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Can I Retire at 60 With 500k? Is it Enough?

In the United States today, “can I retire at 60 with 500k?” 

For some people, half million dollars is a lot of money to retire on, considering the fact that not too many people have or expect to have $500,000 in their retirement savings account in their golden years.

For others, 500k is just not enough to retire comfortably, because their lifestyle simply won’t allow it.

So, there are a number of factors that can impact whether 500k is enough money to retire on at the age of 60, including but not limited to:

  • your overall retirement saving goals;
  • the lifestyle you want to maintain during retirement;
  • cost of living;
  • where you want to live;
  • how long you expect to live;

With this in mind, here’s a quick look to see if it’s possible to retire at 60 if you only have 500k in your retirement savings account.

Before you go ahead with any of these tips below, get independent advice from a financial advisor.

Retire on 500k at 60?: the 4 percent rule.

Retiring on 500k is totally possible, but you should know first about the 4% rule.

The 4 percent rule is a rule of thumb used to determine how much money a retiree should withdraw from his or her retirement account.

It states that money in your retirement savings account should last you through 30 years of retirement if you take out 4% of your retirement portfolio annually and then adjust each year thereafter for inflation. 

So, if you plan on retire with 500k at 60 for 30 years, using the 4 percent withdrawal, you will need to live on $20,000 a year.

In most cities in the United States, $500,000 may not last that long in retirement. That’s why so many financial advisors would recommend something higher like a minimum of $1 Million.

Again, you can retire on less than what financial experts you need. It depends on your individual needs and circumstances.

Keep in mind that the 4% rule only works through 30 years of retirement and not for an indefinite amount of time. 

As mentioned above, life expectancy plays a role in how much money you need to retire. Living longer means you’ll need more money.

If you are in good health and if you expect to live for 40+ years after retiring at 60, $500,000 may not be enough to retire on. 

So, can I retire at 60 with 500k?

Whether you can retire with just $500k at the age of 60 varies widely depending on what state or city you’re planning to retire.

And as mentioned, your lifestyle, cost of living, life expectancy will also impact your nest egg.

Smart Asset’s key findings.

A study by Smart Asset in 2019 of the most expensive vs least expensive places to retire reveals the following:

  • In any major cities, you’ll need at least a minimum of $1 million dollars to maintain the national average standard of living.
  • The less expensive places are located in the south, and the amount needed to retire is less than $650,000.

Note these figures represent the average and the national standard living. So, some people can retire on way less than that $650,000 or below the national standard of living.

What is your lifestyle?

Some people can go by on $20,000 a year with no problem. While others will not be able to. So, it also depends on the kind of lifestyle you’re going to have during retirement.

It also depends on other factors such as your living expenses.

For example, you may already own your home, free and clear, with no mortgage. That’s a big reduction on your expenses.

Second, you may not have any kids that are dependent on you. And if you do have kids, they have already graduated college and are able to take care of themselves.

Lastly, you may have no problem living frugally.

So if your expenses are low, 500k is enough to retire at age 60.

Selling your home and downsizing

Another option for you to consider is to sell your home and downsize. Then, take the proceeds to buy a smaller or less expensive home.

This can make sense if there are not too many of you living in the home. If your kids are no longer living with you and have no intention of coming back, it makes sense to downsize.

Indeed, downsizing can free up money for you to invest and spend. Plus, when you downsize, you lower insurance bills and utility bills.

Consider retiring in another country

While 500k may not be enough to retire at 60 in some places in the States, it sure will be enough in a lot of countries.

500k in countries like Dominican Republic, Mexico, Panama, the Philippines, and so many others should be enough to retire on. 

In fact, these places have been consistently ranked among the cheapest places to retire overseas year after year. 

But if you’re thinking about retiring in another country, weigh the pros and cons. A low cost of living is attractive, but the health system–i.e, access to hospital, etc; security, may not be.

So, before you make it official, make an extended visit to make sure the country suits your needs.

How to retire on 500k at the age of 60

There’s a lot you can do to save up 500k in order to retire at 60. Even if you’re approaching retirement, you can take steps now to boost your retirement savings.

Make a budget.

Once you know the kind of lifestyle you want to have during your non-working days, you are in a better position to budget for it. 

Better yet, a budget can let you know if $500,000 is indeed  a realistic amount of money you can retire on.

The budget should take into account your living expenses, food, utilities, transportation, etc. You can use your current expenses as a baseline for now.

But know that your life will change from now and then. You might be able to get rid of some expenses in retirement. 

Talk to a financial advisor

A financial advisor specializing in retirement planning can help you with your retirement goals. They can help put in a place an investment strategy to put you in the right track to retire on 500k at 60.

If you need to hire one in your local area, try SmartAsset’s free tool. It matches users with financial advisors in just under 5 minutes.

But before hiring a financial advisor, you should do your research. More importantly, you should know they pay structure and how much they charge for their services.

Participate in your employer’s 401k.

If you are employed, and you have a 401k plan available to you at work, you should definitely participate in it. Nothing can boost your retirement savings quicker than a 401k account.

Related: How to Become a 401k Millionaire.

If you do participate and if you can afford it, contribute to the maximum allowed. In 2020, the maximum you can contribute is $19,500 if you are under the age of 50. 

The 401k contribution limits for older employees, i.e., 50 years and older, is $19,500 plus an extra $6500.

That extra is called a catch up contribution limit. That brings the total 401k contribution limits to $26,000 (for tax year 2020), for those 50 and older.

Also, take advantage of the company match if if your employer offers a match.

In addition to the maximum contribution of $19500 you can make to your 401k, your employer also contributes. In some cases, they match dollar for dollar or 50 cents for each dollar the worker pays in.

Open a Roth IRA or Traditional IRA.

In addition to a 401k plan, aim to supplement your retirement savings with a Roth or traditional IRA as well.

Analyze if your 401k account is doing well.

Don’t just open a 401k account and contribute. Be more proactive and see how well it is doing. 

If you’re not sure if your 401k or IRA accounts are doing well, Blooom can help you to make sure you’re on the path to retire at 60 with 500k. Blooom is an online retirement management software that can help you grow your 401k or IRA accounts.

They will do a free analysis of your account and get you personalized suggestions on how to invest your current 401k in minutes.

Click here to connect your 401k accounts to Blooom.

Save More.

Participating in your employer’s 401k plan and/or opening a Roth or traditional account is an obvious way to save for retirement. 

But another approach is to increase your savings wherever you can — i.e., find a side hustle, take up a part-time job, complete online surveys, etc. 

This extra income can quickly add up and should go straight to your retirement savings.

Indeed, the more money you can save the better. You want to make sure you take into account for unexpected expenses as well during retirement.

If you have to pay some unexpected medical bills, that may drain your retirement savings faster than you anticipated.

Use your raise & tax refunds

If retiring on 500k at 60 is really your goal, you should take advantage of every saving opportunities. That means, if you get a raise at work, put some of it towards your savings account.

If you get a tax refund or a bonus, use some of that money towards your retirement savings account. They can add up quickly and make retiring on $500,000 more of a reality.

Rent out space in your home

Another way to maximize your retirement savings is to consider renting out a room in your home. The rent proceeds is another income that will boost your savings.

Retiring on 500k at 60: The Bottom Line

Can I retire at 60 with 500k? The answer is it depends. Everyone’s retirement is different.

While 500k may be a lot of money to retire for some; it’s simply not enough for others. But retiring on 500k is definitely possible. But make sure $500,000 suits your budget, lifestyle and level of independence in retirement.

To attain your goal of retiring with $500k at 60, consider downsizing or renting out a room. Selling your home can free up money to invest.

Or you can stay in your home and renting out a room.

Read More:

Work with the Right Financial Advisor

You If you want to know if you can retire at 60 with 500k, you can talk to a financial advisor who can review your finances and help you reach your retirement goals (whether it is making more money, paying off debt, investing, selling a house or renting out a room, or boosting your saving, etc).

Find advisors near you with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.

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