Is $400,000 Enough to Retire at 65?

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.

Working with a financial advisor can help you plan and save for the retirement you need. Connect with a fiduciary advisor for free.

How Much Income Will You Need?

Figuring out how much income you’ll need in retirement starts with estimating your annual expenses and considering how those might change over time.

One way to do this is to look at other retirees’ spending. According to the 2022 Survey of Consumer Finances, the median annual income for households headed by someone between 65 and 74 years old was $60,530 ¹ or about $68,130 in 2026, ² after adjusting for inflation. 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:

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, consider how long your savings may need to last. According to the Social Security life expectancy calculator, a 65-year-old man can expect to live to about age 84, while a woman of the same age may live nearly to 87. ³ These figures are averages, meaning actual lifespans can be considerably shorter or longer.

Using a 30-year planning horizon can help account for the possibility of living into your 90s. A longer timeframe also gives you a way to consider how inflation and market fluctuations could affect your finances throughout retirement.

If personal savings will provide a significant portion of your income, consider how your withdrawal rate, expected investment returns and other income sources could affect how long your assets last. Planning for a longer retirement may reduce the risk of exhausting your savings too soon.

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 April 2026, the average monthly Social Security benefit for a retired worker was $2,081. ⁴ 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 2026 ⁵ vary by the age you start collecting:

• $2,969 at age 62
• $4,152 at full retirement age (67)
• $5,181 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 2025 will need approximately $172,500 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. ⁶

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.​

Your retirement readiness depends on how your savings translate into usable income. Use our retirement calculator to estimate your annual income and long-term outlook.

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.

How Taxes Shape Your Actual Retirement Income

The $400,000 figure doesn’t tell the whole story. Taxes on your withdrawals reduce what you actually spend each year. Understanding which accounts to tap first and when to access them makes a real difference.

Your Accounts Are Taxed Differently

Money in a traditional IRA or 401(k) gets taxed when you withdraw it. A Roth IRA works differently. Qualified withdrawals are free from taxation. Regular investment accounts fall in between: you owe tax only on gains, not on your original contributions.

The order matters. Many retirees benefit from drawing from taxable accounts first, then traditional retirement accounts, then Roth accounts last. This approach keeps tax-free money growing longer.

RMDs Start at Age 73

At 73, the IRS forces you to take Required Minimum Distributions from traditional IRAs and 401(k)s (the RMD age increases to 75 for those born in 1960 or later). These withdrawals are treated as ordinary income, and large RMDs can push you into a higher tax bracket. They also affect whether your Social Security benefits get taxed.

Planning for RMDs years in advance, especially in your late 60s when you may have lower income, can reduce the tax impact later.

Converting to Roth When Income Is Low

If you retire at 65 but wait to claim Social Security at 67 or later, you have a window of lower-income years. Converting part of a traditional IRA to a Roth during this time means paying tax at a lower rate than you might otherwise face. The conversion itself triggers a tax bill, but if your overall income is down, that bill may be smaller than it would be later.

Social Security Gets Taxed If Income Is Too High

When your withdrawals push your total income above certain thresholds, the IRS taxes your Social Security benefits. Being thoughtful about withdrawal amounts in years when you’re also collecting benefits can help protect more of that income from taxation.

Real Numbers Matter

A $400,000 portfolio might generate $16,000 yearly. Add $20,000 in Social Security, and you’re at $36,000. But if poor withdrawal choices push you into higher tax brackets or trigger Social Security taxation, your actual spendable income drops. Reviewing your account types and withdrawal sequence with a tax professional before you retire can preserve thousands of dollars over your lifetime.

Bottom Line

Whether $400,000 is enough to retire at 65 depends on factors such as your lifestyle, location, expenses and other income sources. For someone with modest spending, Social Security benefits and little debt, that amount may support retirement for a significant period. Those facing higher housing, healthcare or everyday costs may need additional income or savings. Building a realistic budget and withdrawal strategy can help determine how far $400,000 could go based on your circumstances.

“For most Americans living in big or midsized cities, $400,000 won’t cut it for an expected 30-year retirement. It might, however, be plenty for someone with average or above average Social Security benefits and a pension. It could also be workable for someone with very few lifestyle expenses and in good health,” said Tanza Loudenback, CFP®.

Tanza Loudenback, CFP® provided the quote used in this article. Please note that Tanza is not a participant in SmartAsset AMP, is not an employee of SmartAsset and has been compensated. The opinion voiced in the quote is for general information only and is not intended to provide specific advice or recommendations.

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.

Photo credit: ©iStock.com/supersizer, ©iStock.com/DNY59, ©iStock.com/AndreyPopov