Can You Retire on $500k? 2025 Calculator + State-by-State Cost Analysis
Understanding the Basics of Retiring on $500k
Retirement planning can feel overwhelming—especially when your savings are limited. But the big question remains: can you retire on $500k? The answer isn’t black and white. It depends on several factors like where you live, your lifestyle, healthcare costs, and supplemental income such as Social Security.
Key Considerations:
- Cost of Living: States vary widely in cost. A $500k nest egg stretches much further in Mississippi than it does in Hawaii.
- Inflation Impact: A 2–3% annual inflation rate can significantly erode purchasing power over time.
- Lifespan: Retiring at 60 could mean you need your money to last 25–30+ years.
The Rule of 4% and What It Means in 2025
The "4% rule" is a retirement strategy that suggests withdrawing 4% of your savings per year to make your money last approximately 30 years.
Here's how it applies:
- 4% of $500,000 = $20,000 per year
- This may not be enough for most Americans, but it’s a good benchmark to start with.
Many advisors now recommend adjusting that to 3.5% or even 3% in uncertain market conditions, which equates to $15,000–$17,500 annually. Not ideal unless you supplement your income.
Social Security’s Role in a $500k Retirement
Social Security can significantly extend your retirement funds. The average benefit in 2025 is around $1,900/month, or $22,800/year.
Strategies to Maximize:
- Delay claiming benefits until 67 or 70 to boost your monthly income.
- Use a bridge strategy: tap savings early while delaying Social Security for higher long-term payouts.
- Watch state tax laws—some states tax Social Security benefits.
2025’s Best Retirement Calculators
An interactive retirement calculator is your best friend when planning with a modest nest egg.
Top Picks:
| Calculator | Features |
|---|---|
| Bankrate Retirement Calculator | Custom inputs for lifestyle, Social Security, inflation |
| Western & Southern Calculator | Includes pensions and spousal benefits |
| Bogart Wealth Realistic Planner | Real-world scenario modeling |
Use these to estimate how long $500k will last depending on your retirement age, spending, and location.
State-by-State Cost Analysis
The cost of retirement varies dramatically across the U.S. Here's a breakdown of where your money stretches the most:
| State | Comfortable Annual Spending | Years $500k Lasts (No SS) | Tax-Friendly? | Healthcare Costs |
|---|---|---|---|---|
| Mississippi | ~$53,000 | ~9.4 | ✅ Yes | Low |
| Texas | ~$55,000 | ~9 | ✅ Yes | Moderate |
| California | ~$80,000+ | ~6.25 | ❌ No | High |
| Hawaii | ~$117,000 | ~4.3 | ❌ No | Very High |
Cheapest States to Retire in 2025
If you’re aiming to stretch $500k over 25+ years, location matters most. These states offer the best value:
- Mississippi – low housing and healthcare costs.
- Arkansas – tax-friendly and affordable groceries.
- Missouri – modest cost of living and central access.
- Oklahoma – low taxes and cheaper utilities.
Most Expensive States for Retirees
Avoid these if you’re sticking to a $500k budget:
- Hawaii – Paradise comes with a $117,000 annual price tag.
- California – High housing and taxes.
- New York – Costly healthcare and living expenses.
- Washington D.C. – High across the board.
2025 Retirement Scenarios Based on Spending
Here’s how long $500k lasts depending on your lifestyle:
| Annual Spending | Years $500k Lasts (No SS) | Years $500k Lasts (With Avg. SS) |
|---|---|---|
| $20,000 | 30+ | 30+ |
| $30,000 | 20–25 | 30+ |
| $40,000 | 18 | 25+ |
| $50,000 | 13 | 20+ |
Frugal Retirement Strategies
To make $500k stretch, adopt these smart habits:
- Downsize your home or rent in retirement.
- Move to a no-income-tax state like Florida or Texas.
- Shop around for Medicare Advantage or Medigap plans.
- Cut unnecessary subscriptions, dining out, or luxury travel.
- Share housing with other retirees or live with family.
The Impact of Healthcare Costs in Retirement
Healthcare is the wildcard. On average, a 65-year-old couple may spend $300,000+ in medical costs over retirement.
Save by:
- Enrolling in high-quality Medicare Advantage plans.
- Using Health Savings Accounts (HSAs).
- Shopping for low-cost prescription plans annually.
How Part-Time Work Can Support Your Nest Egg
Bridge jobs or side gigs can add income without tapping your savings.
- Consulting or freelance work from home.
- Seasonal jobs like tax prep or retail.
- Gig work: Uber, pet sitting, Airbnb hosting.
Working just 10 hours/week at $20/hour = $10,400/year in extra income.
The Social Security Bridge Strategy
This strategy involves:
- Drawing from savings early (ages 62–66)
- Delaying Social Security until 67 or 70
This results in a larger monthly benefit for life. It’s especially helpful if you're healthy and expect a long retirement.
Key Tools to Model Your Retirement Journey
Use tools to fine-tune your plan:
- SmartAsset Retirement Calculator
- Fidelity Retirement Score
- Spreadsheet models for conservative/optimistic returns
Meeting with a fiduciary advisor can also help personalize your path.
Mistakes to Avoid When Planning Retirement on $500k
- Overestimating investment returns
- Ignoring healthcare inflation
- Taking Social Security too early
- Underestimating housing costs
- Not accounting for taxes on withdrawals
Frequently Asked Questions
1. Can I retire at 60 with $500k?
Yes, but you’ll need to live frugally or relocate to a low-cost state. Supplement with Social Security or part-time work for best results.
2. What states let me stretch $500k the furthest?
Mississippi, Arkansas, and Oklahoma are top picks due to low housing and healthcare costs.
3. How much can I safely withdraw each year?
Aim for 3%–4% annually. That’s $15,000–$20,000 from $500k, not including Social Security.
4. Should I delay Social Security if I have only $500k?
Yes, delaying can raise your lifetime income. Use the Social Security bridge strategy to draw from savings early.
5. What if I want to work part-time in retirement?
Perfect! Even $10k/year can stretch your savings by 5–7 more years.
6. Is retiring on $500k realistic in 2025?
Yes, but only with proper planning, budgeting, and lifestyle choices. Use calculators and consult advisors.
Conclusion: Is $500k Enough for You to Retire?
Yes—you can retire on $500k in 2025, but success depends on how and where you live. With smart budgeting, a tax-friendly state, delayed Social Security, and maybe a little part-time work, you can make it work.
Explore your options with our recommended retirement calculators, compare state costs, and build a flexible plan. Retirement is not one-size-fits-all, and with the right approach, $500k can absolutely carry you through your golden years.