I’m 62 years old and only have $490K in savings — how much can I spend per month if I retire today?

The problem with retiring on $490,000 at age 62

In a Northwestern Mutual study released earlier this year, Americans across all age groups said they expected to need $1.46 million to retire comfortably. If you have $490,000 in savings, you’re only about one-third of the way there.

Of course, just because one survey found that $1.46 million seems to be the magic retirement number doesn’t mean that’s the amount you need. You may have plans to live a fairly modest lifestyle in retirement, which would make it easier to get away with having less savings.

But there’s another issue with retiring at age 62 on $490,000, and it’s that you haven’t reached full retirement age for Social Security purposes. Full retirement age is when you’re eligible for your complete monthly benefit based on your personal income history without a reduction.

If you're 62 years old and were born in 1962, your full retirement age is 67. Filing for Social Security as soon as you retire means slashing your monthly benefit by as much as 30% for life. And while you could certainly wait until age 67 to claim Social Security, in that scenario, you risk spending too large a portion of your limited savings too quickly. So all told, it’s a tricky situation.

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How to pull off your retirement plans

While retiring at 62 with $490,000 in savings may not be the easiest thing, it can be done. But to make sure it’s a smart move, you’ll need to figure out how much monthly income you’ll have and what your expenses look like. Sticking to a budget will be crucial, since your income will be limited.

If you use the 4% rule to manage your $490,000 nest egg, you’re getting about $19,600 per year, or $1,633 per month, to spend for 30 years. This assumes you’ve invested your retirement savings in a balanced portfolio.

If you’re eligible for the average monthly Social Security benefit of $1,920 at full retirement age, but you file at age 62 instead, you’re looking at $1,344 a month. Combined with $1,633 from your savings, that gives you about $3,000.

Whether you can keep your monthly expenses to $3,000 depends on you and your lifestyle. But it’s possible, especially if your home is paid off.

And if your expenses are higher, you may want to consider postponing retirement by a year or two. Even if you can’t save much more during that time, delaying Social Security by a couple of years will leave you with a larger monthly check.

You’ll also notice that this budget doesn’t give you a lot of wiggle room for unplanned expenses, and it doesn’t build in room for things like travel. So you may want to consider a part-time job to supplement your retirement income. Just be sure to keep your income to $23,400 in 2025 to avoid having a portion of your Social Security benefits withheld for exceeding the program’s earnings test exemption.