Can You Retire With $500k? Yes, If You Time Retirement Right

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Can I Retire On $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. If you retire with $500k, the 4% rule suggests you can take out $20,000 yearly for at least 30 years. So, if you retire at 60, your money should last until you’re 90. This 4% rate considers yearly inflation increases.

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.

Can You Retire With $500K?

How Long Will $500k Last In Retirement Calculator

Find out how long $500,000 will last in retirement with our calculator.

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% of their savings during their retirement year 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 recently, 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 guarantees you 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, they 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 is passed down to beneficiaries in a lump sum.

Helpful Tool: Annuity Payout Calculator

Can I Retire On 500K Plus Social Security

Can I Retire On $500k Plus Social Security?

Yes, you can! The average monthly Social Security Income in 2024 is $1,907 per person. In the tables below, we’ll use an annuity with a lifetime income rider coupled with SSI to better understand 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 and will be a total of $3,086.
  • A $500,000 annuity with an income rider provides a monthly income for life.
  • The starting point will be age 62 since this is the earliest age to collect SSI.
Can You Retire On $500K?

How To Retire On $500K, Starting Immediately.

The table below illustrates how much monthly income can be generated immediately with annuity payments and Social Security Income (SSI).

ADDITIONAL READINGHow Much Does A $500,000 Annuity Pay?

AgeSSIAnnuityTotal
62$3,086$2,932$6,018
65$3,086$3,073$6,159
70$3,086$3,229$6,315
Total = Monthly Income for Life
Retire With 500K

Living Off The Interest On $500,000

Some retirees like to withdraw interest from a fixed-interest savings account like a fixed annuity or CD. For example, the interest on five hundred thousand dollars is $125,461 over seven years with a fixed annuity, guaranteeing 3.25% annually.

Find all the current fixed annuity rates here.

How Long Will $500K Last In Retirement?

How Much Income Does $500,000 Generate?

For a person planning for the future, the following table will estimate how much guaranteed income a $500,000 annuity will pay out annually for the rest of a person’s life. The “Age” column is when a person purchases the annuity with income starting now or in the future. Income amounts do not include Social Security.

AgeImmediatelyIn 5 YearsIn 10 yearsIn 20 Years
40$77,532
45$86,878
50$69,400$95,434
55$45,758$71,408$103,332
60$34,063$51,274$78,440
65$36,875$56,323$84,932
70$38,750$60,985$91,263
75$41,250$68,913

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 to worry about running out of money, and you’ll be able to earn interest along the way!

Annuity Basics

Understanding Lifetime Income Riders

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

Next Steps

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!

How To Retire With $500K

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Frequently Asked Questions

Can I retire at 55 with $500k?

Yes, you can retire at 55 with $500,000, which is feasible. An annuity can offer a lifetime guaranteed income of $24,688 per year or an initial $21,000 that increases over time to offset inflation. At 62, Social Security Benefits augment this income. Both options continue payouts even if the annuity depletes. Any remaining annuity funds are inherited by a chosen beneficiary upon the annuitant’s death.

Can I retire at 60 with $500K?

Yes, you can retire modestly at 60 with $500,000, getting about $34,000 yearly from an annuity. Social Security kicks in at 62, providing an additional layer of income.

Can I retire at 65 with $500K?

Retiring at 65 with $500,000 is possible. An annuity offers an annual income of $30,938 for life or an adjustable income starting at $25,000 to counteract inflation. These payments start immediately and remain constant or gradually increase, providing a reliable income stream for the rest of your life.

Is $500,000 a good amount to retire on?

$500,000 for retirement depends on factors like location, lifestyle, health costs, and other expenses. In some places, it’s sufficient; in others, it may fall short.

Can I retire with $500k in my 401k?

With $500k in a 401k, retirement success hinges on factors like age, expenses, and investment returns. Annuities can convert that sum into lifelong income, potentially enhancing security.

Can I retire on 500k plus social security?

It is possible to retire on $500k plus social security, but it will depend on various factors such as lifestyle, expenses, and investment returns. Individuals should consider their retirement goals, expected income, and potential healthcare costs to determine if this amount is sufficient. Consulting a financial advisor can provide a more accurate assessment.

What is the maximum social security benefit?

The maximum social security benefit is the highest monthly payment an individual can receive through the Social Security Administration. As of 2021, the maximum benefit for a worker retiring at full retirement age is $3,895 per month. However, this amount may be higher or lower depending on factors such as the individual’s earnings history and the age at which they choose to begin receiving benefits.

How much does a couple need to retire?

The amount a couple needs to retire depends on various factors such as their desired lifestyle, location, and healthcare expenses. However, experts suggest aiming for a retirement savings of at least 25 times their annual expenses. For example, if their annual expenses are $60,000, they would need around $1.5 million to comfortably retire. It is advised to consult a financial advisor for a more accurate estimation.

Retirement Income Guides

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Shawn Plummer is a Chartered Retirement Planning Counselor, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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