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Wanting to retire but not having enough money to do so comfortably is a common dilemma. According to the Schroders 2025 US Retirement Survey, 53% of preretirees worry about outliving their savings (1).

Let's imagine Darren is in this situation. At 65, he earns $70,000 a year, has $500,000 in his 401(k) and wants to quit working as soon as possible. However, to achieve that dream, he knows he'll need to be creative.

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Experts say most people require about 80% of what they earned pretax before retiring to maintain a similar standard of living after leaving the workforce (2). In Darren's case, that amounts to $4,667 a month. Darren believes he can make do with less. He has no debt, isn't a big spender, is relatively healthy and reckons the nearly $1,700 a month he's expected to get from Social Security plus an extra $2,000 should be sufficient to retire comfortably.

The issue is where that $2,000 will come from. Using the 4% rule, a commonly applied guideline for retirement withdrawals, Darren's $500,000 savings would provide him with about $1,667 a month. That's not enough, so he needs to find alternatives.

Option 1: Delay retirement

If Darren is able to work longer, he should consider it. There's a reason nearly a quarter of Americans delay retirement (3). It isn't a popular choice. But sometimes it's necessary to reduce nest egg requirements and save more.

Putting as much as possible from each paycheck into your retirement plan for an extra year or more can be game changing, especially if your employer offers matching contributions. In 2025, the most someone Darren's age can add to their 401(k) is $31,000, or $77,500 if you include the employer's contributions. Factor in returns, and it really adds up, especially if Darren also opened an individual retirement account (IRA) and maxed out contributions to that, too.

Working longer also means fatter Social Security checks. For each year that you delay retirement until turning 70, your benefits go up. If Darren held off until 66, he'd get roughly $1,850 a month from Social Security. Make that 67, and the monthly check increases to a little more than $2,000.

Read more: I'm almost 50 and have nothing saved for retirement - what now? Don't panic. These 6 easy steps can help you turn things around

Option 2: Income investing

An alternative to gradually drawing down retirement savings is leaving the balance invested in income-generating assets. The beauty of this strategy is that you get paid while keeping your money fully invested. But there are also drawbacks.

For Darren to generate $2,000 a month from $500,000 invested, he'd need his savings to yield 4.8% annually - at least while his balance remains at half a million. That's not terribly steep but may require taking a more moderate risk approach.

The safest options, such as government bonds, high-yield savings accounts and large, reliable dividend-paying companies whose goods or services are constantly in demand and likely to remain so, such as Coca-Cola and Johnson & Johnson, don't generally pay out that kind of income. That leaves investments more susceptible to price and payout fluctuations, which isn't ideal when you're relying on them to keep you afloat.

A safer bet could be to implement a hybrid approach, targeting a lower yield while slowly drawing down retirement funds to make up the difference.

Option 3: Work part time

If continuing to work full time isn't an option, Darren might consider working fewer hours for the same company or perhaps doing something else, like freelancing, consulting, tutoring or even taking a few shifts at a local shop.

It doesn't have to be much. Even if the job brings in $1,000 a month, that still halves his extra income need and the strain on his savings.

In this scenario, Darren could feasibly live off his new paycheck, Social Security and income from his investment portfolio without potentially withdrawing a cent. Then, by the time he fully retires his savings ought to be worth more, thanks to capital appreciation, and will have fewer years to last.

Option 4: Tap home equity

Darren could also use his home to plug his shortfall. When you own property, it's possible to extract money from it. Options include:

• Selling and downsizing.
• Moving to a cheaper city or state.
• Renting out a room or a floor in his home.

If none of those options are palatable, Darren could consider a reverse mortgage, which allows homeowners age 62 or older to convert part of their home equity into cash that doesn't need to be repaid until they move out or pass away. But, weighing the drawbacks here, including declining equity and possible higher interest rates, is key.

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Article sources

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

Schroders (1 ); AARP (2 ); F&G Annuities & Life (3 )

This article originally appeared on Moneywise under the title: I'm 65, itching to retire but only have $500K saved. I want $2K/month plus my Social Security - how can I swing this?

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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