Can I Retire At 60 With 500K
If you are pondering the idea of retiring at age 60 with 500K saved, you will be happy to know this can become a reality! Here is our complete how-to guide for saving towards early retirement.
How Can I Retire With 500K?
While common sense tells us you’ll need to save $1-$2 million dollars for retirement, that figure is simply unobtainable in some cases. 500K can be enough to retire on for many people these days. Yet, that doesn’t mean the saving process will be simple. With strict budgeting and the possibility of one or two individuals receiving a pension income or social security, this goal can become a reality.
The financial experts suggest following these three steps when saving for retirement by age 60:
- Strict Budgeting.
- Save Early And Often.
- Location Consideration.
One building block towards a stable financial future is enjoying your current lifestyle while planning for retirement at the same time. Make sure all basic living expenses (healthcare, housing, utilities and transportation) are on a strict budget moving forward. Are you unsure how to come up with the best budget possible? The experts recommend going over all your bills from either the past month or year to determine a budget.
Figure out exactly which expenses you can cut back on and how you can make those sacrifices. If retiring at 60 is your objective, do not wait until your 40s to start saving! Come up with the answers to these questions when formulating a budget:
- How much money do you spend on food each month?
- How much money do you spend on housing each month?
- How much money do you spend on entertainment?
- Do you plan to support your children with an educational savings account?
- What type of health insurance do you plan on using in the future?
Save Early And Often
This step should go without saying, but the more money you save throughout your lifetime, the better off you will be when it comes time to retire. Making and saving as much money as possible while you are young and working is crucial towards obtaining your desired outcome. Thankfully, there are several different savings options nowadays.
First, start by asking your boss for more earnings opportunities, whether that means more hours or bonuses. Always take advantage of those extra opportunities and see if your employer will match any amount fully towards your retirement plan. Opening either a traditional or Roth IRA is another great way to save money.
One of the toughest parts about saving for retirement is evaluating your current living conditions. If possible, it is suggested to consider moving to an area with lower housing prices. Of course, this is certainly a difficult task for working adults who may also be raising a young family.
Luckily, moving to a cheaper area can apply to retirement rather than your current situation. With 500K in the bank, it’s wise to expect you won’t be living in the most luxurious area in the world during retirement. It is smart to never live above your means, even during retirement.
When To Start Saving For Retirement
Financial experts say everyone needs to start saving as soon as they possibly can. Now, that is easier said than done, of course. There are many ways for young people to begin saving, though, even if it is a small amount to start. Try putting away 10% of your monthly income. If you put 10% of $5,000 away, this will give you a grand total of $500 saved each month. $500 each month will then translate to $6,000 saved for the year. Saving 10% each month starting in your 20s can help cover for any potential dips in the stock market over the years to come.
Americans believe they need at least $1.7 million saved in order to retire comfortably by age 65, according to a Charles Schwab survey. If that is the goal, these individuals will need to save close to $500 per month starting at age 25. This may not be possible for many 25 year old’s currently struggling in the job market, paying off student loans or beginning to raise a family.
Average Age When Americans Start Saving For Retirement
Here is a look at typical age groups when Americans will start saving towards retirement:
- Ages 20-29: 39%
- Ages 30-39: 25%
- Ages 40-49: 15%
- Ages 50-59: 6%
*Data according to Morning Consult.
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