Calculate if $400k is enough for your retirement
Your retirement outcome depends on more than just your savings. It also varies by your age, contributions, investment growth, and lifestyle.
Use the calculator below to see how much you could have by the time you retire and whether $400,000 will be enough to last through retirement.
How long will $400k last in retirement?
The length of time $400k can last depends on your spending, your retirement lifestyle, and how long you want your retirement income to cover.
The table below shows how long $400,000 will last for different annual incomes. The calculations are based on a 6% yearly return and a federal tax rate of 22%.
| Annual spending | Years it will last | Total interest | Total withdrawals | Total taxes |
|---|---|---|---|---|
| $20,000* | Over 30 | $661,920 | $600,000 | $145,622 |
| $30,000 | 20 | $291,775 | $600,000 | $64,192 |
| $40,000 | 13 | $179,719 | $520,000 | $39,539 |
| $50,000 | 10 | $130,879 | $500,000 | $28,792 |
| $60,000 | 8 | $103,048 | $480,000 | $22,670 |
*The amounts for total interest, withdrawals, and taxes are for 30 years.
To figure out how much you need in retirement, you need to understand your spending habits, including how they’re likely to change by the time you reach retirement age.
Ask questions like the following, building a clear and sensible picture of your needs:
How many essential outgoings will I have each month as a retiree?
How much non-essential spending am I likely to do as a retiree?
Will I receive any other sources of income, like Social Security, that I can factor in?
Will I have any other financial obligations that I need to factor in?
Would I be willing to work part-time to supplement my retirement income?
How much income tax will I pay if I have $400k in retirement?
It’s difficult to be precise about the amount of tax you’ll pay on your retirement income since so much depends on the specifics of your situation.
The best way is to consider the following:
Look at your type of retirement account: Some retirement savings accounts tax you when you deposit your money, such as a Roth IRA. Others tax you when you withdraw money as a retiree, such as a traditional IRA or a 401(k). Check whether your savings are taxed or untaxed at the distribution point; this will significantly affect your ultimate tax burden.
Look at any other forms of income you may not have considered: Figure out your entitlement to Social Security and any other similar benefits, and how these things will be taxed. Speak with a financial advisor about how your investments will be taxed and whether they’ll be considered capital gains.
Calculate your total annual income and your tax liability: Using federal and state requirements, figure out how much you will earn, on average, each retired year. Then, determine how much you’ll pay in tax. You’ll only be able to do this according to current rates, so while it won’t be 100% accurate, it will undoubtedly be a helpful barometer for your reference.
Can I retire with $400,000 and Social Security?
Incorporating Social Security benefits can significantly enhance your retirement income, making it easier to retire on $400,000.
The average monthly Social Security benefit for retired workers is around $2,000, though individual amounts vary.
Keep in mind that while retirement is possible at any age, full benefits are only accessible when you reach your "full retirement age."
For individuals born in 1960 or later, this age is 67. You can begin collecting Social Security retirement benefits as early as 62, but the amount will be reduced.
The tax you pay on Social Security benefits depends on your state of residence, and some states do not tax these benefits at all.
Is $400k above the average retirement savings in the US?
Looking at every working-age American, $400k is above average for retirement savings.
The Economic Policy Institute (EPI) puts that figure at just under $100,000. But what happens when you narrow it down to Americans who actively have retirement savings, track them, and then sort them by age group?
$400k becomes either right on or just below the average. For example, according to the Federal Reserve, the average retirement savings balance among 55 to 64-year-olds is $408,420, rising to $426,070 among 65 to 74-year-olds.
Can you retire at 50 with $400k?
If you choose to retire at 50 and plan to spread $400,000 across 35 years up to a life expectancy of 85, you may struggle with a lower annual income.
If you can live frugally and make that monthly budget work, you can leave the workforce 10 years earlier than average.
If this doesn’t seem possible, you still have a few options (short of working until the traditional retirement age):
Semi-retire at 50, but keep working part-time, supplementing your income from savings.
Build your $400k to a higher total by your 50th birthday.
Can you retire at 65 with $400k?
If you decide to wait a little longer to retire, your $400,000 will stretch further and provide you with more income each year.
Not factoring in additional income from other sources or taking taxes into account, if you retire at 65 and plan to spread $400,000 across 15 years up to a life expectancy of 85, you’ll receive, at a minimum, $34,000 annually. This assumes a 2% inflation rate and an annual yield of 6%. However, this figure doesn’t include taxes.
While expenses do reduce when you retire, your daily commutes grind to a halt, which means less money is spent on gas or metro tickets – you may end up paying more money on other areas, such as healthcare.
It’s important to consider all of these considerations when deciding when and how much money to retire with.
"Securing a comfortable retirement means proactively diversifying your savings through plans like 401(k) and IRAs, carefully timing your social security benefits and considering long-term care planning.
Regularly reviewing your investment strategy, especially as retirement nears, is vital to balance risk with income needs. Addressing these practical steps early can make a significant difference in achieving the retirement lifestyle you've envisioned."
3 ways to increase your retirement savings
If you want to grow your retirement savings in your remaining working years, below are three tried and tested, expert-recommended methods you might like to try out:
Focus on financial literacy: Though you may have some understanding of investing, budgeting and saving, a trusted financial advisor can genuinely transform your level of financial literacy.
Complete a lifestyle overhaul: It’s easy to set up your life with the present at the forefront of your mind and the distant future barely a consideration. If this is you, you might need to reassess your lifestyle and take a more whole-life approach.
Save in all the right places: This method has a double meaning. On the one hand, keep as much money as you can by cutting non-essential spending. Simultaneously, save your $400k+ for retirement in a suitable account, such as a traditional or Roth IRA.
Get expert financial advice
It isn’t easy to save a considerable figure like $400,000, especially if you’re a working person on an average salary in a climate of increasing costs. You may be happy with this final figure, or you may still want to grow and consolidate wealth ahead of your golden years.
For financial planning advice free of bias and filled with expertise, why not connect with a qualified fiduciary advisor? They can deep-dive into your finances and develop a retirement plan tailored to your needs. Match with a financial advisor today.