Wanting to retire but not having enough money to do so comfortably is a common dilemma. According to the Schroders 2025 US Retirement Survey, 53% of preretirees worry about outliving their savings (1).<\/p>\n
Let\u2019s imagine Darren is in this situation. At 65, he earns $70,000 a year, has $500,000 in his 401(k) and wants to quit working as soon as possible. However, to achieve that dream, he knows he\u2019ll need to be creative.<\/p>\n<\/p>\n
Experts say most people require about 80% of what they earned pretax before retiring to maintain a similar standard of living after leaving the workforce (2). In Darren\u2019s case, that amounts to $4,667 a month. Darren believes he can make do with less. He has no debt, isn\u2019t a big spender, is relatively healthy and reckons the nearly $1,700 a month he\u2019s expected to get from Social Security plus an extra $2,000 should be sufficient to retire comfortably.<\/p>\n
The issue is where that $2,000 will come from. Using the 4% rule<\/a>, a commonly applied guideline for retirement withdrawals, Darren\u2019s $500,000 savings would provide him with about $1,667 a month. That\u2019s not enough, so he needs to find alternatives.<\/p>\n If Darren is able to work longer, he should consider it. There\u2019s a reason nearly a quarter of Americans delay retirement (3). It isn\u2019t a popular choice. But sometimes it\u2019s necessary to reduce nest egg requirements and save more.<\/p>\n Putting as much as possible from each paycheck into your retirement plan for an extra year or more can be game changing, especially if your employer offers matching contributions. In 2025, the most someone Darren\u2019s age can add to their 401(k) is $31,000, or $77,500 if you include the employer\u2019s contributions. Factor in returns, and it really adds up, especially if Darren also opened an individual retirement account (IRA)<\/a> and maxed out contributions to that, too.<\/p>\n Working longer also means fatter Social Security checks. For each year that you delay retirement until turning 70, your benefits go up. If Darren held off until 66, he\u2019d get roughly $1,850 a month from Social Security. Make that 67, and the monthly check increases to a little more than $2,000.<\/p>\n Story Continues <\/p>\n Read more: Robert Kiyosaki warns of a ‘Greater Depression’ coming to the US \u2014 with millions of Americans going poor. But he says these 2 ‘easy-money’ assets will bring in \u2018great wealth\u2019<\/a>. How to get in now<\/p>\n An alternative to gradually drawing down retirement savings is leaving the balance invested in income-generating assets. The beauty of this strategy is that you get paid while keeping your money fully invested. But there are also drawbacks.<\/p>\n For Darren to generate $2,000 a month from $500,000 invested, he\u2019d need his savings to yield 4.8% annually \u2014 at least while his balance remains at half a million. That\u2019s not terribly steep but may require taking a more moderate risk approach.<\/p>\n The safest options, such as government bonds, high-yield savings accounts<\/a> and large, reliable dividend-paying companies whose goods or services are constantly in demand and likely to remain so, such as Coca-Cola and Johnson & Johnson, don\u2019t generally pay out that kind of income. That leaves investments more susceptible to price and payout fluctuations, which isn\u2019t ideal when you\u2019re relying on them to keep you afloat.<\/p>\n A safer bet could be to implement a hybrid approach, targeting a lower yield while slowly drawing down retirement funds to make up the difference.<\/p>\n If continuing to work full time isn\u2019t an option, Darren might consider working fewer hours for the same company or perhaps doing something else, like freelancing, consulting, tutoring or even taking a few shifts at a local shop.<\/p>\n It doesn\u2019t have to be much. Even if the job brings in $1,000 a month, that still halves his extra income need and the strain on his savings.<\/p>\n In this scenario, Darren could feasibly live off his new paycheck, Social Security and income from his investment portfolio without potentially withdrawing a cent. Then, by the time he fully retires his savings ought to be worth more, thanks to capital appreciation, and will have fewer years to last.<\/p>\n Darren could also use his home to plug his shortfall. When you own property, it\u2019s possible to extract money from it. Options include:<\/p>\n If none of those options are palatable, Darren could consider a reverse mortgage<\/a>, which allows homeowners age 62 or older to convert part of their home equity into cash that doesn\u2019t need to be repaid until they move out or pass away. But, weighing the drawbacks here, including declining equity and possible higher interest rates, is key.<\/p>\n Join 200,000+ readers and get Moneywise\u2019s best stories and exclusive interviews first \u2014 clear insights curated and delivered weekly. Subscribe now.<\/a><\/p>\n We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines<\/a>.<\/p>\n Schroders (1<\/a>); AARP (2<\/a>); F&G Annuities & Life (3<\/a>)<\/p>\n This article originally appeared on Moneywise.com<\/a> under the title: I\u2019m 65, itching to retire but only have $500K saved. I want $2K\/month plus my Social Security \u2014 how can I swing this?<\/a><\/p>\n This article provides information only and should not be construed as advice. It is provided without warranty of any kind.<\/p>\n","protected":false},"excerpt":{"rendered":"Wanting to retire but not having enough money to do so comfortably is a common dilemma. According to…\n","protected":false},"author":2,"featured_media":254122,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[45,49,48,1691,4190,133,7480,131,132,1705,12985,2438],"class_list":{"0":"post-254121","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-ca","10":"tag-canada","11":"tag-darren","12":"tag-dave-ramsey","13":"tag-finance","14":"tag-month","15":"tag-personal-finance","16":"tag-personalfinance","17":"tag-retirement","18":"tag-retirement-savings","19":"tag-social-security"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/254121","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=254121"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/254121\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/254122"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=254121"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=254121"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=254121"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}