Can you retire with a million dollars? (2024)

It’s the million-dollar question.

Is $1 million enough to retire?

A lot of people wonder exactly how much money they’re going to need in order to enjoy a comfortable retirement.

One common benchmark for retirement savings is $1 million. “Surely, if I’ve saved up a million bucks, I’ll be able to retire comfortably,” is how this thinking traditionally goes.

But is this really the case? Is a million dollars enough money to ensure a financially secure future?

Arecent analysisdetermined that a $1 million retirement nest egg may only last about 20 years depending on what state you live in.1

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. However, it’s important to remember there is no one-size-fits-all amount. Rather than shooting for a specific number like $1 million, striving to save as much as you reasonably can is a good goal.

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.

Can you retire with a million dollars? (2024)


Can you retire with a million dollars? ›

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. That 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.

Can a person retire comfortably with 1 million dollars? ›

How long will $1 million in retirement savings last? In more than 20 U.S. states, a million-dollar nest egg can cover retirees' living expenses for at least 20 years, a new analysis shows. It's worth noting that most Americans are nowhere near having that much money socked away.

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.

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? ›

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 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.

How long does $1 m last in retirement? ›

In some states, like Mississippi and Oklahoma, a $1 million retirement fund would last about 22 years. In other states like New York and Hawaii, which already have high cost of living expenses, the $1 million retirement fund would last less than 15 years.

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 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 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.

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 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 the average net worth of retirees in the US? ›

The most recent report released in September 2020 (using data collected in 2019) shows the median U.S. household net worth is $121,700 — but it's more than double that for people ages 65 to 74. According to the Fed data, the median net worth for Americans in their late 60s and early 70s is $266,400.

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

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.

Is a net worth of 1 million considered rich? ›

Someone who has $1 million in liquid assets, for instance, is usually considered to be a high net worth (HNW) individual. You might need $5 million to $10 million to qualify as having a very high net worth while it may take $30 million or more to be considered ultra-high net worth.

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.

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


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.

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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