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For someone withdrawing 4% from $500,000, this annual amount would be around $20,000. Coupled with Social Security benefits—approximately $30,000 per year for a typical retiree—this brings total annual income to around $50,000. While this might be adequate for some retirees, it may still fall short for others, particularly those who were accustomed to a higher income during their working years.

The Challenge of Adjusting to Retirement Incomes

Working individuals typically spend about 80% of their pre-retirement income in retirement for a comfortable lifestyle. If someone earned $100,000 annually, they would aim to have an income of around $80,000 in retirement, making the projected $50,000 from a mix of savings and Social Security a substantial drop.