Key Points
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The amount of money you need in retirement depends on your expenses and goals.
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An $800,000 nest egg may be enough for a modest lifestyle.
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Be mindful of the pitfalls of retiring at 60, like not yet being eligible for Social Security or Medicare.
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By the time you reach the age of 60, you may be inclined to start thinking about retirement. The nice thing about being 60 is that you’re able to tap your IRA or 401(k) plan without a penalty. So if you have a decent chunk of money saved up, it may be feasible to end your career at that point.
In this Reddit post, we have someone who’s on the cusp of 60 with $800,000 in their 401(k). They’re wondering what their next move should be and if retirement is a possibility.
The answer is, it may be. But it depends on what they want their retirement to look like.
An $800,000 nest egg may or may not work
Asking if you can retire on $800,000 is kind of like asking if you can live on $75,000 a year. Some people can do it. But in major cities, you may not even be able to afford rent.
Similarly, an $800,000 nest egg may suffice for your retirement if your needs are simple. If you have a paid-off home and live in a part of the country where living costs are fairly low, that amount of savings may be more than enough. This especially holds true if you’re not a big traveler and intend to spend your days doing things in the neighborhood or around the house.
On the other hand, an $800,000 nest egg may fall very short if you have big travel plans for retirement, if your home is not paid off yet, or if you live in a metro area where costs are above average. In that case, you may want to think twice about retiring at 60 with only $800,000 saved. Working a few more years could get your nest egg to a much stronger place.
Pitfalls of retiring at 60 to consider
It’s one thing to retire at 60 with several million dollars saved up. But if you’re retiring at 60 with $800,000, money may not be so abundant. That means you may need to budget carefully and be aware of your costs.
One pitfall you might run into is that you can’t collect Social Security until age 62 at the earliest. This means you may have at least a couple of years when you’re living solely on savings. And if you want your complete Social Security benefit without a reduction, you’ll have to wait until age 67 to start getting it.
Another pitfall to think about is that Medicare doesn’t begin until 65. You’ll need to figure out health insurance if you’ll be retiring at 60.
With a huge nest egg, it may be easy enough to swing the cost of buying coverage yourself. With an $800,000 nest egg, you have to be more careful with your money, so there’s the risk of spending so much on health insurance that your balance starts to dwindle quickly.
With $800,000 to your name, you may want to consider delaying retirement until age 62 at least. That way, you can get Social Security right away, and there’s less time until Medicare kicks in.
You may also want to discuss the situation with a financial advisor. They can take a look at your projected expenses and let you know if retiring at 60 is a safe bet or not. And they can also set you up with investments that allow your $800,000 nest egg to produce the income you need it to.
The post I’m turning 60 and want to know if I can retire on $800k appeared first on 24/7 Wall St..
