Moneywise

Sun, Jun 29, 2025, 3:15 AM7 min read

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At age 65, a $120,000 nest egg isn't going to produce as much income as you might hope.

Assuming you follow the 4% rule, you'll only be able to withdraw $4,800 annually ($383 a month) from your retirement savings. — That rule would ensure your nest egg lasts 30 years.

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Add a $1,700 Social Security check to that and you have about $2,000 to cover your stated expenses each month — about $1,900 shy of the $3,900 you need, not including emergency medical bills and expenses.

Factor in taxes, and you’re in trouble. In fact, if you take this much money out of your savings, your money would only last 5 years if your investments earn 7% and you're in the 22% tax bracket.

You need to figure out another solution. Here are some options.

If your retirement spending needs are higher than your income, consider a part-time job, if not a full-time job.

You can collect Social Security benefits while you’re working, but if you haven’t hit the full retirement age of 67, the government can claw back your benefits. In 2025, you'll lose $1 in benefits for every $2 earned above $23,400 if you won't reach FRA all year.

The good news is that if you earn too much and lose some or all of your Social Security benefits, this is temporary. Your payment will be recalculated after you hit full retirement age.

So, working can help you in two ways, by providing you with a livable income, and potentially giving your Social Security benefits a boost when you reach full retirement age.

If you’re a homeowner you may be able to tap into your home equity to generate cash flow — for example, through a home equity loan or even selling your home and downsizing, then investing the difference.

With home values higher than ever, you can make your home work harder for you by making the most of your equity. The average homeowner sits on roughly $311,000 in equity as of the third quarter of 2024, according to CoreLogic.

Having access to your home equity could help to cover unexpected expenses, pay substantial debt, fund a major purchase like a home renovation or supplement income from your retirement nest egg.