Millennials have an average of $51,300 in personal savings and $63,300 in retirement accounts, well behind baby boomers, who have an average of $102,400 in personal savings and $138,900 in their retirement accounts.

Then, there’s you. You did your best and scraped as well as you could, but the total comes out to $500,000. And with most of us thinking we ought to hit nearly a million to not worry about retirement, that $500k can be rather worrying.

Can you retire on $500,000? Here’s what you need to know before you start the process.

The Typical Cost of Retirement

It’s worth bearing in mind that because everyone’s situation is different (your income, your expenses, where you live, and what it costs to live comfortably), $500,000 can mean different things to different people. So it’s more productive to look at the typical cost of retirement and whether $500,000 will cover what you need.

According to the Bureau of Labor Statistics, the average senior spends $55,700 per year in retirement. Assuming you’re retired for 20 years, that comes out to $1.114 million in order to keep the same standard of living throughout your retirement (a simplification, since your costs will change as you age).

Remember, even healthy seniors face rising healthcare costs as they age. According to Fidelity, your average 65-year-old retiree can expect to spend $300,000 on medical expenses alone over the remainder of their life, which does not include the cost of a private room in a nursing home.

This is further complicated by the fact that Medicaid can cover long-term expenses but Medicare cannot, and many seniors have to significantly shrink their assets in order to meet income qualifications for Medicaid in the first place. Social Security won’t get very far to cover it, either—the average monthly benefit is $1,437.55, but the amount changes dramatically depending on the recipient in question.

In other words? Retirement doesn’t come cheap, averages don’t give you the whole picture, and there’s no good way to predict how the exact details of your situation will unfold.

So…Can You Retire on $500,000?

Experts generally recommend saving at least 10 times your annual income by age 67 to keep the same standard of living. So if you earned $50,000 per year at peak pre-retirement earnings, you’re in good shape. If you earned less than that, you’re in great shape. However, this assumes that you’re spending exactly the same amount per year in retirement—and the reality is that you’re going to spend more as you age and accumulate healthcare expenses.

If you earn above $50,000 and your $500,000 in savings is nowhere close to 10 times your income, don’t panic. Take a deep breath. Retirement isn’t entirely out of reach. You can still retire on $500,000.

How to Retire with $500,000

To be clear: you can retire on $500,000, but you’re going to have to adjust your expectations.

If you’re picturing a gold watch, cushy retirement, that probably isn’t in reach with $500,000 in savings. You’re going to have to be much more budget-conscious than some of your friends. But you can still enjoy retirement.

Here’s how to do it.

Budgeting is Your Best Friend

First and foremost, budgeting is your new mantra and golden rule.

Before you file a single piece of paper to leave your job, you need to take a hard look at the $500,000 available to you and a hard look at your expenses. Start by creating a mock-up budget. This isn’t quite the time for cold hard realism yet—think about the retirement lifestyle you’re hoping to enjoy. Then, break it down into expenses to see if that $500k covers the bill.

If it doesn’t, it’s time to start paring down.

A good approach to this is to track what you’re spending for six months. That way, you have a realistic idea of your monthly expenses. From there, you can ask yourself if this is the standard of living you want to keep in retirement, if you’re spending in a way that will be comparable to your retirement spending, if you have expenses that will change in retirement, and if you have any expense categories that don’t exist yet but will come into the picture during retirement.

The 4% Rule

From there, you can turn your attention to your $500,000 and how much you can realistically withdraw from it each year without running out of money. A good approach is the 4% rule, which says a healthy retirement nest egg should allow you to withdraw 4% in the first year then increase each year to adjust for annual inflation.

Ergo, according to the 4% rule, if you have $500,000 in savings, you’ll have access to roughly $20,000 per year for 30 years.

Plan Your Retirement Income

If $20,000 per year is scant compared to the pre-retirement income you’re used to, you’re going to have to supplement with income. You’ll get a bit of a boost from Social Security, but you shouldn’t rely on Social Security benefits alone to cover the difference.

In other words, you should plan on having some sort of income stream during retirement. This can be a retirement job—not a 9-to-5 like the one you’re leaving, but a source of income that allows you to cover some basics. That way, you can count on Social Security for a marginal boost and let your retirement savings cover bigger expenses.

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