Is $600,000 Enough to Retire? What the Numbers Actually Say

"If you have $600,000 invested for your later years, you have more money than many people do for retirement. In fact, the average 401(k) balance among Baby Boomers is $249,300 according to Fidelity, while the average IRA balance is $257,002. But, does that mean you have enough money? Is $600K going to provide you with financial security, or should you keep working and saving longer?"

"While $600K is undoubtedly a lot of money, it's not necessarily as much as you'd think when you have to make it last for decades. You can't withdraw the money all at once, or even withdraw too much of it at any one time, or you'll drain your accounts too low, and risk your accounts running dry. One simple way to determine how much to withdraw is to follow the 4% rule."

"If you follow the 4% rule, you'd be looking at withdrawing 4% of your $600,000 balance during your first year of retirement, then making adjustments in subsequent years to account for the impact of inflation. So, since 4% of $600K is $24,000, you would have this much income from your investments - if you wanted a reasonable chance of making sure you don't run out of money in your accounts while you are still relying on them to provide income."

A $600,000 retirement nest egg produces roughly $24,000 in the first year when using the traditional 4% withdrawal rule. Some experts suggest a slightly more conservative initial withdrawal around 3.7 percent to improve longevity of funds. Withdrawals should be adjusted yearly for inflation and managed carefully to avoid depleting accounts over multi-decade retirements. Whether $600K is enough depends on prior earnings, expected expenses, Social Security or pension income, healthcare costs, market returns, longevity, and lifestyle choices. Delaying retirement, saving more, or securing guaranteed income can improve financial security.

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