I'm 62 With $800,000 and $2,600 Monthly Social Security. How Much Can I Spend in Retirement?

A 62-year-old with $800,000 in savings and a monthly Social Security benefit of $2,600 can expect an annual income of $63,200 in retirement. The specific amount depends on various factors, including the type of accounts holding the $800,000 and how they are invested. Social Security benefits are inflation-adjusted and have been paid consistently since 1940.

Despite projections of a potential 17% reduction in benefits by 2035, Congress could take measures to shore up the program. If Social Security benefits remain intact, a $2,600 monthly benefit translates to $31,200 in guaranteed income during the first year of retirement. A commonly recommended withdrawal rate from savings is 4%, which in this case would yield an additional $32,000 in income in the first year, with adjustments for inflation in subsequent years.

Combining Social Security and investment income could result in a pre-tax income of $63,200. Living expenses in the United States vary, but the median real inflation-adjusted income for a householder aged 65 or older in 2022 was $50,290, which is slightly lower than the hypothetical $63,200 income. Consulting with a financial advisor is recommended to create a personalized retirement income plan based on individual circumstances.