How long will $600k last in retirement: a complete guide
This article explores how long $600k will last in retirement, the tax implications worth considering, and why you should seek professional financial advice when planning for retirement.
Summary
It is possible to retire with $600,000 if you plan and budget accordingly.
With an annual withdrawal of $40,000, you will have enough savings to last for over 20 years.
Social Security retirement benefits can increase your monthly income by approximately $1,900.
An expert financial advisor can help you manage your finances and ensure your retirement savings align with your goals.
Can you retire on $600k?
Yes, it is possible to retire comfortably on $600k.
With an annual withdrawal of $40,000, you will have enough savings to last for over 20 years. So, if the idea of a yearly expenditure of $40,000 aligns with your lifestyle, then $600k is sufficient for your retirement needs.
The table below illustrates how $600k, assuming an average annual return of 6% before taxes and a 22% federal tax rate, would perform under various yearly spending situations over 20 years:
| Annual spending | Is $600k enough? | Ending balance after 20 years |
|---|---|---|
| $30,000 | Yes | $536,610 |
| $40,000 | Yes | $206,455 |
| $50,000 | No | Savings run out after 17 years |
| $60,000 | No | Savings run out after 13 years |
As the table suggests, while $600k is generally sufficient for a comfortable retirement with annual spending up to $40,000, it may fall short if annual expenses exceed this threshold.
If you’re struggling to work out how much money you’ll need in retirement and how much you’ll need to save, a financial advisor can help. They will work with you to understand your unique needs and create a retirement savings plan to make your money go further. Match with a financial advisor below.
How long will $600k last in retirement?
How long $600k will last in retirement is influenced by your age at retirement and your annual spending plans.
Assuming an average annual return of 6% before taxes and a 22% federal tax rate, the table below offers a comprehensive breakdown of how long $600k can last across different annual spending scenarios:
| Annual spending | Years it will last | Total interest | Total withdrawals | Total taxes |
|---|---|---|---|---|
| $30,000* | 30+ | $992,881 | $900,000 | $218,433 |
| $40,000 | 26 | $559,961 | $1,036,770 | $123,190 |
| $50,000 | 17 | $361,753 | $850,000 | $79,587 |
| $60,000 | 13 | $269,578 | $780,000 | $59,308 |
| $70,000 | 11 | $215,903 | $768,404 | $47,497 |
*The amounts for total interest, withdrawals, and taxes are for 30 years.
When planning for retirement, it's crucial to consider other financial elements, including retirement plans, annuities, Social Security benefits, and potential reductions in living expenses.
What are the income taxes applicable to retirees with $600k?
With a retirement savings of $600,000, the tax burden is likely manageable, especially if you opt to spread withdrawals across 20 years or more. Your specific tax liability will hinge on several factors:
Your filing status (single filer, head of household, married filing jointly, etc.)
Your location (different states have varying tax rules)
The sources of your retirement income (various sources have distinct tax rules)
Your total annual income
The type of retirement account you have will greatly influence how much tax you pay.
For example, if you have a traditional pre-tax IRA, distributions will be subject to tax upon withdrawal. However, if you possess an after-tax Roth IRA, the tax has already been paid upon initial deposit, allowing for tax-free withdrawals.
Can you retire at 50 with $600k?
With $600,000 in savings at age 50, an early retirement becomes even more feasible.
As mentioned, if you choose an annual income of $30,000, your $500,000 savings will last for over 30 years.
However, if you want your savings to last longer, perhaps into your 90s, you will need a lower annual income.
While $600,000 at 50 may not allow extravagant spending, discipline and careful planning can pave the way for a simple yet fulfilling early retirement lifestyle. The added savings also provide a buffer for unexpected costs or market fluctuations.
Three methods to increase your savings
You may now want to figure out how to increase your savings, growing that $600,000 to $700,000 or even more to give yourself extra disposable income as a retiree.
Some ways you can increase your retirement savings include:
Revise your monthly budget and prioritize savings – Try to limit spending on non-essential items. Establish realistic lifestyle and financial targets with a focus on your future needs. Reduce expenditures where possible and allocate those savings to more impactful areas.
Develop a diverse investment portfolio with professional guidance – Building a robust and balanced investment portfolio with various securities can significantly enhance your savings and bolster your retirement plans. If you're unsure how to start, consult with a financial advisor to embark on your investment journey.
Choose the right retirement products – Numerous savings accounts and financial products are available to support you during retirement. Annuities, for instance, can transform your savings into a steady monthly income for a specified duration, potentially for the remainder of your life, if you opt for an annuity with a lifetime income rider.
Get expert financial advice
If you’ve managed to save $600k for retirement, this should be enough savings for your post-work life.
This will guarantee you a valuable degree of security and comfort in your later years, and it’s a figure many will never reach
For retirement planning advice and investment guidance, connecting with an experienced financial advisor is highly recommended. They can guide you through the daunting world of retirement planning and lead you to success. Get started with Unbiased and find your match.
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Senior Content Writer
Rachel is a Senior Content Writer at Unbiased. She has nearly a decade of experience writing and producing content across a range of different sectors.