With $500,000 in a Roth IRA and $2,000 in combined monthly Social Security and pension payments, you may be able to afford to retire at age 62. However, that will mean living on approximately $44,000 per year.
Yes, it is possible to retire comfortably on $500k. This amount allows for an annual withdrawal of $30,000 and below from the age of 60 to 85, covering 25 years. If $20,000 a year, or $1,667 a month, meets your lifestyle needs, then $500k is enough for your retirement. Is $500k enough?
Average Monthly Retirement Income
According to data from the BLS, average 2022 incomes after taxes were as follows for older households: 65-74 years: $63,187 per year or $5,266 per month. 75 and older: $47,928 per year or $3,994 per month.
We estimated that most people looking to retire around age 65 should aim for assets totaling between 7½ and 13½ times their preretirement gross income. From there, we identified savings benchmarks at other ages based on a reasonable trajectory of earnings and savings rates.
Retirement savings in your 70s
Americans in their 70s have an average retirement savings balance of $1,068,290; the median is $509,038, putting some 70-year-olds in the retirement millionaire bracket.
Starting with the month you reach full retirement age, there is no limit on how much you can earn and still receive your benefits. You work and earn $32,320 ($8,920 more than the $23,400 limit) during the year.
Based on those assumptions, we estimate that saving 10x (times) your preretirement income by age 67, together with other steps, should help ensure that you have enough income to maintain your current lifestyle in retirement. That 10x goal may seem ambitious. But you have many years to get there.
Those Americans won't be able to claim their FRA until they hit 67 years old, which means that someone born in January 1960 must hold off until January 2027 to get their full retirement benefits. That will mostly impact the youngest baby boomers and Gen Xers, with the latter generation spanning 1965 to 1980.
Depending on how you manage your money, you can probably expect an annual income between $48,000 (at roughly $4,000 per month) and $63,000 (at roughly $5,300 per month). More is possible if you invest for more aggressive returns, but that will mean taking on more risk.
The number of 401(k) accounts with a balance of $1 million or more jumped to a record 497,000 as of Sept. 30, up 9.5% from the second quarter, according to Fidelity. Similarly, the number of IRA-created millionaires increased by nearly 5% to a record 418,111.
Roth IRA contribution limits 2025
In 2025, individuals filing as single must make less than $150,000 to contribute the full amount of $7,000. Those married filing jointly must make less than $236,000. Above these limits, the contribution limit is decreased until it is phased out completely.
While it's difficult to pinpoint an average retirement income, the most recent Census Bureau data indicates that people 65 and older have a median annual income of approximately $54,700 or nearly $4,560 per month. A financial advisor can help you create a retirement plan for the future. Speak with an advisor today.
Half a million dollars might sound like a lot of money, but if you're approaching retirement, is it enough? If you have $500,000 in a pre-tax IRA and expect $2,000 per month from Social Security, you may have enough money to retire at age 67.
Safe Withdrawal Rate
Using our portfolio of $400,000 and the 4% withdrawal rate, you could withdraw $16,000 annually from your retirement accounts and expect your money to last for at least 30 years. If, say, your Social Security checks are $2,000 monthly, you'd have a combined annual income in retirement of $40,000.
By retirement age, it should be 10 to 12 times your income at that time to be reasonably confident that you'll have enough funds.
For those born in 1960 or later, full retirement age is 67. 67-70 – During this age range, your Social Security benefit, if you haven't already taken it, will increase by 8% for each year you delay taking it until you turn 70.
The $1,000 per month rule is designed to help you estimate the amount of savings required to generate a steady monthly income during retirement. According to this rule, for every $240,000 you save, you can withdraw $1,000 per month if you stick to a 5% annual withdrawal rate.
Those facing financial emergencies, such as a layoff or debt, may benefit from accessing Social Security early. If you retire early and need extra income, Social Security benefits can provide supplemental funds to support your new lifestyle, hobbies or retirement activities.
If your spouse dies, do you get both Social Security benefits? You cannot claim your deceased spouse's benefits in addition to your own retirement benefits. Social Security only will pay one—survivor or retirement. If you qualify for both survivor and retirement benefits, you will receive whichever amount is higher.
Social Security bases your retirement benefits on your lifetime earnings. We adjust or “index” your actual earnings to account for changes in average wages since the year the earnings were received. Then we calculate your average indexed monthly earnings from your highest 35 years of earnings.
The maximum Social Security benefit at full retirement age is $3,822 per month in 2024. It will be $4,018 a month in 2025. It's $4,873 per month in 2024 if retiring at age 70 and $2,710 if retiring at age 62. A person's Social Security benefit amount depends on earnings, full retirement age and when they take benefits.