Can you retire with a million dollars? (2024)

It’s the million-dollar question.

Is $1 million enough to retire?

Factors to consider: How long will $1 million last in retirement?

How much you save for your future depends on severalpersonal financefactors and your goals, including the key ones listed below:

1. Your desired retirement lifestyle

Do you have a picture in your mind of what retirement will look like for you? For example, do you plan to travel extensively, dine at the best restaurants, spend time with children and grandchildren (and spoil the grandkids), tour the country in a motorhome, buy a yacht or sailboat, or join a country club? If so, you may need a lot of money to support this kind of lifestyle.

On the other hand, if you envision a simpler and more frugal retirement lifestyle, or you are one of the lucky few who has a robustretirement pension, you might have plenty of money in the bank to retire on and still leave a generous inheritance for your heirs.

2. Your risk tolerance and rate of return

When entering retirement, many people adjust their asset allocation to a less risky mix of stocks, bonds and cash alternatives.² While reducing volatility, this generally comes with an expectation of lower rates of return throughout retirement.

Finding the right balance between risk and return could potentially stretch your retirement nest egg significantly further if that money was invested more aggressively throughout retirement. But this could also subject your retirement funds to higher risk of loss, which might jeopardize your retirement financial security.

Managing the risk-reward tradeoff is something that each individual and couple must seriously consider. It might be smart to discuss this with a financial professional.

3. Your health and life expectancy

Healthcare expenses can eat up a big chunk of your retirement nest egg, depending on the type of healthcare coverage you have and what health issues you encounter during your retirement. In fact, according to arecent study, a healthy 65-year-old couple could see their annual healthcare costs go up by nearly 6% per year in retirement because of inflation.³

While Medicare will partially cover many healthcare expenses, there will still be copays and other out-of-pocket medical expenses you’re responsible for. If you are in poor health or experience major medical complications after you retire, this could drain your nest egg faster than you may have planned.

Further, if your family has a history of longevity, you might live longer than average. If you end up outliving the average lifespan, you might need a healthy chunk of change to last throughout retirement. On average, according to the Social Security Administration’s 2019 Period Life Table, a 65-year-old man today can expect to live until 84 while a 65-year-old woman can expect to live until 86.⁴

4. Where you live in retirement

It’s important to evaluate the overall cost of living in any given state, in addition to your state’s tax rates. Some retirees choose to relocate in retirement to reduce their overall expenses.

Read more:States that don't tax retirement income

5. How much income you receive in retirement

Your retirement savings probably won’t be your only source of income in retirement. You’ll probably receive Social Security income and you also might choose to work part-time in order to generate additional income. Every dollar of additional income you receive in retirement will help your retirement nest egg last longer and help improve your chances of retiring with more money.

6. The impact of inflation

Inflation erodes the purchasing power of your retirement savings because it costs more money to buy the things you need — everything from food and groceries to gasoline, clothing and entertainment. After years of low inflation, the U.S. economy has recently experienced an inflation spike. If this continues for a long period of time, it could jeopardize what your nest egg will enable you to purchase.

Read more:How to protect against inflation

How to increase your savings

Asking if you can retire with $1 million presumes that you will be able to save $1 million in the first place.

Here are three steps to help you reach your goals and potentially increase your retirement savings:

1. Aim to save 10% (or more) of your annual pretax income for retirement.

This assumes an approximately 40- to 45-year working career during which you are actively saving money for your retirement, such as between ages 25 and 67. If you participate in anemployer-sponsored retirement planat work — such as a 401(k) or 403(b) plan — and your employer matches your contributions, this could reduce the amount you need to save. Employer matches represent a boost on what you’re contributing, so it usually makes sense to contribute at least enough to an employer-sponsored retirement plan to qualify for a full match.

2. Leave your retirement savings alone.

One of the biggest hindrances to building your retirement savings is withdrawing money from your retirement account before you retire. Not only might you incur early withdrawal penalties, but you’ll miss out on potential long-term compounding of returns on your savings. Compounding is one of the biggest friends you may have when it comes to accumulating a retirement nest egg.

3. Consider using financial tools.

Are you prepared for retirement? What lifestyle can you afford to maintain? Will moving out of state significantly alter your retirement potential? Find out for yourself if your retirement plan is on track. Empower’s financial tools can help you determine how much money you might need to fund your golden years.

TheEmpower Retirement Plannerallows you to determine how much money you may need to save for retirement. You can also evaluate alternative plans in order to determine whether $1 million might be enough for you.

FAQs

Can you retire with a million dollars? ›

A recent analysis determined that a $1 million retirement nest egg may only last about 20 years depending on what state you live in. Based on this, if you retire at age 65 and live until you turn 84, $1 million will probably be enough retirement savings for you.

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Can a person retire comfortably with 1 million dollars? ›

Around the U.S., a $1 million nest egg can cover an average of 18.9 years worth of living expenses, GoBankingRates found. But where you retire can have a profound impact on how far your money goes, ranging from as a little as 10 years in Hawaii to more than than 20 years in more than a dozen states.

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Can you live off the interest of $1 million dollars? ›

Once you have $1 million in assets, you can look seriously at living entirely off the returns of a portfolio. After all, the S&P 500 alone averages 10% returns per year. Setting aside taxes and down-year investment portfolio management, a $1 million index fund could provide $100,000 annually.

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Is being a millionaire enough to retire? ›

A $1.46 million portfolio would be enough to support a 40-year retirement with an annual withdrawal of about $48,000/year (3.3% x $1.46 million). This number doesn't account for taxes on retirement account withdrawals, but it also doesn't include Social Security income.

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How much income will $1 million generate? ›

Saving a million dollars is a big achievement, but many Americans fear it won't be enough. One rule of thumb suggests $1 million would generate around $40,000 each year, adjusted upward for inflation. Instead of picking a figure, work out what income you might need in your old age and work backward from there.

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How much money do most people retire with? ›

The average retirement savings for all families is $333,940, according to the 2022 Survey of Consumer Finances. The median retirement savings for all families is $87,000. Taken on their own, those numbers aren't incredibly helpful. After all, not everyone who is the same age will retire at the same time.

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How long will $1 million last in retirement by state? ›

For retirees in California, the annual cost of living expenses would be $72,319.57, meaning a $1 million retirement fund would last for about 14 years. Retirement can often last 25 years or more, according to Fidelity.

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What is considered wealthy in retirement? ›

To be considered wealthy at age 65 or older, you need a household net worth of $3.2 million, according to finance expert Geoffrey Schmidt, CPA, who used data from the 2019 Survey of Consumer Finances (SCF) to determine the household net worth needed at age 65 or older to determine the various percentiles of wealth in ...

What percentage of Americans retire with $1000000? ›

Putting that much aside could make it easier to live your preferred lifestyle when you retire, without having to worry about running short of money. However, not a huge percentage of retirees end up having that much money. In fact, statistically, around 10% of retirees have $1 million or more in savings.

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What is a comfortable retirement income? ›

Their latest figures show that a single person will need £12,800 a year to achieve the minimum living standard, £23,300 a year for moderate, and £37,300 a year for comfortable. For couples it is £19,900, 34,000 and £54,500¹. The minimum living standard covers most people's basic needs plus enough for some fun.

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Are you considered rich if you have $1 million dollars? ›

Additionally, statistics show that the top 2% of the United States population has a net worth of about $2.4 million. On the other hand, the top 5% wealthiest Americans have a net worth of just over $1 million. Therefore, about 2% of the population possesses enough wealth to meet the current definition of being rich.

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How much does a $1,000,000 annuity pay per month? ›

According to SmartAsset, they might expect to receive between $4,500 and $6,500 per month for the rest of their lives or the specified duration of the annuity contract.

How long will $800,000 last in retirement? ›

With $800k initially saved, you could withdraw $40k-60k annually and still have your portfolio last between 19-28 years. The higher your spending amount, the faster your savings get depleted. Assessing your specific retirement costs and life expectancy is key to determining withdrawal rate.

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What is a good monthly retirement income? ›

Many retirees fall far short of that amount, but their savings may be supplemented with other forms of income. According to data from the BLS, average 2022 incomes after taxes were as follows for older households: 65-74 years: $63,187 per year or $5,266 per month. 75 and older: $47,928 per year or $3,994 per month.

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Can a couple retire at 60 with 1 million dollars? ›

Can I Retire at 60 With $1 Million Dollars? You can retire at 60 with $1 million dollars and receive a retirement income of $55,000 p.a. For 30 years if you are a couple and $70,000 p.a. for 30 years if you are single.

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What should your net worth be to retire at 60? ›

And by age 60, you should have six to 11 times your salary saved in order to be considered on track for retirement. For example, a 35-year-old earning $60,000 would be on track if she's saved about $60,000 to $90,000.

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Do I really need 2 million to retire? ›

Your ability to retire on $2 million depends on your expenses in retirement. Because lifestyle drives monthly expenses, your activities and hobbies may run up against your $80,000 annual income. This amount equates to $6,666 per month.

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