Nearing Retirement With $250,000? Here’s What to Do Next

When you are getting close to retiring, you need to make sure your nest egg is large enough to supplement your Social Security benefits.

The reality is that Social Security is designed to replace only about 40% of a typical worker’s pre-retirement income. That leaves a substantial gap that most retirees must fill with personal savings, investments, or other income sources. Relying on Social Security alone means accepting a very lean lifestyle, and that calculus gets harder when healthcare costs rise in your later years.

If you are approaching retirement with just $250,000 in your investment portfolio, you may be wondering whether that is enough or what your next steps should be. Here is what you need to know about entering retirement with that amount saved.

Determine what $250,000 will actually do for you

The first and most important task is understanding how much income your $250,000 nest egg will actually generate. The standard starting point is the 4% rule: withdraw 4% of your portfolio in year one, then adjust each year’s withdrawal for inflation. That approach was developed by financial planner William Bengen in 1994 and remains widely cited as a rule of thumb for sustaining a portfolio over a 30-year retirement. Applied to a $250,000 portfolio, it produces $10,000 in annual income.

The 4% rule is not without critics, and the debate around it has grown sharper. Bengen himself revisited his research in a 2025 book and concluded that the new worst-case safe withdrawal rate is actually 4.7%, given greater portfolio diversification options available today. Meanwhile, Morningstar’s December 2025 research recommended a more conservative 3.9% as the optimal starting rate for new retirees targeting a 90% probability of not running out of money over 30 years. The gap between those two figures reflects genuine disagreement among researchers, not a settled answer. For a $250,000 portfolio, the practical range runs from about $9,750 to $11,750 per year, depending on which framework you use. Either way, the income is modest.

Add that portfolio income to the average Social Security retirement benefit, which reached approximately $2,083 per month as of May 2026, and a typical retiree in this situation would have roughly $35,000 per year to live on. For most people, that falls well short of the 60% or more of pre-retirement income that personal savings are expected to cover. A financial advisor can help you model your own specific numbers, but the rough picture makes clear that you have decisions to make.

Explore other sources of income

Before concluding that $250,000 is simply not enough, take stock of every other income source available to you. Home equity is one often-overlooked asset. If you have owned your home for many years and built up substantial equity, selling and moving to a lower-cost area could free up meaningful capital. Investing the difference between your sale proceeds and the cost of a new home could significantly extend how long your savings last.

If you are married, your household picture may look considerably better than your individual savings suggest. A spouse’s income, pension, or Social Security benefit can shift the math in your favor. Look at your combined retirement income from all sources before deciding whether you are truly short. For couples, coordinating Social Security claiming ages can also make a real difference: one spouse delaying to 70 can lock in a benefit that is roughly 24% higher than claiming at full retirement age.

Consider working a little longer

If the numbers still fall short after accounting for all potential income, extending your career is often the most powerful lever available. Every additional year of work has a compounding effect: you contribute more to your portfolio, you give existing investments more time to grow, and you shorten the number of years your savings must support you. Each year you delay Social Security past your full retirement age also increases your benefit by about 8%, up to age 70. That gain is permanent and inflation-adjusted, making delayed claiming one of the highest-return financial decisions most retirees can make.

Staying in the workforce longer than you had planned is rarely anyone’s first choice. But the alternative, running short of money in your 80s, carries consequences that are far harder to recover from.

Make plans for lifestyle changes if necessary

For retirees who must stop working now and have limited income options, lifestyle adjustments become the primary tool. Relocating to a low-cost-of-living area is one of the most effective moves available, since housing costs typically represent the largest line item in a retiree’s budget. Cities and regions with lower property taxes, moderate climates, and affordable healthcare infrastructure are worth researching carefully before making a move.

A fee-only fiduciary financial advisor can help you stress-test a tight budget, project how long your money is likely to last under different spending scenarios, and identify any remaining options for earning or saving more. The goal is to build a realistic plan you can actually execute, rather than one that assumes everything goes right.

Editor’s note: The average Social Security retirement benefit figure was updated to approximately $2,083 per month, reflecting SSA May 2026 data, and the combined annual income estimate was revised to roughly $35,000. Context on the ongoing expert debate over safe withdrawal rates was added, including William Bengen’s 2025 book revising his floor to 4.7% and Morningstar’s December 2025 recommendation of 3.9% for new retirees in 2026.

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