Can You Retire on $1 Million? (2024)

Did you know that if you had $1 million in dollar bills, it would literally weigh a ton and take you about 12 days to count it all? No matter how you slice it, that’s a lot of money!

For a long time, a $1 million nest egg was the measure of retirement planning success. It was considered enough to enjoy a dream retirement and leave an impressive legacy behind.

But lately, the image of the $1 million nest egg has started to fade.Articles like “How to Get By on $1 Million in Retirement” have been popping up all over the place, filled with advice about tapping your home equity or retiring overseas to make your savings last.

So is an actual ton of cashstill enough to get you comfortably through your golden years? Let’s find out!

Is $1 MillionReallyEnough to Retire On?

Do you remember that old fable about the goose that laid the golden eggs? Think of all yourretirement accountsas your goose, and the growth your investments produce each year inside those accounts (aka the money your money makes) as the golden eggs you plan to live off of in retirement.

The idea is this: You want to have enough money in your retirement account so that you can live off the growth of your investments each year (the golden eggs) without touching the base of your retirement savings (the goose).

Let’s imagine you have $1 million in your retirement accounts by the time you retire. Historically, the stock market has an average annual rate of return between 10–12%.1So if your $1 million is invested ingood 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 evenmoreconservative. Even if your account produces average returns somewhere in the ballpark of 7% each year—that’s still $70,000 worth of income to work with. (Keep in mind that the average household income in America today is around $69,700 per year.)2

The million-dollar question now becomes: Can you live off somewhere between $70,000 and $120,000 each year in retirement? That’s a question onlyyoucan answer!

Of course, keep in mind that 10–12% is anaverage.Some years your money will grow even more than that. Other years you might see smaller returns or evennegativereturns. If you’re not careful and you stop paying attention to how your investments are performing, you could wind up burning through your nest egg faster than you think and end up relying on Social Security (or SocialInsecurity, is more like it).

That’s why you need tokeep working with a financial advisorin retirement—someone who can help you manage your investments and make sure you don’t accidentally shoot your goose!

Figuring Out How Much IsReallyEnough for Retirement

With careful planning and a solid investing plan, itisabsolutely possible to retire with dignity on $1 million today (no matter what some blogger writing from their mother’s basem*nt might try to tell you)!

But what if you’re retiring 10 years from now? Or 20 years from now? Will $1 million still be enough to have a comfortable retirement then? It’s definitely possible, but there are several factors to consider—including cost of living, the taxes you’ll owe on your withdrawals, and how you want to live in retirement—when thinking abouthow much money you’ll need to retire in the future.

1. Cost of Living

Whether you’re shopping for a gallon of milk from the grocery store or looking for the latest tech gadget, one thing is true: The cost of goods goes up over time. That’s just a fact of life!

How much will you need for retirement? Find out with this free tool!

Just look at the price of gas. At the beginning of 2001, you could have filled up your tank at around $1.47 per gallon. Fast forward to Summer, 2023 and the average price for a gallon of gas ballooned to $3.86!3Thanks a lot, inflation . . .

Yep, the inflation rate has been a lot higher than normal recently, but the average rate is around 3%. Assuming things get back to normal sometime soon, $1 million today will have the same purchasing power as $1.8 million two decades from now.4That means if you plan to retire in 20 years, you might need an extra $800,000 in your nest egg to live the kind of lifestyle $1 million would buy you in retirement now.

That’s why you shouldinvest 15% of your gross incomeinto good growth stock mutual funds. Work with an investment professional who can help you find funds that have a long track record of solid returns, which will help your money grow faster than inflation!

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2. Taxes

Even in retirement, Uncle Samstilltakes his share, and income taxes can really trip you up, especially if all your retirement savings are in tax-deferred accounts like a traditional401(k)or traditional IRA. The money you take out from those accounts in retirement will get hit with income taxes—just like the income you earned from your job.

That means you might need to withdraw a few thousand dollars extra from your savings each year to pay your taxesandmaintain the kind of lifestyle you want in retirement. And because you’re withdrawing more, you’ll need to have more saved to avoid running out of money during retirement.

But if you’re saving for retirement with aRoth IRAor aRoth 401(k), that’s a whole different story. With Roth accounts, your contributions are made withafter-tax dollars. That means in most cases, once you turn 59 1/2 you won’t owe income taxes on any or most of the money you withdraw from those accounts. Woo-hoo!

So if you’re deciding between a Roth or traditional retirement account, here’s the bottom line: Roth beats traditionaleverytime!

Keep in mind that you also might need to pay taxes on your Social Security benefits depending on your situation. That’s why it’salwaysa good idea to consult atax proto make sure your tax bases are covered.

3. Lifestyle in Retirement

Cost of living and taxes will help you figure out how much money you’ll need in your golden years. But there’s one more factor—and it’s the most important one:You!

How you want to live in retirement will determine how big your nest egg needs to be. A person who wants to travel the world in retirement, for example, will need a lot more in the bank than a person who wants to volunteer in their community and watch their grandkids grow up.

And remember to keep a proper perspective about what a millionaire lifestyleactuallylooks like. A lot of folks think millionaires fly around in private jets and dine out on lobster and filet mignon every night, but that’s just not true!

According toThe National Study of Millionaires, the vast majority of millionaires live on less than they make, spend $200 or less each month at restaurants, andstilluse coupons to look for good deals. Even though they don’t really have to worry about money anymore, they’re still careful about spending in retirement—and you should be too!

Next Steps

  • To help you figure out how much money you may need to retire based on your needs, use our R:IQ Retirement Assessment. It’ll also give you an idea of how much money you’ll need to save every month to reach that number.
  • Grab a copy of Dave Ramsey’s bestselling book Baby Steps Millionaires and learn how to bust through the barriers preventing you from becoming a millionaire.
  • Get in touch with an investment pro in your area who can help you make informed investing choices so you can feel more confident about your retirement dreams.TheSmartVestorprogram can connect you for free.

Find an Investment Pro

This article provides generalguidelines about investingtopics. Your situation may beunique. If you havequestions, connect with aSmartVestorPro.RamseySolutions is a paid, non-clientpromoter ofparticipating Pros.

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About the author


Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

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Can You Retire on $1 Million? (2024)


Can You Retire on $1 Million? ›

Will $1 million still be enough to have a comfortable retirement then? It's definitely possible, but there are several factors to consider—including cost of living, the taxes you'll owe on your withdrawals, and how you want to live in retirement—when thinking about how much money you'll need to retire in the future.

How long will $1 million dollars last in retirement? ›

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.

What percentage of Americans retire with $1 million dollars? ›

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.

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

How much you need to live off interest depends entirely on your expenses and where the balance is invested. A million dollars in a retirement account might produce enough income for the median American to get by, but you'd need larger returns to cover a six-figure lifestyle. Consider your lifestyle goals, too.

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

Summary. $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.

How much money do most people retire with? ›

What is the average and median retirement savings? The average retirement savings for all families is $333,940 according to the 2022 Survey of Consumer Finances.

What is the average 401k balance for a 65 year old? ›


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.

How much wealth does the average American retire with? ›

Average Net Worth by Age

Average net worth surges above the $1 million mark between 55 to 64, reaching $1,566,900. Average net worth again rises for those ages 65 to 74, to $1,794,600, before falling to $1,624,100 for the 75 and older group.

How many people have $3,000,000 in savings in usa? ›

1,821,745 Households in the United States Have Investment Portfolios Worth $3,000,000 or More.

How much annual income can $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.

How rich are you 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.

What is the 4 rule in retirement? ›

The 4% rule says people should withdraw 4% of their retirement funds in the first year after retiring and take that dollar amount, adjusted for inflation, every year after. The rule seeks to establish a steady and safe income stream that will meet a retiree's current and future financial needs.

How many couples retire with $1 million dollars? ›

According to EBRI estimates based on the latest Federal Reserve Survey of Consumer Finances, 3.2% of retirees have over $1 million in their retirement accounts, while just 0.1% have $5 million or more.

How long will 900k last in retirement? ›

Yes, it is possible to retire very comfortably on $900k. This allows for an annual withdrawal of around $36,000 from age 60 to 85, covering 25 years. If $36,000 per year or $3,000 per month meets your lifestyle needs, $900k should be plenty for retirement.

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.

How long will 1 million last in retirement with Social Security? ›

$1 million lasted the least amount of time in Hawaii at just 10.3 years, followed by Massachusetts at 12.8 years. California took third at 13.8 years. Funds lasted the longest in Mississippi at 22.7 years, with Oklahoma close behind at 22.1 years.

How much monthly income will 1 million generate? ›

With cash, and assuming a 30 year retirement, you can expect to withdraw about $2,700 per month. ($1 million / 30 years = $33,333 / 12 months = $2,777) With your $2,500 in Social Security, this would give you about $5,200 per month to live on.

How long will $1 million last in each 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.

Can you retire $1.5 million comfortably? ›

Most retired Americans believe they will need nearly $1.5 million in the bank to retire comfortably, according to a new study. The majority of retirees surveyed believe that they will need $1.46 million in the bank to retire comfortably, according to Northwestern Mutual's 2024 Planning & Progress Study.

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