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. A half million dollars is a relatively modest nest egg, but it can still generate a comfortable income depending on your standard of living.
Here's what to think about as you plan for retirement around these figures. A financial advisor can help you build a comprehensive plan for retirement. Match with a fiduciary advisor today.
First of all, make sure to consider your health and longevity. Are you planning to retire at age 67 for health reasons or will you be healthy enough to continue working, if you need to? As you hit your late 60s and 70s, your health may become more unpredictable.
Even if you're still in good health, your workday may become more tiring as time goes on. You may not be able to continue working after 67, regardless of finances. So while it's worth considering whether you can continue to work beyond age 67, it's also critical to think about how long your $500,000 may last in the event that you need to call it a career at 67.
A financial advisor can help you decide when the right time is to retire. SmartAsset and Yahoo Finance LLC may earn commission or revenue through links in the content below. The next question is how much money your portfolio will generate.
"Lower net worth situations typically imply less room for error," Bryan M. Kuderna, founder of the Kuderna Financial Team told SmartAsset. "There's always a lot to consider, but… removing variables to simplify the math means $500,000 over a 20-year hypothetical retirement equals $25,000 annual spend down." That's the starting point: $4,000 per month in cash withdrawals and Social Security income.
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