I'm 65 With $500k in Cash and $1 Million in an IRA-Is It Finally Time to Retire?

SmartAsset and Yahoo Finance LLC may earn commission or revenue through links in the content below.

Someone with $1.5 million in assets on top of Social Security income may be able to maintain a comfortable retirement starting at 65 with the right circumstances. While this is can be a relatively strong retirement profile depending on your needs, location and risk tolerance, you’ll need to plan carefully and make some critical decisions surrounding Social Security, your investments and spending. If you need additional help deciding whether you can afford to retire, consider speaking with a financial advisor.

Calculate Your Social Security Benefit

First, you’ll need to determine how much your Social Security benefits will be if you retire immediately at 65.

For someone born in 1958, the full retirement age is 66 years and 8 months. At age 65, you’d be collecting benefits 20 months early, which reduces your lifetime payments by 11.11%. For example, say you would have received the average payment of $1,759 per month or $21,108 per year at full retirement age. At age 65, you would instead receive $1,563 per month or $18,762 per year. Maximum benefits can pay up to $4,555 per month in 2023 if you wait until age 70 to begin collecting.

Your exact benefits depend on how many Social Security credits you earned while working. If possible, it would be wise to wait on collecting until full retirement age or later so that you can maximize your benefits. A financial advisor can help you determine when to start collecting Social Security.

Build an Income Plan

The next step is planning for other income. How much money can you generate from your combined savings, benefits and other assets?

First and foremost,if you have half a million dollars sitting in a low- or no-interest depository account, it’s likely not keeping up with inflation. You can do better.

Many investment pathways have a good chance of beating inflation so you don’t lose purchasing power to inflation over time. A financial advisor can help you create the right portfolio, as well as suggest other potential routes to sustainable financial health.

“Some of the excess $500,000 cash could be used to purchase permanent life insurance as this would provide a guaranteed tax-free death benefit,” said Bryan M. Kuderna, founder of the Kuderna Financial Team. “This might act as a ‘permission slip’ to spend down retirement assets and enjoy Social Security without disinheriting heirs and replenishing a lost Social Security check upon first spouse’s demise.”

Otherwise, the question is how to balance your income and risks. Depending on your spending and expenses, you should be able to generate enough income throughout retirement, but the scope of that income will depend on how you invest.