Retiring With $500,000 (Or Less) In Savings.

If you ask most financial advisers how to retire on a half-million dollars, they’ll likely say it can’t be done.”

Kiplinger published this very informative piece entitled ‘How To Retire On $500,000‘. You can read the whole article by clicking here. While the article is very interesting, it leaves out a very important component IMHO for retirement planing and that’s Social Security payments. If you’ve made a paycheck for 35 years in your working lifetime, please do not omit this valuable financial entitlement from your retirement portfolio. Contrary to what many nay-sayers may project, Social Security will always be around and you should take that into account as you prepare your own retirement projections. In other words, when you count in your Social Security benefits, you may not need to save a half million dollars. You probably will be able to retire with less savings. A lot less.

The median personal income in the U.S. is $33,706 per year, as of 2018 data. Not including Social Security, you’d need about $750,000 in your retirement account(s) to hit that number, if you followed this rule. Depending on where you live, as well as the lifestyle you want to maintain, you’d probably need to start with more. That’s why many advisers point even higher, stating figures between $1 million to $1.5 million as ideal retirement targets.

It’s a lot easier for someone who earned around $50,000 a year to retire than someone who earned (and lived) on $150,000 a year. Why? Because a person who lived on $50,000 probably lived a spartan lifestyle and will be used to living that same spartan lifestyle in retirement. A person who earned $150,000 is probably used to the finer things in life and will expect many of those fine things to continue into their retirements. Thus they will have to amass millions of dollars in order to maintain their luxurious lifestyles.

Generally, the rule of thumb is that you should anticipate to live on 80% of your pre-retirement income. For a person who earned $50,000 a year, he or she can retire and live on $40,000 a year. For a person who earned that $150,000 a year, 80% of their retirement would be $120,000. According to Social Security expectations:

The benefit calculations use the 2017 FICA income limit of $127,200 with an annual maximum Social Security benefit of $32,244 per year ($2,687 per month) for a single person and 1.5 times this amount for a married couple.

So, the $150K earner can only expect to receive about $32K in Social Security Benefits which is just about right for the $50K earner. The $50K earner will need much less in savings to make up the difference than the $150K earner will. Or, the $50K earner can just learn to live on the $32K in Social Security benefits and forgo savings altogether. (which I do NOT recommend. You have to save something towards your retirement). There’s no escape for that $150K earner. They have got to be saving lots and lots of money in order to sustain their lifestyle. I doubt very much that anyone who earned $150K in their working lifetime can retire to a lifestyle $32K can provide.

Which brings me down to me. It’s always about me, isn’t it here? Since I don’t have the financial wherewithal to advise anyone else what to do, I can only tell you what I can and will do in my own retirement planning. It’s no secret that neither I nor my husband were big earners in our working lifetimes. I never earned more than $28K a year and hubby never earned more than $56K. Together, give or take, we earned a combined gross income of $84,000. (once we earned $90,000 for the year but hubby had a lot of overtime that year, never to be duplicated again).

So, at $84,000 a year, we should be retiring on $67,200 BUT we’re NOT! Based on Social Security estimates, I always knew hubby and I could never save enough money to make up the difference and retire on the suggested $67K. What I did know was how much we were going to get in Social Security and a smallish pension, so I systematically downsized our lifestyle to meet the downgraded goal of living on less than $30,000 a year. Not a small feat, for sure. It didn’t go down easy, to say the least. I was the worst downsizer because it was sort of fun living on $84K a year. $67K would have been tolerable. $30K is near poverty level, or so I thought. But once you have a paid off home, paid for cars, no debt and a creative lifestyler (me) in place, living on $30K wasn’t as difficult as I thought it was going to be.

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Every retirement test I’ve taken states we’re going to make it. Click here to take this RISE test.


I’ve taken in the inflation factor and higher medical and housing expenses and recalculated our retirement years to be at an anticipated $40K per year. Needless to say our three pronged retirement stool of Social Security, Pension, Investment Interest will show at least a $2500 deficit per year. That deficit and any other unexpected expenses can be covered for the next 30 years of retirement (age 92-98+) from the savings we were able to accumulate (which is way less than $500K) thus I am not worried about our retirement futures (provided we maintain our current level lifestyle and do NOT increase it in any way).

Note: Keep in mind that our retirement lifestyle takes into account 5 months of RVing. This could always be reduced. Also, we could always sell and cash in our paid-for home and relocate to another area that is even less expensive than where we are living now and have some extra cash left over to sustain us. If my calculations miss their projected mark, we have options. It’s always advisable to have a Plan B in retirement planning. My recommendation is to also have a Plan C, D E and F!!

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I’ve calculated our savings to hold us till 92 and 98 respectfully, NOT the 85 the calculator suggested.

Figure out your end goal: how do you want to live YOUR life in retirement? It’s easy to calculate how much money you made in your working years and Social Security does a good job at forecasting what you will get in retirement based on when you decide to collect (starting at age 62 to 70 years of age). Be realistic on how much money you will be able to save towards your goal. I always stated to buy a forever home at least by age 35 with a 30 year mortgage, so you can live rent/mortgage free by age 65. A 15 year mortgage is also a good way to go. Never take out your precious equity because if you’re not a saver, you’re going to need that precious equity in your retirement years. Let your house work for YOU…..not the other way around. Keep up with maintenance and repair. Don’t go crazy putting in new, fandangled kitchens and baths but do keep abreast with design trends. Don’t ever have your home look dated!

I always knew I wanted an RV in my retirement years. I always knew I wanted to winter in Florida. I always knew I wanted to be at a beach in the summer. I tried buying homes in all those locations but sometimes vacation home ownership is not the best route to follow. Which brings me back to RVing. Having a solid, affordable home base plus an RV solved all my retirement vacation/travel goals. We did most of our international traveling while we were still employed. We couldn’t do that now in retirement. Why?

No one knows what their future may hold. I never expected my younger husband’s health to be so feeble. Turns out, I’m the strong one and have to carry out much of the retirement expectations. Make sure you know what your Significant Other’s responsibilities are and vice versa. Should anything happen to either one of you, the remaining partner can sustain, survive and carry on. Don’t be so smug and think bad things can’t happen to you. They can and they will.

Just make sure you have that Plan F in place!




  1. Well, this is a lot more encouraging than saving a half mil before retiring. 😀 But I guess we’re still screwed…..with no savings to back us up.

    We have lived frugally for the last 3 years, have managed to pay cash for some more expensive items recently, and our mortgage payments end in 2 years, so I guess there is some light at the end of the tunnel. We are slowly paying off some debts, so we can get our expenses down enough that one Social Security check will cover them.

    Liked by 1 person

    • Robin, getting one Social Security check to cover your expenses is an excellent goal! Good for you. Then you can save the other check or at least a part of it. That’s what we intend to do. Once hubby collects, we can sock away $1,000 a month and invest it for the longer term.
      Just know that you can’t downsize in a hurry. You have to do it over time otherwise it’ll just feel awful and deprived. Time cures everything.
      Good luck!
      Thanks for your comment.

      Liked by 1 person

  2. It is just me. I am divorced with four grown kids. I will have a smallish pension, and I do have a paid off house and no debt. My goal is to keep my living expenses below the combo of social security and the pension. I am still working to try to build up the pension some more, even though I am tired, and to try to build up my savings, which tanked in the Great Recession. The house where I live is convenient for work, but it is in a sketchy neighborhood, so I hope to move closer to my kids and be in a better neighborhood when I retire. Right now, I am staying put because of the house being so convenient for work.

    Liked by 1 person

    • Cindy, you’ve come to the same conclusion many of have: try to live within the guidelines of social security and a pension. This reduces the need for exorbitant savings as far as I am concerned! It’s more doable than the alternative.
      You are off to a good start. Hang in there. Trust me, it’ll be worth it. Better to sacrifice now while still sort of young that to sacrifice when older and life is more difficult to begin with!
      Best of luck on your future retirement plans! Thank you for your comment.


  3. Thank you for sharing your advice – I agree with you, it is important to look at your lifestyle and not just the ‘recommendations’ out there. I personally don’t believe SS will be there for us for the long haul. I appreciate your thoughts on ‘what do you want to have your retirement look like’ that’s the goal!

    Liked by 1 person

  4. Some really good food for thought here for me. I feel like we are saving very diligently for retirement, and have been all along, but it seems like hitting our target could be difficult, especially with college on the horizon for our daughter. We haven’t truly examined the lifestyle side and what amount would be acceptable to live on. Hmmm. May not necessarily be the 80% amount.


    • Hi Jen. Have you thought of low interest student loans your daughter may qualify for rather than your paying her tuition? Perhaps just partly? Students have their youth and lots of time to pay off their student loans. Future near retirees? Not so much. I did 50/50 with my two daughters. Paid half their tuition in cash. They borrowed the rest at only 1%. My daughters also paid for their own weddings ( I gave them a nice cash gift but it was nothing as compared to paying for the whole wedding myself).
      Some things to think about. Sometimes planning for our retirement may mean being a bit stringent in some departments. Our age works against us. Not for us.
      Thanks for your comment.


      • She has been advised we will have what we have when she graduates… we have been auto investing since she was born but it all depends on where you go how far it stretches! I used to work in higher education and have considered going back because often employees get free tuition for themselves and dependents.

        Liked by 1 person

  5. Hi Cindi, IMHO That rule of thumb needing 80% of income is absurd to apply to every one or anyone for that matter, it is ridiculous. First off, some advisor say it is applied to your gross income and others say your take home pay which not only includes all tax deductions but also for others 401k or other retirement savings, and health insurances and flexible spending accounts Then you need to eliminate all other specific work related expenses- commuting, work clothes, lunches out, gift contributions. Then you have to add what your medical insurance will be and your actual new taxes. If you own your home, most middle income wage earners can cover their necessity expenses on 40-50% of their gross pay if they live frugally. Right about where you are living. Lara


    • HI Lara. I totally agree with you on these points also. Living frugally as we do was done in stages, not all at once. We gradually reduced our output over the years prior to retirement. We’re not fully retired yet as DH still has 2.5 years to go before he collects his full benefits. So, we have a bit more fine tuning to go.
      Thanks for your comment.
      I’m learning more and more about this retirement thing each & every day!


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