I'm 63, fed up with work, and plan to retire in 6 months — but I only have $850,000 saved. Is that enough for a comfy income or do I need to consider part-time consulting work?

Can you survive on an $850,000 nest egg?

There's no question that $850,000 is a good amount of money and more than many people have. In fact, Vanguard's 2024 How America Saves report says the median balance in defined contribution plans of those aged 55 to 64 is $87,571.

Unfortunately, although you have a pretty substantial amount saved, it's not going to produce as much income as you might think. That's because you need to limit the amount you take out of your account each year to a safe withdrawal rate.

A popular guideline says withdrawing 4% from your balanced portfolio in the first year of retirement and adjusting for inflation each year thereafter means there's a high likelihood that your nest egg will last 30 years.

However, Morningstar analysts now recommend a 3.7% withdrawal rate to ensure your money lasts.

With $850,000 saved, that would leave you with an income of $31,450.

Even if you add Social Security benefits to this, that's probably not enough for you to live comfortably on. Doing some consulting work could help supplement that income.

Your consulting paycheck would also allow you to draw less from savings, and depending on how much you work and how much you are paid, perhaps even keep growing your nest egg for a while instead of starting to deplete it.

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Consulting could help you delay your Social Security claim

There's another benefit to consulting as well. If you can earn enough to delay claiming your Social Security benefits, you will increase the amount of your monthly payments in the future.

While you become eligible for Social Security at 62, that's before your full retirement age (FRA). FRA is 67 for anyone born in 1960 or later.

As a result, if you claim benefits before 67, you will shrink your monthly payments for life. Claiming at 63 with an FRA of 67 would result in a 25% reduction in your standard benefit, which gives you a lot less money to live on.

If consulting allows you to put off your benefits claim, you won't have to take that hit. In fact, you could potentially put off your claim even beyond FRA and earn delayed retirement credits that raise your benefit amount for each month you wait until age 70.

Now, you should be aware that if you work while collecting Social Security and are under FRA, there's a limit to how much you can earn before you start to temporarily forfeit part of your benefits. They are withheld until you reach FRA. However, if you're working to delay Social Security and don't claim your checks, this won't affect you.

Ultimately, consulting can be a great way to ease into retirement, keep your skills sharp, preserve your savings, and grow your retirement income. If you can find good consulting opportunities that pay you a fair rate, you should strongly consider taking them — especially with only $850K saved.

The effort you put into consulting now can make a big impact on your future financial security, and you'll be very happy you did the work while you could.