I’m 62, Have $800,000 and Will Receive $2,600 Monthly from Social Security. What’s My Retirement Budget?

Planning for retirement can be an exciting challenge, and figuring out how much you can realistically spend each year is a key piece of that puzzle. For example, a 62-year-old with $800,000 in savings and a monthly Social Security benefit of $2,600 can reasonably expect an annual income of $63,200 in retirement.

However, this figure varies depending on your individual circumstances. Where you keep your money matters. You benefits may change whether you hold your $800,000 in a taxable, tax-free, or pre-tax account – or a combination of the three. Additionally, how these accounts invest your funds significantly impacts your financial outlook.

A financial advisor can help you determine how much income you’ll need for retirement and build a strategy that gets you there.

Income Considerations

Social Security benefits are inflation-adjusted and have been paid without interruption since 1940. Current projections indicate benefits may reduce by 17% in 2035 unless Congress takes action to support the program’s trust fund.

The government has countered previous threats to Social Security by increasing taxes, extending the retirement age, and making other modifications that enable the program to continue paying benefits. There’s no way to know for sure that Congress will do that again. However a number of proposed fixes that include raising or eliminating the income cap on Social Security taxes are likely to work. Assuming Social Security benefits stay the same, a $2,600 monthly benefit means $31,200 your first year of retirement.

The amount of income you could receive from your $800,000 portfolio would be less certain. The commonly used 4% safe rule calls for withdrawing 4% of your savings in the first year of your retirement and adjusting that number for inflation thereafter. If you plan to follow the 4% guideline, you would have another $32,000 in income in year one of retirement. Subsequent annual withdrawals will need to increase to reflect inflation.

Combining $31,200 in annual Social Security benefits with $32,000 in investment income gives you a pre-tax income of $63,200. If you’re single and have average living expenses, this may be enough to fund a comfortable retirement. According to the Census Bureau, the median real inflation-adjusted income for a householder age 65 or older in 2024 was $59,648 ¹ . This is about $3,500 less than what you would have in our hypothetical scenario.

What Types of Accounts Do You Have?

Taxes can be one of your biggest retirement expenses. The types of accounts that hold your $800,000 can dictate the taxes you pay. If your keep your savings in a pre-tax retirement account, such as a traditional 401(k), the IRS will tax all withdrawals, contributions, and earnings as ordinary income. Keep in mind that withdrawals from a pre-tax retirement account will increase your taxable income. This can trigger taxes on your Social Security benefits.

Any growth in a brokerage or savings account will be subject to capital gains taxes, ordinary income taxes, or both. This income can also result in Social Security benefit taxes. However, the IRS won’t tax your initial principal deposits.

If you save using a Roth IRA or similar after-tax account, earnings accumulate tax-free. You also won’t have to pay income tax on withdrawals as long as you meet certain guidelines. This includes making your first Roth contribution at least five years earlier. This is the best move from a tax perspective. Roth withdrawals also won’t impact how the IRS taxes your Social Security benefits.

The Importance of Asset Allocation

Along with the type of account you have used to save, the way you invest the funds in the account is also really important. If you invest the entire $800,000 in bank certificates of deposit (CDs), you could generate $40,000 per year without touching the principal at current rates of about 5%. You can’t count on renewing CDs at these rates forever, but you could invest in 10-year U.S. Treasury Notes, currently paying 4% annually. ² That would give you the same $32,000 in income as the 4% withdrawal rate without reducing the principal.

To counter potential inflation spikes that would reduce your purchasing power, you could invest in stocks. The S&P 500, for instance, has historically returned an average of nearly 10% per year. However, this return also fluctuates significantly from year to year. You can’t expect to reliably earn $80,000 from your stock investments year-in and year-out.

Traditional approaches to asset allocation can result in a portfolio consisting of some cash, some fixed-income securities and some stocks, possibly including other options such as fixed-income annuities like one from New York Life currently guaranteed to pay over 7% for as long as you live. ³ Diversified portfolios are generally regarded to be the most reliable way to generate the highest return from your assets. But if you need help selecting investments that meet your needs, find a financial advisor and talk it over.

Other Variables to Consider

In addition to these choices, you could have a host of other options for increasing your income or reducing your expenses, including the following:

• Delay retirement. Every year you keep working is another year your savings can grow. Assuming a 7% annual growth rate, your $800,000 in savings will increase by $56,000 per year
• Delay Social Security. Waiting to claim Social Security after your current age earns you delayed retirement credits which increase your monthly amount you’ll receive. As of February 2026, your benefit increases by 8% for each year you wait past your full retirement age.
• Reduce housing expenses. Housing is the single biggest cost for retirees, accounting for more than a third of the typical retiree’s budget. It’s also the expense that varies most by location. By moving to a less costly area or simply downsizing, you can significantly increase how far your retirement income goes.

Uncertainty is inescapable in retirement planning. Future inflation, tax rates and your own health and longevity are important factors that can only be estimated. A carefully constructed retirement plan takes into account these factors and may address them with insurance and other tools to keep risk within acceptable limits.

How a Financial Advisor Can Help You Create a Retirement Budget

If you are approaching retirement or have already stopped working, how much you can safely spend each year? You may have savings, Social Security benefits, and other income sources, but turning them into a retirement budget is not always straightforward. The decisions involved often center on tradeoffs.

How much income do you draw from savings? When should you claim Social Security? How do investment choices affect income stability and long-term sustainability? These decisions are connected, and changing one variable can affect the others. A financial advisor can help you evaluate how your income sources work together. An advisor can also help clarify how investment risk, inflation and longevity factor into your budget.

You might ask questions such as: How much can you spend without increasing the risk of running out of money? How do taxes change your take-home retirement income? How does claiming Social Security earlier or later affect your annual budget? These are practical questions that often benefit from scenario analysis rather than a single estimate.

Timing also matters. Decisions made at age 62 may look different at 67 or 70, and changes in markets or tax rules can alter your budget assumptions. A financial advisor can help you revisit your retirement budget as conditions change and adjust spending targets accordingly.

When your finances involve multiple moving parts, a retirement budget becomes less about one number and more about managing uncertainty. Professional guidance can help you weigh options, understand constraints, and make spending decisions that align with both your resources and your priorities.

Bottom Line

With $800,000 in savings and $2,600 in Social Security benefits at age 62, a conservative estimate gives you about $63,200 in income. You may be able to generate more income, depending on the types of accounts in your investment portfolio and it’s overall performance. If necessary, you could keep working and delay claiming Social Security for a year or two, or relocate to a less costly area to make your income go further.

Retirement Planning Tips

• A financial advisor can help you do scenario modeling to see how different scenarios could play out. SmartAsset’s free tool matches you with financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• As you can see, a lot goes into a person’s readiness for retirement. Luckily, SmartAsset’s free retirement calculator can help you gauge how much income you can expect to have in retirement and whether it will be enough to support your projected expenses.
• Maintain an emergency fund in case you run into unexpected expenses in retirement. An emergency fund should be liquid – in an account that isn’t at risk of significant fluctuation like the stock market. The tradeoff is that the value of liquid cash can be eroded by inflation. But a high-interest account allows you to earn compound interest. Compare savings accounts from these banks.

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