I Have $680K in a 401(k), a Monthly Pension of $1,600 and Another $150K in Cash. Can I Retire at 62?


Financial advisor and columnist Matt Becker

Financial advisor and columnist Matt Becker

I currently have $680,000 in a 401(k), $150,000 in savings and a pension of $1,600 per month. Can I retire at age 62?

– Hieu

This is a good question and the answer depends primarily on what your expenses are and how much you will collect from Social Security. What we can do here is run the numbers on a few different scenarios to give you a sense of how much income you can expect to have and the level of monthly expenses that your income might support. (And if you have more retirement-related questions, consider speaking with a financial advisor.)

Planning Out Your Retirement Income With Social Security

First, let’s look at what your retirement income might be before considering Social Security benefits.

Your pension is straightforward. That $1,600 per month is a consistent income that provides a strong baseline for supporting your needs. On an annual basis, your pension income will be $19,200 per year.

You also have $830,000 between your 401(k) and your savings. Using the 4% rule, you should be able to withdraw about $33,200 from these sources in your first year of retirement before adjusting subsequent withdrawals for inflation.

Between your pension and account withdrawals, you’re starting with $52,400 in annual income. Depending on where you live, you’ll likely have around $48,000 per year to spend after taxes are taken out.

That comes out to about $4,000 in monthly expenses that you’re in a position to support before factoring in Social Security. (And if you need help building sources of retirement income or estimating how much you’ll have, consider matching with a financial advisor.)

Estimating Your Social Security Payments

A man who's nearing retirement calculates how much his Social Security benefits will be.

A man who’s nearing retirement calculates how much his Social Security benefits will be.

Of course, Social Security could add a significant amount of income to the equation. Using the Social Security Administration’s Quick Calculator, I ran a few different scenarios to see how they would affect your situation.

First, I assumed that you turned 62 on Oct. 1, 2023, and made $40,000 in your most recent year of employment. In that scenario, here’s your estimated annual Social Security income depending on when you retire:

  • Age 62: $11,340 per year

  • Age 67: $17,064 per year

  • Age 70: $21,816 per year

When added to the income from your pension and your savings, you’re looking at a total annual pre-tax income of between $63,740 and $74,216.

Next, I ran the same scenario, but assumed that your employment income was $70,000. Using the same calculator, here is your estimated Social Security benefit at each retirement age:

  • Age 62: $15,744 per year

  • Age 67: $24,036 per year

  • Age 70: $30,972 per year

In this scenario, we’re now looking at a total annual pre-tax income that ranges from $68,144 to $83,372.

To answer your question specifically, your total pre-tax income at age 62 could fall between $63,740 and $68,144 per year, depending on whether your employment income has been closer to $40,000 or $70,000.

With taxes taken out, you’re probably looking at between $57,000 and $61,000 in annual retirement income, which means you could support between $4,750 and $5,083 in monthly expenses. (Consider matching with a financial advisor if you need help planning for Social Security.)

So, Can You Retire at Age 62?

A 62-year-old woman smiles after officially filing for Social Security benefits.

A 62-year-old woman smiles after officially filing for Social Security benefits.

If those Social Security estimates are reasonably close to your actual benefits, and if your monthly expenses in retirement will be $4,750 or less, then you appear to be in a good position to retire at age 62.

If your expenses are greater than that, you might want to consider working a little bit longer. Doing so would increase your Social Security benefit, increase your retirement savings and reduce the number of retirement years you have to support. Or you could find ways to reduce your monthly expenses to the point where your current assets, pension income and Social Security benefits will cover them.

Of course, I’ve made several assumptions here, and it’s also worth noting that the 4% rule is simply a good rule of thumb. Your actual situation may differ from what I’ve laid out.

My hope, though, is that seeing how I ran the numbers will help you understand how to do this kind of analysis so that you can make the best decision for yourself. (And if you need additional help with your retirement plan, this tool can help match you with potential advisors.)

Tips for Finding a Financial Advisor

  • Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

  • Consider a few advisors before settling on one. It’s important to make sure you find someone you trust to manage your money. As you consider your options, these are the questions you should ask an advisor to ensure you make the right choice.

Matt Becker, CFP®, is a SmartAsset financial planning columnist and answers reader questions on personal finance and tax topics. Got a question you’d like answered? Email AskAnAdvisor@smartasset.com and your question may be answered in a future column.

Please note that Matt is not a participant in the SmartAdvisor Match platform, and he has been compensated for this article.

Photo credit: ©iStock.com/ljubaphoto, ©iStock.com/Korrawin

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