401(k) calculator

1 min read by Charlie Barton Last updated October 9, 2023

How long will $600,000 in 401k last?

The length of time that $600,000 in a 401(k) will last depends on various factors such as the retiree's lifestyle, expenses, and investment returns. However, there are some general guidelines to consider:

  • One rule of thumb suggests that retirees can withdraw 4% of their retirement savings annually without depleting their savings too quickly. This means that $600,000 in a 401(k) could provide $24,000 per year in retirement income.

  • Retirees may also have other sources of income, such as Social Security or pensions, which can supplement their retirement savings.

  • Inflation and investment returns can also affect the longevity of retirement savings. If investment returns are lower than expected or if inflation increases, retirement savings may not last as long as anticipated.

It's important for retirees to work with a financial advisor to develop a retirement income plan based on their individual circumstances and goals.

How much will my 401k pay me per month?

The amount that a 401(k) will pay per month depends on several factors, including the account balance, investment returns, and the retiree's withdrawal rate. Here are some key points to consider:

  • One rule of thumb suggests that retirees can withdraw 4% of their retirement savings annually without depleting their savings too quickly.

  • To estimate monthly retirement income, divide the annual withdrawal rate by 12. For example, if a retiree withdraws 4% annually, the monthly income would be 4% / 12 months = 0.33% of the account balance.

  • For a retiree with a $500,000 401(k) balance, the estimated monthly retirement income would be $1,650 assuming a 4% withdrawal rate.

  • Other sources of retirement income, such as Social Security, pensions, or annuities, can supplement 401(k) income.

It's important for retirees to work with a financial advisor to develop a retirement income plan based on their individual circumstances and goals.

Is a 401k a good idea?

A 401(k) can be a smart way to save for retirement for many Americans. Here are some key points to consider:

  • A 401(k) is an employer-sponsored retirement savings plan that allows employees to contribute pre-tax dollars from their paycheck, which can reduce taxable income and potentially lower taxes owed.

  • Employers may also offer a matching contribution, which can help boost retirement savings.

  • 401(k) contributions are invested in a selection of investment options, such as mutual funds, stocks, and bonds, allowing for potential growth over time.

  • However, it's important for investors to regularly review and adjust their investments to ensure they align with their goals and risk tolerance.

  • While 401(k) contributions are subject to certain limitations, such as annual contribution limits and required minimum distributions (RMDs) after age 72, they can still be an effective way to save for retirement.

It's important for individuals to work with a financial advisor to determine the appropriate retirement savings strategy based on their individual circumstances and goals.

Writer

Charlie Barton

Charlie Barton is a writer at Unbiased. He has been writing about personal finance and investing since 2017, with extensive knowledge of platforms and products. Charlie has a first-class degree from the London School of Economics.