How Much Money Can You Make from a $500,000 Portfolio?

Everyone has to stop working at some point in their life. When that time comes, they will have to dig into their retirement savings. Some have enough and can live comfortably; but others are not so lucky.

People now live a little longer and, depending on how long you live, you may need income for 30 or more years. So, how much should a retiree save?

Will $500,000 Be Enough?

To be honest, this would not be enough for many people today. But you can get sufficient income with a good investment portfolio.

Suppose in your first year of retirement you want to earn about $50,000. The average Social Security payment is $17,000. So now you have to earn $33,000 from your $500,000 portfolio.

Another assumption here is that income will increase with inflation and the investment portfolio will, therefore, have to increase. The portfolio should protect your savings and, at the same time, grow at a higher rate than your yearly withdrawals. So be sure to find the proper balance between fixed-income investments and stocks.

Many financial advisors typically recommend the 4% rule to their clients when it comes to withdrawals. According to this guideline, you should never withdraw over 4% of your income in a year.