He's 50 with $500K saved and dreams of retiring at 62 — but the math tells a different story
He's 50 with $500K saved and dreams of retiring at 62 — but the math tells a different story.
Moneywise and Yahoo Finance LLC may earn commission or revenue through links in the content below.
The average retirement age (1) in the U.S. hit 64.6 for men in 2024, while women retire at an average age of 62.6. This is around three years later than the average retirement age in 1994.
Changes in Social Security rules (such as the full retirement age being pushed to later (2), along with changes in the nature of work, have all contributed to people staying on the job longer. But not everyone wants to work until their mid-60s.
Jeff Bezos backs a platform that lets anyone invest in rental homes for as little as $100 — 6 ways to build wealth like a landlord without actually being one
JP Morgan sees gold hitting $6,000/oz before 2027 — and a gold IRA lets you hold the physical metal while deferring the tax bill. Get your free guide from Priority Gold
The tax breaks in Trump's 'big beautiful bill' expire after 2028 — and experts say most people won't act in time. What to do before the window closes
Let's consider, for example, that Bob is 50 years old and really wants to retire at 62.
Bob is making $150,000 per year; he's got $500,000 saved already and he's contributing 6% to his retirement investment account with no employer matching contributions. He's also earning a 7% average annual return.
So, will he be able to hand in his notice on his preferred retirement schedule and start enjoying life as a retiree?
Let's take a look at the numbers and some expert advice to find out.
Figuring out whether you're on track to retire doesn't have to be complicated.
It just requires a bit of math to see how much money Bob would end up with. Bob can even calculate the numbers himself using the tools available at Investor.gov (3).
For now, let's say Bob is making $150,000 and is putting away 6%. That's $9,000 per year he'll add to his 401(k).
"At a 7% average growth rate, he would have about $1,281,685 in a retirement nest egg at 62," Domenick D'Andrea, founder of DanDarah Wealth Management, told Moneywise. "This is a very nice start to being able to retire at 62."
"As we all have different monthly bills and different lifestyles, one man could retire very comfortably on this amount and one man could overspend and run out of money," D'Andrea said.
Read More: Millionaires under 43 hold only 25% of their wealth in stocks. Here's where their money is actually going
Figuring out how much money he'll end up with is the first step.
But as D'Andrea pointed out, his income needs matter, too. Bob's ability to retire hinges on whether his retirement income from all sources can cover his spending.
