Can I Retire at 60 with $500k

We discuss the question you might be asking yourself in terms of whether you have enough funds to retire at a certain point. Today we look at the big questions – can I retire at 60 with 500k?

Keep in mind there are many issues and variables that go into such questions, and only you can answer them. But going through the process of consideration, should help you determine how realistic it is for you to retire at any age and with any amount of assets.

Key Considerations:

• What the experts say you will need
• How long you might have to plan for
• What’s your current budget
• Estimated retirement budget
• Sources of income

I’m 60 Years Old With 500k for Retirement, Now What?

You’re at or fast approaching the start of your sixth decade. And for the first time, you suddenly feel a little bit…well, your actual age…for some maybe even a little bit…older.

You notice you feel just a bit weary and there’s less spring in your step. You still feel sharp as a tack, but you’re noticing you sometimes forget names during conversations, such as those of your spouse or kids. Ouch!

But you’re wise enough to play it off as a joke.

That’s just how it goes…we age.

Whether you’re sixty, or nearing, you start to wonder whether you can seriously contemplate retiring while you still have some good “tread on the tire,” as it were.

You know you have roughly $500k in various accounts, which is a fair sum, but now you are thinking it’s time to get serious about moving on to the next stage in life.

Sound familiar?

So the question becomes real versus theoretical – whether or not it’s feasible to retire at your current age and with your current savings.

Let’s take a look.

Broad Answer 

The down and dirty answer for the main question of whether you can retire at 60 with 500k is that you need approximately eight (8) times your annual salary at age 60, according to Fidelity. So, if you earn $65,000 annually now when you are 60, you need $520,000 saved in order to retire.

There you have it. You can retire at 60 with 500k. End of story…

Well, not so fast. That is VERY broadly speaking.

Key Considerations

Fact is the “broadly speaking” answer is waaaay general.

There are many issues and variables that must be considered when it comes to retirement and what will be required, what you will probably need, what you should expect, things that might occur, and more.

All of those things must be considered to ensure you have a good handle on this critical question. And more importantly, to ensure you don’t outlive your assets and can live the retirement you envision.

How Long Will I Live If I Retire at 60?

The first thing you need to consider is how long retirement might last. If you plan to retire at 60ish, there’s at least a decent chance you could live into your 90s, so you better consider up to 30-plus years in retirement.

In terms of average life expectancy, the Center for Disease Control and Prevention (CDC) reports that it declined for Americans recently, to 76.1 in 2021 from 77 in 2020. For females the average life expectancy in the U.S. as of 2021 is 79.1 years, while that of males is 73.2.

Heredity, health, habits (good and bad), where you live, and much more come into play with life expectancy.

If your family tree is full of people who lived well into their 90s, you should probably consider the same possibility for yourself.

If not, well, you get the picture…

What’s Your Current Budget?

What you spend currently on a monthly and annual basis is an important factor to consider, as it provides context in terms of what your future budget might look like during retirement.

If you can comfortably cover your monthly bills and the debt you might have on things like cars, home mortgage, etc, then you can use that figure for a comparative basis regarding retirement.

You also want to look at what you actually spend money on each month. This should include fixed, straightforward, and more discretionary expenses, such as movies, dining out, hobbies, spending on kids and grandkids, travel, and more.

Going back to our earlier example, if you’re 60 now and have an annual salary of $65k, your gross monthly salary is $5,400. According to Talent.com, your net pay if you lived in Florida would be $52,960 per year or $4,413 per month.

That figure doesn’t begin to account for qualified (before-tax) contributions to retirement accounts (think 401(k) or IRAs), health savings accounts, etc.

Assuming you are able to cover your expenses comfortably now, then when you retire that monthly figure is a good starting spot in terms of what you will need then, perhaps even less.

The key will then be determining if you can replace that income to ensure you are able to maintain the same standard of living when you retire.

 Can I Retire at 60 with 500k with Some Good Budgeting?

When putting together a retirement budget, you definitely should start with the one you use now. To that you need to add costs associated with your retirement desires, such as engaging in charitable giving, passing money on to your kids and grandkids, and bucket list type activities, such as travel or moving to a warm locale.

Keep in mind some of your current budgets may go to items that will likely decrease or be eliminated when you retire, such as those associated with raising kids, commuting costs, the home mortgage and car payments, etc.

On the flip side, you can expect your healthcare costs will likely go up – perhaps significantly. There’s also the issue of long-term care, which many simply skip and hope they won’t need, which is a big risk.

Ultimately you want to try to concisely project what you will spend each month and year, based on what you do know now.

Even having done that, you need to buffer for the unexpected, which you can’t know at this point.

Taking all of that in account, let’s say you’ve determined your monthly bills add up to $3,500. Over 30 years you would theoretically need $1.26 mil to maintain the same standard of living. Calculated over 20 years (at $42,000 annually), you would need $840k.

Quite a bit of disparity, but either figure is obviously well north of what you have now.

To move forward from this point, you need to look at your potential income sources, as they will be key in answering whether you will have enough to replace your current income and in determining where adjustments will be needed.

Sources of Income For Retiring at 60 with 500k

In contemplating retirement, you’ve probably focused mostly on what you’ve accumulated, but not given much thought to other sources of income. This can range from social security, royalties, part-time or consulting work, rental income, turning that hobby into a business, and much more.

Those things, along with the $500k you have accumulated in savings, will combine to fund your retirement and be used to meet your budget demands.

Going back to the example, your $500k in savings could provide $1,389 per month over 30 years.

In terms of social security, that adds up as well, given the average monthly benefit for retired workers as of 2023 is $1,830, according to the Social Security Administration. (These benefits are based on a number of factors, so you need to check with the SSA to determine what your benefits will be).

Using the same example, you would have approx. $3,200 in monthly income between the two sources, although that doesn’t take into account taxes.

The good news in this scenario is you are getting close to your projected monthly retirement budget figure of $3,500.

If you have other sources of income (previously detailed), you might find you have more than needed.

Keep in mind there are specialized tools or products and strategies that can be utilized specifically for retirement. One example is that of Fixed Index Annuities or FIAs, which are capable of providing potential double-digit returns without market risk or that of your principle, as well as lifetime income you can’t outlive.

There are also trusts and tax strategies that can be utilized to reduce taxes by thousands to tens of thousands, plus protect assets, and provide myriad additional benefits.

Last thing on income – when considering tapping into your social security benefits, you do want to remain cognizant of the fact that while you can take them out earlier, doing so will result in reduced payments.

Holding off until you reach the age of full retirement, which for many is 67, will increase your benefit payments, thus increasing by a fair amount your monthly income once you reach that age.

So, Can I Retire at 60 with 500k?

When it comes to determining whether you can retire at age 60 with $500,000, there are obviously many variables. They tend to fall into the categories of available income, expected expenses, your desired standard of living, plans and goals in retirement, as well as health, how long you expect to live, and more.

As demonstrated above, you can potentially get there in terms of retiring with that amount and at that age, but the only way to know is to look at your own situation and take all of these variables and issues into account. Doing so should allow you to make an informed decision.

The bigger question you might want to ask yourself at this point is should you be making such a huge decision on your own that will impact the rest of your life?

There are tons of moving parts and considerations, so why forgo information and insights from a qualified retirement planner or financial advisor when contemplating such a critical decision.

More importantly, given the magnitude of the situation, you need a comprehensive plan that will guide you through retirement. Working with a retirement professional can help you build one customized to you and your situation, thus ensuring you have the best opportunity to retire successfully and in a manner of your choosing.

We’d be happy to assist you as you contemplate retiring. We know retirement and can help you navigate the process, ensuring you cover all the bases, issues and decisions, providing peace of mind as you do so.

If you’re ready to take the next step and talk to a team of financial advisors and retirement planners who put your interests first, Schedule a call today!