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

Shawn Plummer

CEO, The Annuity Expert

Regarding retirement planning, most people think you need a million dollars or more to retire comfortably. But what if we told you you could retire with just $500,000? It may sound too good to be accurate, but it’s not! This guide will discuss achieving 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 to determine if you can retire on $500k!

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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.

For help with budgeting, we recommend the following:

How To Retire On $500K

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 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.

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 2021 is $1,543 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:

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?

Total = Monthly Income for Life
Retire On 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.

Retire On $500K

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

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!

Can You Retire On $500K?

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Frequently Asked Questions

Can I retire at 55 with $500k?

Yes, you can retire at 55 with $500,000 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 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.

Retirement Income Guides

*Disclosure: Some of the links in this guide may be affiliate links. I may receive a commission at no cost if you purchase a policy. It helps us keep the lights on!

Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

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

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