Should I just upgrade my GPU to RX 9060 XT or do a complete system overhaul?

I'm pretty new to all this, so bear with me. I've got an Intel i7-7700, a Gigabyte H110M-S2H-CF motherboard, and I'm currently using a GTX 1060 6GB. My power supply is an Aerocool Integrator 500W, and I have 16GB of DDR4-2133MHz RAM. The main reason I want to upgrade is to play new AAA games at 1080p, but my experience with the current setup has been rough—I could only manage low to medium settings in Expedition 33, and I can't even run FF7 Rebirth. My friend, who isn't much of an expert either, mentioned all sorts of potential issues like compatibility with other parts, power supply wattage, and possibly needing a new motherboard as well. I initially thought of only upgrading to the RX 9060 XT, but I'm not sure if that's enough or if I should consider a more comprehensive upgrade instead.