Can You Retire With $500,000 in 2025?

I've spent years covering retirement planning, and this question is coming up more often in 2025. With prices still elevated in many places and interest rates offering better yields, many people want to know -- can you really retire on $500,000 now?

The short answer: Yes, but you'll need a clear plan, a flexible mindset, and smart strategies to stretch your dollars.

Why $500,000 feels possible now

In the past, many experts called $500,000 too low for a secure retirement. But in 2025, higher yields on high-yield savings accounts (some still near 4.00% APY) and CDs (around 4.00%-4.50% APY) can help retirees earn more on their cash.

At the same time, many retirees are:

• Downsizing to lower housing costs
• Moving to lower-cost states
• Taking on part-time or hobby work for supplemental income

These changes can make $500,000 more realistic than you might think.

What your lifestyle demands

Your lifestyle is the biggest factor in making $500,000 work. If you can live on around $35,000 a year and supplement your withdrawals with Social Security, your nest egg may last.

Consider:

• Downsizing your home or relocating to a lower-cost area
• Reducing discretionary spending, especially in early retirement
• Avoiding lifestyle creep as you transition out of the workforce

These decisions can be hard to make by yourself -- especially if you've never had to do it before. A short questionnaire from our partner, SmartAsset, helps match you with up to three fiduciary financial advisors, each legally bound to work in your best interest.

Healthcare and inflation challenges

Healthcare can be a big wildcard, especially if you retire before age 65. Premiums, out-of-pocket costs, and long-term care expenses can eat into your savings quickly.

Options to help manage these costs include:

• Building and using a health savings account (HSA) for future medical needs
• Considering part-time work to keep employer health coverage
• Using Affordable Cart Act (ACA) plans with subsidies if your income is low enough

Inflation is also still a concern in 2025. Even with cooling price increases, many essentials remain expensive. You'll need to keep some of your portfolio in stocks and inflation-protected investments to maintain your purchasing power.

Withdrawal strategies for a $500,000 portfolio

To make your money last:

• Use a bucket strategy: Keep one to three years of expenses in cash while letting other investments grow.
• Withdraw conservatively: A 3-3.5% withdrawal rate may be safer on a $500,000 balance.
• Stay flexible: Reduce spending during market downturns to avoid selling investments at a loss.

If you can supplement your income with part-time work, rental income, or seasonal jobs, you'll reduce pressure on your portfolio. And you don't have to do it alone. This no-cost quiz from our partner, SmartAsset, makes it easier to find a fiduciary financial advisor.

Your next step if you're aiming for $500,000

Retiring with $500,000 isn't for everyone, but it can be done if you:

• Keep your expenses low
• Take advantage of high yields on cash and CDs
• Stay invested to fight inflation
• Have a clear withdrawal strategy

If you're wondering where to start, review your current spending, estimate what retirement will actually cost you, and check how your Social Security will fit into the picture.

You might discover you're closer to your retirement goals than you think.