Whether $400,000 is enough to retire at 65 depends on your expenses, other income sources and how long you expect to live. There is no hard and fast answer that is accurate for all situations. For someone with modest expenses and full Social Security benefits, it may be possible to make $400,000 last. But without careful planning, rising healthcare costs and inflation can quickly erode its value. You’ll need to assess how far $400,000 will stretch in retirement—and what trade-offs you’re willing to make along the way.
How Much Income Will You Need?
One way to do this is to look at other retirees’ spending. According to the U.S. Census Bureau, the median annual income for households headed by someone 65 or older is $54,710. Actual needs can vary widely from this figure based on location, healthcare costs and personal choices, but it can serve as a useful starting point.
You can also base your retirement spending estimate on pre-retirement income. One extensive analysis of retiree spending suggests replacing from 55% to 90% of your pre-retirement income with portfolio withdrawals, Social Security, pension income and other sources. The lowest percentage figures are considered best suited to higher earners. Many experts recommend an income replacement target of 70% to 90% for most savers.
The table below shows how much income you might aim to replace based on different pre-retirement earnings:
| Pre-Retirement Income | 70% Replacement Rate | 80% Replacement Rate | 90% Replacement Rate |
|---|---|---|---|
| $50,000 | $35,000 | $40,000 | $45,000 |
| $100,000 | $70,000 | $80,000 | $90,000 |
| $150,000 | $105,000 | $120,000 | $135,000 |
| $200,000 | $140,000 | $160,000 | $180,000 |
| $300,000 | $210,000 | $240,000 | $270,000 |
Any gap between your target retirement income and what Social Security provides would need to be filled by personal savings, pensions or other income sources.
How Long Will Your Money Need to Last?
If you’re retiring at 65, it’s useful to think about how many years your savings might need to support you. According to the Social Security Life Expectancy Calculator, a 65-year-old man can expect to live to about age 84, while a 65-year-old woman may live nearly to 87. These are averages, so many people will live longer—sometimes well into their 90s—while just as many may have shorter lifespans.
To account for this, many planners suggest using a 30-year horizon to help account for longer lifespans. A longer timeline helps prepare for extended longevity and allows for market volatility and inflation over time.
If you’re relying heavily on personal savings, stretching those dollars over three decades means taking a close look at your annual withdrawal rate, anticipated investment returns and any backup sources of income. Planning for a longer lifespan may help reduce the risk of outliving your savings, even if it means being more conservative early on.
How Much Social Security Will You Collect?
Social Security benefits make up a significant portion of retirement income for most retirees. The amount you receive depends on your work history, earnings and the age at which you start collecting benefits.
How Benefits Are Calculated
To determine your benefit, Social Security looks at your 35 highest-earning years, adjusting each for inflation. It then averages those years to calculate your average indexed monthly earnings (AIME). Using that figure, the Social Security Administration applies a specific formula to arrive at your primary insurance amount (PIA)—the monthly benefit you can collect once you reach full retirement age, typically between 66 and 67 based on your birth year.
Average Monthly Benefit
As of February 2025, the average monthly Social Security benefit for a retired worker was $1,980.86. Your benefit could be higher or lower depending on your personal earnings record and when you choose to claim.
Maximum Monthly Benefit
The maximum monthly benefit amounts in 2025 vary by the age you start collecting:
- $2,831 at age 62
- $4,018 at full retirement age (67)
- $5,108 at age 70
Knowing your projected Social Security benefit helps determine how much income you’ll need to supplement with savings or other sources.
Accounting for Healthcare Costs
Healthcare expenses can significantly impact retirement finances. Fidelity estimates that a 65-year-old who retired in 2024 will need approximately $165,000 in after-tax savings to cover healthcare costs throughout retirement. It covers Medicare premiums (Parts A, B and D) and out-of-pocket costs like deductibles and coinsurance.
While Medicare provides substantial coverage, it doesn’t cover all healthcare expenses. Retirees often face additional costs for services not included in Medicare, such as dental and vision care. Moreover, long-term care, which isn’t covered by Medicare, can be a significant expense for many.
To manage these expenses, retirees might consider supplemental insurance options such as Medigap or Medicare Advantage plans. These can help cover costs not included in traditional Medicare. Additionally, if eligible, contributing to a Health Savings Account (HSA) before enrolling in Medicare can provide tax-advantaged funds specifically earmarked for medical expenses in retirement.
Is $400,000 Enough to Retire at 65?
Using the 4% rule as a benchmark, someone retiring at 65 with $400,000 in savings could withdraw $16,000 in the first year. You would typically increase this amount annually to keep pace with inflation—about 3% annually. Over time, those inflation adjustments would push withdrawals higher, gradually reducing the portfolio’s balance. With 5% to 6% annual returns, this strategy is generally expected to support a 30-year retirement, aligning with the life expectancy of many retirees.
Whether $400,000 provides enough income depends on how much additional income is coming from other sources, such as Social Security. For example, if Social Security benefits add another $20,000 to $25,000 per year, total annual income could range from $36,000 to $41,000. That could be sufficient for someone with low expenses, especially in areas with a lower cost of living.
However, without other savings, pensions or part-time income, a $400,000 portfolio may require strict budgeting. Unexpected healthcare costs or extended longevity could further strain these funds. For those concerned about outliving their savings, adopting a more conservative withdrawal rate or delaying retirement a few years may be necessary.
Bottom Line
A $400,000 nest egg can support retirement at 65 in certain circumstances, but it leaves little room for financial surprises. The balance between spending needs, Social Security income and healthcare costs plays a central role in how long that money might last. Careful planning and flexibility can help stretch limited savings, especially for those open to adjusting their lifestyle, relocating or supplementing their income.
Retirement Planning Tips
- Consider speaking with a financial advisor as you begin to plan for retirement. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Consider holding a mix of taxable, tax-deferred and tax-free accounts to give yourself flexibility when withdrawing income. This approach lets you manage your taxable income more efficiently in retirement, potentially lowering your lifetime tax burden.
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