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? ›

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.

How long will $1 million last in retirement? ›

In America's most affordable big city — El Paso, Texas — $1 million in retirement savings will last you over 21 years without any Social Security income, or nearly 40 years if you do receive benefits. In the most expensive big city — San Francisco — it would last less than nine years, even with Social Security income.

What percentage of retirees have over $1 million? ›

According to the Federal Reserve's latest Survey of Consumer Finances, only about 10% of American retirees have managed to save $1 million or more. This leaves a significant 90% who fall short of this milestone. Don't Miss: The average American couple has saved this much money for retirement — How do you compare?

Can I 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.

How much monthly income will 1 million generate? ›

At the current Treasury rate of 4.3%, a $1 million portfolio would generate about $43,000 per year, or roughly $3,500 per month.

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.

At what age should you have $1 million in retirement? ›

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.

What is considered wealthy in retirement? ›

According to the SCF report, it takes a net worth of $16.7 million or more for those over 65 to be considered super wealthy. People at this level “engage in just about anything they want to engage in,” says Schmidt.

What is a good net worth to retire? ›

The final multiple — 10 to 12 times your annual income at retirement age. If you plan to retire at 67, for instance, and your income is $150,000 per year, then you should have between $1.5 and $1.8 million set aside for retirement.

What is the average net worth of a 62 year old American? ›

Average net worth by age
Age of head of familyMedian net worthAverage net worth
2 more rows
May 29, 2024

What age can you retire with $2 million? ›

A financial advisor can help you set a plan for your retirement goals. Talk to an advisor today. If you have multiple income streams, a detailed spending plan and keep extra expenses to a minimum, you can retire at 55 on $2 million.

Can I retire at 62 with $1 million? ›

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

Standard retirement planning rules of thumb

So, for example, if your current salary is $120,000 per year, you should have at least $1.2 million saved up by the time you retire. This rule of thumb focuses on savings.

Are you rich if your net worth is $1 million? ›

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.

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.

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.

Can you retire $1.5 million comfortably? ›

If that budget looks comfortable, it's a good sign that you can reasonably expect $1.5 million will cover it if you retire at 45. A financial advisor can help you project expenses, inflation, portfolio growth and more in a comprehensive financial plan. Get matched with a financial advisor.

Can I retire at 56 with $1 million dollars? ›

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.

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.

What is the $1000 a month rule for retirement? ›

One example is the $1,000/month rule. Created by Wes Moss, a Certified Financial Planner, this strategy helps individuals visualize how much savings they should have in retirement. According to Moss, you should plan to have $240,000 saved for every $1,000 of disposable income in retirement.


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