I've done the math: I can retire at 66 with $550,000 in the bank and not a penny more. How do I make it last?

Moneywise and Yahoo Finance LLC whitethorn gain committee oregon gross done links successful the contented below.

Take the pursuing scenario: Assume you were 56 and privation to discontinue successful 10 years with $550,000. Your savings whitethorn align with galore others your property — the mean American aged 65 to 74 has astir $609,000 saved (1). But that doesn’t mean you’re looking astatine capable status income. Here are a fewer things to consider.

To enactment your savings successful perspective, the caller “magic number” Americans judge they’ll request to discontinue comfortably is $1.26 million, according to Northwestern Mutual (2), putting the $550,000 astatine conscionable halfway to that target.

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If you use the 4% regularisation for withdrawals to your $550,000 successful savings, you get an yearly income of astir $22,000.

Of course, Social Security benefits volition origin into your status income arsenic well; the mean payment for retired workers contiguous is astir $2,005 per month, oregon $24,000 per twelvemonth (3).

That means you’d person astir $46,000 per twelvemonth to enactment with. But arsenic of 2023, the mean yearly spending among Americans 65 to 74 was person to $65,150, according to the Federal Reserve Bank of St. Louis (4). In different words, a $46,000 yearly income could permission you with a shortfall of astir $19,000.

That said, determination are steps you tin instrumentality to trim your taxation burden, agelong your savings and unrecorded good successful status connected a $550,000 nest egg. Here are immoderate strategies to consider.

If you won’t person a precocious income successful retirement, it’s that overmuch much important to minimize your payments to the IRS and to marque the astir of immoderate taxation incentives, specified arsenic Trump’s caller One Big Beautiful Bill, which offers a $6,000 idiosyncratic taxation interruption to seniors betwixt the 2025 and 2028 taxation years.

Until you retire, you tin besides assistance yourself by contributing to a Roth IRA oregon 401(k) oregon doing a Roth conversion if you don't presently person funds successful 1 of these accounts. Doing truthful often depends connected your taxable income present and anticipated taxable income successful the future.

The bully happening astir Roth IRA accounts is that withdrawals are not taxed successful retirement, truthful you don't person to reserve a information of each organisation to fulfill an IRS measure astatine that time.