I'm in my 50s with $650,000 in my 401(k) and I'm starting to worry that I don't have enough saved to last through my retirement. Should I panic or stay the course?

Is $650K enough for retirement?

A 2024 Allianz Life survey found that 63% of Americans are more concerned about running out of money than dying, and those fears are being fueled by high levels of inflation.

Whether a $650,000 nest egg will suffice for your retirement depends on a number of factors. These include what your expenses look like, how much Social Security you expect to get, and how long you end up living.

If you use the 4% rule to gradually draw down your retirement savings, you could draw $26,000 a year from your balance. Meanwhile, the average Social Security benefit among retired workers today is roughly $1,979 per month, or about $24,000 per year.

By the time you retire, that average benefit will likely be higher. And you may be eligible for more Social Security based on your income history.

Otherwise, based on these numbers, you may be looking at a retirement income of about $50,000 a year based on a number of unlikely assumptions:

• that you don’t manage to save any more money over the next decade,
• that your portfolio experiences 0% growth,
• and that you have no additional sources of income at your disposal.

The likelier reality is more promising. Even if you don’t add any money to your $650,000 balance and it grows at a conservative rate of 5% per year over the next 10 years, you’ll be looking at $1.07 million after a decade, based on a calculation on investor.gov.

In that case, the 4% rule would allow you to draw down $43,000 in income from your savings alone, not including Social Security benefits. Add those in and your annual income would be closer to $77,000.

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Boost your savings now and in retirement

Remember, you have 10 years to boost your 401(k) significantly. The IRS allows savers 50 and older to make annual catch-up contributions to their 401(k)s and IRAs.

In the case of 401(k)s, 403(b)’s and government 457 plans, employees 50 and older can make annual catch-up contributions of $23,500. The annual limit on IRA contributions is $7,000 plus a catch-up contribution of $1,000 for those aged 50 and over.

So between additional contributions and gains, your 401(k) balance could grow substantially. A financial adviser can review your investments and make sure you're taking on an age-appropriate amount of risk.

You can also consider ways to generate more income in retirement.

One option is to delay your Social Security claim past full retirement age (which, if you’re in your 50s now, is 67). Choose that option, and you can grow your Social Security entitlement by 24% between 67 and 70.

That means if the average benefit is $1,979 today, your holding off until 70 would entitle you to $2,454 a month ($29,448 a year) in Social Security benefits. And that doesn’t include cost of living adjustments.

If you’re really concerned about running out of money in retirement, another option is to work part-time. Recent data from T. Rowe Price reveals that around 20% of retirees are working full- or part-time.

Interestingly, while 48% of people in that category are working for financial reasons, 45% are doing so for social and emotional reasons.

So while your primary motivation for working may be to boost your retirement income and stretch your savings, you might enjoy the fringe benefits — like getting out of the house and socializing with people — just as much.