Can I Retire With 500k In My 401K [Will You Run Out of Money?]

I’ve been watching several videos, listening to podcasts, and reading financial books about retirement. I’m only 50, but I’m closer to retirement than my twenties. I’ve been setting goals and developing a plan to save enough money to retire comfortably. 500k in your 401k may seem like a dream, especially if you’re starting from scratch like I am. But can you retire comfortably with 500k?

At the moment, I have about 55k in my retirement, so I’m a long way off from 500k. According to statistics, only 26% of people in their 60s have a net worth of over $500,000 in their retirement accounts. Whether this is enough to retire comfortably depends on your social security income, pensions, additional savings, healthcare costs, lifestyle, current debt, etc. 

The only way to know for sure is to sit down and take a serious look at your finances. This will help you determine whether 500k in your 401k will be enough during retirement. I wish someone would’ve told me this when I was in my 30s or 40s, but they didn’t, so we can only start where we are, so here we go. 

Understanding Your Retirement Goals

Most people want to be able to travel, spend more time with family and friends, and spend more time on their hobbies without having to wake up to an alarm. 

Most of us don’t think that we’ll run out of money and end up having to go back to work, but unfortunately, over 25% of American retirees were forced to go back to work because of financial issues. 

When I reach 60, I don’t want to work for anyone. That’s why I’ve decided to go back to work in my 50’s. I’m doing everything I can to catch up on my retirement contributions, so I don’t end up broke in my 60s or 70s. 

Here’s what I’ve learned about figuring out whether or not 500k will be enough. 

How Much Is 500k In Retirement? 

According to the 4% withdrawal rule (I’ll discuss this later), you can withdraw $20,000 the first year from your portfolio. The withdrawal percentage would stay the same yearly, but the withdrawal amount would change yearly based on inflation. 

So ask yourself, can you live on $20k per year? This doesn’t include paying taxes, healthcare costs, and other expenses. Are you willing to downsize your current lifestyle? 

You need to answer these questions before you know if 500k will be enough for retirement.

Once you’ve answered those questions, it’s time to analyze your goals and develop a plan to get there. 

You can start by determining how much money you’ll need each year to maintain your desired lifestyle. Then you can create an investment plan to help you reach your retirement goals. 

Here are some questions to ask yourself to help you understand how much is enough in your retirement portfolio.  

What Expenses Will You Have In Retirement?

Figure out what your expenses will be in retirement. This includes things such as; groceries, utilities, housing costs, vacations, hobbies, etc. 

Of course, figuring out the exact amount you need can be challenging, especially since the cost of everything keeps rising. But it’s better to estimate more than you need. 

Here’s a look at some of the expenses I’ll always have in retirement. 

  • Rent: $750 (likely to go up due to inflation)
  • Groceries: $500 (this can change monthly)
  • Utilities: (gas, water, electricity): $350 (likely to go up in the future)
  • Vehicles: (gas, insurance, wear, and tear) $300 (I don’t have a car payment, but I save money each month for tires, oil changes, car insurance, etc. 
  • Subscriptions: (Costco, Sams, streaming channels, etc.) $250 ( I can cancel these if I can’t afford them during retirement)
  • Medical: I haven’t figured out how much to save for medical yet, so stay tuned. 
  • School Loans: $400 per month (I plan on paying these off in the next few years)

This is just a quick dry run of my current expenses, but the total comes to $1800 per month, which is more than $20k per year. 

Based on my current expenses, I would run out of money if I only had 500k in my retirement portfolio. Of course, I didn’t take social security into account, but I don’t know what that will look like when I reach 62. 

If I consider social security and my dividend portfolio, we could live on 500k in our retirement, but it won’t be the lavish retirement we dreamed about.  

Creating a financial spreadsheet with your expenses can be an ugly reality, but it’s the only way to know if 500k will be enough to retire. 

Here are some other things to consider before leaving your job. 


Inflation can have a significant impact on your retirement savings and spending power. At the time of this writing, the Fed is trying to control the outrageous inflation rate by hiking interest rates

Most of us, including myself, have no clue what this means. All I know is that buying food, gas, and other necessities costs a lot more. During these unusual times, retirees are forced to withdraw less from their portfolios. 

This is why financial blogs talk about saving enough cash to live when the stock market isn’t doing well. The goal is to have enough cash in a high-yield savings account (this is the one I use and love) so you don’t have to withdraw money from the portfolio when the markets are down. 

Other Retirement Income

When you decide it’s time to leave your job, what type of income will you have to live on? Here’s a look at some of the different types of retirement incomes that will cover your spending needs. 

Social Security

According to statistics, 15% of women and 12% of men rely on social security for 90% or more of their retirement income. Last I checked, my social security will pay me $1400 monthly, which is only $16,800 annually. 

The may not consider this poverty level, but I don’t know anyone in the United States who can live comfortably with $16k per year. 

According to statistics, the average retiree receives $18,000 per year or ($1,500 per month) from social security. 

Pension Income

If you’re lucky to have a pension, consider yourself lucky. Unfortunately, the shift from companies paying pensions to employees to shoulder having to save for retirement in 401ks started in the 1980s and accelerated in the 1990 and 2000s. 

It’s still possible to get a pension; these jobs include education, government, law enforcement, healthcare, and some private sector jobs. 

However, most of us are responsible for saving for our retirement. 

Taxable Accounts

Dividends are a great way to supplement your retirement income. I’ve been investing in my M1 taxable account for two years and get paid $97 in passive income. 

My goal is to increase that to $500 per month. I’ve been reinvesting my dividends and investing as much as I can into my taxable brokerage account. 

The key to success with dividends is finding companies or ETFs that pay a consistent amount and increasing the amount year after year. 

I invest in individual stocks, but I’ve been focusing more on SCHD, an ETF with over 100 different assets, which is safer than individual stocks. 

If you have extra income, consider opening a taxable account. I use both Fidelity and M1 for mine, and I love them. 

Rental Income

Rental income is another great way to supplement your retirement income. You can rent out properties and collect a steady income stream each month. 

The key here is finding the right property to generate a good return on investment (ROI), also, finding the right tenant that pays on time and takes care of your property. 

I had a few rental properties in the past, but it was a nightmare. I’m not sure that I’ll go down that road again. 

Side Gig Income

If you’re not living under a rock, you’ve likely seen several retirees starting blogs, YouTube, TikTok, and Instagram accounts to make money. 

You don’t have to be a financial expert to do this; I’m not a financial advisor. However, sharing your personal experience will help others who are in the same boat as you, which can help you earn money from ads, sponsorships, etc. 

Imagine starting a blog or YouTube channel that earns you $1000 or more per month in your golden years. Last year I made over six figures from my online business. 

It’s possible with some hard work and patience. I know you’re thinking you don’t want to work when you’re retired, but working 4-10 hours per week isn’t hard and it’s a great way to supplement your retirement income. 

How Much Do You Have Saved Right Now?

Where do you stand right now? At the time of this writing, I have about 51k in my 401k’s and Roth IRA. I’m no where near 500k, but I do expect to get there. Right now, my goal is to my race to 100k, and you can read about it here, where I show you my monthly deposits.

You can join me on the race to 100k and comment and let me know how you’re doing and share your retirement goals.

Final Word

I can’t live off 500k in retirement, so I decided to return to work at 50. Before deciding if it’s enough for you, sit down and look at your current finances. Determine your monthly expenses, how much debt you can pay off today, and what type of income you’ll have in your retirement. 

Be honest with yourself. If you think you’ll run out of money, you may need to work longer, increase your retirement contributions, get a side gig, etc. 

It’s better to make sacrifices when you’re younger, in the early 50s, mid-50s, or early 60s. You still have time to make adjustments before you hit retirement. 

For example, if you save $300 per month for ten years and earn an annual interest rate of 8%, compounded monthly, you will have an extra $50,481.06 at the end of the 10 year period. Earning an extra $300 right now shouldn’t be that hard. 

So what are you willing to do to make sure you don’t run out of money in your retirement? 

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