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? ›

$1 million should be enough to see you through your retirement. If you choose to retire early, you may need additional savings and amend your desired retirement lifestyle to live a little more frugally.

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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? ›

Historically, the stock market has an average annual rate of return between 10–12%. So if your $1 million is invested in good growth stock mutual funds, that means you could potentially live off of $100,000 to $120,000 each year without ever touching your one-million-dollar goose. But let's be even more conservative.

How many Americans have $1000000 in retirement savings? ›

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.

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. Taken on their own, those numbers aren't incredibly helpful. There are a variety of decent retirement savings benchmarks out there, but how much money other people have isn't one of them.

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How long does $1 m last in retirement? ›

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

Can you retire at 50 with $800k? It is certainly possible to retire by age 50 with $800,000 in the bank, but you would need to adopt a relatively frugal lifestyle. Using the 4% safe withdrawal rule, you could take out $32,000 per year, or $2,667 monthly. This should sustain you for 25 years until age 75.

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How much do you need in the bank to live off interest? ›

For an interest-only retirement, you'll need to have a large nest egg. How big a nest egg depends on your target income and the interest rate. For example, an annual income of $48,000 would require a nest egg of $1.6 million, assuming a 3% interest rate. And that's not even accounting for inflation.

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How much money do you need to retire with $120000 a year income? ›

Let's say you consider yourself the typical retiree. Between you and your spouse, you currently have an annual income of $120,000. Based on the 80% principle, you can expect to need about $96,000 in annual income after you retire, which is $8,000 per month.

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What net worth is considered rich? ›

While having a net worth of about $2.2 million is seen as the benchmark for being rich in America, it's essential to remember that wealth is a subjective concept. Healthy financial habits and personal perspectives on money are crucial in defining and achieving wealth.

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How long will money last in retirement? ›

This rule is based on research finding that if you invested at least 50% of your money in stocks and the rest in bonds, you'd have a strong likelihood of being able to withdraw an inflation-adjusted 4% of your nest egg every year for 30 years (and possibly longer, depending on your investment return over that time).

What is a comfortable retirement amount? ›

Comfortable retirement around age 67

A modest retirement, which allows for only basic activities although is better than relying only on the Age Pension, is estimated at $32,665.66 for singles per year, and $46,994.28 for couples.

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How long will $1 million in 401k last? ›

Assuming you're in the 24% tax bracket and withdraw $5,000 per month, your savings should last just over 30 years. Example #2: Your $1 million in savings earns a 5% annual return. With the same tax bracket and monthly withdrawal amount, you'd run out of money in 26 years.

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Is a net worth of 1 million considered rich? ›

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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Can I retire at 65 if I have $1 million in a 401k and will receive $2500 monthly from Social Security? ›

Here, say that you have $1 million in a 401(k) or IRA, and expect to receive $2,500 per month in Social Security payments, a number right in the mid-range of possible benefits. Can you retire at 65? Well, it certainly depends on your standard of living. But for most people the answer is yes.

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Can I retire at age 60 with $1 million dollars? ›

With $1 million in a 401(k) and no mortgage on a $500,000 home, retirement at 60 may, in fact, be possible. However, retiring before eligibility for Social Security and Medicare mean relying more on savings. So deciding to retire at 60 calls for careful planning around healthcare, taxes and more.