine your monthly income and monthly expenses to ensure you can stay financially afloat. Make sure to also take factors such as taxes and inflation into account.

How Much Money You Need Saved by Age

Saving for retirement should ideally be something that you do throughout your life. Whether you’re considering retirement at 45 or you’re happy to work until you’re 80, you need to be consistent with your financial management to ensure that you’re comfortable and stable in the later years of your life. Of course, the amount you need to save will depend entirely on the lifestyle you plan to have. However, the following examples should give you a good idea of the average 401(k) balance based on age groups:

• Age 20-29 

If you’re wondering “how much money should I have saved by 25?”, it’s good to know that the average 401(k) balance of someone in their twenties is $10,500. The average contribution rate is 11% of their monthly income.

• Age 30-39

The average 401(k) balance for 30-year-olds is $38,400. This includes an average contribution of 8%. This may be lower due to changes in budget and lifestyle as people focus on their families.

• Age 40-49

People in their forties tend to have roughly $93,400 in their 401(k). The average contribution at this age is still 8%.

• Age 50-59

Can I retire at 50? Well, the average contribution from people in their fifties is 10%. This may be because they are fast approaching retirement and start focusing on building their safety net. On average, these individuals will have $160,000 in their 401(k).

• Age 60-69

These individuals are soon to be living on their retirement income. If you are wondering “can I retire at 60?”, you may want to compare your financial situation to the average person in their sixties. This group tends to increase their contribution rate to 11%, while their average 401(k) balance is $182,000.

• Age 70-79

People still working in their seventies tend to contribute 12% of their income source into their retirement fund. Their 401(k) tends to equal roughly $171,400. If you save $500k for retirement, you’ll find you’re in a better position to retire than most 70-year-olds.

Key Takeaways

How Long Will 500k Last in Retirement?

There are many factors that can influence how long $500,000 will last you when you decide to retire. If you are frugal and live in a low-cost state, $500,000 will last you a lot longer than living a lavish lifestyle in a more expensive state. Are you wondering, “how long will my 401k last?” To calculate this, many people choose to follow the “4% rule”. This is a rule of thumb that is commonly used to determine how much a retiree should withdraw from their retirement account each year. Doing so will help provide a retiree with a steady and reliable income stream. If you choose to follow the 4% rule and save 500k for your retirement, you should have access to roughly $20,000 for 30 years.

Conclusion

Whether you’re looking to retire at 50, 60, 70, or later, there’s a whole lot to take into consideration to make sure you can retire comfortably with a sufficient income source. It’s generally best to follow rules that will allow you to live well once you reach Full Retirement Age (FRA), such as the 4% rule, which we’ve outlined in our article.