{"id":24247,"date":"2026-04-23T07:18:21","date_gmt":"2026-04-23T07:18:21","guid":{"rendered":"https:\/\/budgetadirect.com\/?p=24247"},"modified":"2026-04-23T07:18:23","modified_gmt":"2026-04-23T07:18:23","slug":"can-you-retire-on-1-million","status":"publish","type":"post","link":"https:\/\/budgetadirect.com\/?p=24247","title":{"rendered":"Can You Retire on $1 Million?"},"content":{"rendered":"
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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\u2019s a lot of money!\n <\/p>\n

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Market chaos, inflation, your future\u2014work with a pro to navigate this stuff.<\/p>\n<\/p><\/div>\n

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.\n <\/p>\n

But lately, the image of the $1 million nest egg has started to fade.\u00a0Articles like \u201cHow to Get By on $1 Million in Retirement\u201d have been popping up all over the place, filled with advice about tapping your home equity or retiring overseas to make your savings last.\n <\/p>\n

So, is an actual ton of cash\u00a0still enough to get you comfortably through your golden years? Let\u2019s find out!\n <\/p>\n

Is $1 Million\u00a0Really<\/em>\u00a0Enough to Retire On?<\/h2>\n

Let\u2019s be clear\u2014with careful planning and a solid investing strategy, it\u00a0is<\/em>\u00a0absolutely possible to retire with dignity on $1 million <\/strong>today (no matter what some blogger writing from their mother\u2019s basement might try to tell you)!\n <\/p>\n

How? Let\u2019s break it down.\n <\/p>\n

Do you remember that old fable about the goose that laid the golden eggs? Think of all your\u00a0retirement accounts\u00a0as 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. \u00a0\n <\/p>\n

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).\n <\/p>\n

Let\u2019s 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\u201312%.1<\/sup>\u00a0So if your $1 million is invested in\u00a0good growth stock mutual funds, that means you could potentially live off of $100,000 to $120,000 each year without ever touching your $1 million goose.\n <\/p>\n

But let\u2019s be even\u00a0more\u00a0<\/em>conservative. Even if your account produces average returns somewhere in the ballpark of 7% each year\u2014that\u2019s still $70,000 worth of income to work with. (Keep in mind that the average household income in America today is around $79,000 per year.2<\/sup>)\n <\/p>\n

The million-dollar question now becomes: Can you live off somewhere between $70,000 and $120,000 each year in retirement? That\u2019s a question only\u00a0you\u00a0<\/em>can answer!\n <\/p>\n

Of course, keep in mind that 10\u201312% is an\u00a0average.\u00a0<\/em>Some years your money will grow even more than that. Other years you might see smaller returns or even\u00a0negative<\/em>\u00a0returns. If you\u2019re not careful and you stop paying attention to how your investments are performing, you could burn through your nest egg faster than you think and end up relying on Social Security (Social\u00a0Insecurity<\/em> is more like it).\n <\/p>\n

That\u2019s why you need to\u00a0keep working with a financial advisor\u00a0in retirement\u2014someone who can help you manage your investments and make sure you don\u2019t accidentally shoot your goose!\n <\/p>\n

Figuring Out How Much Is\u00a0Really\u00a0<\/em>Enough for Retirement<\/h2>\n

But what if you\u2019re retiring 10 years from now? Or 20 years from now? Will $1 million still be enough to have a comfortable retirement then?\n <\/p>\n

It\u2019s definitely possible, but there are several factors to consider\u2014including cost of living, the taxes you\u2019ll owe on your withdrawals, and how you want to live in retirement\u2014when thinking about\u00a0how much money you\u2019ll need to retire\u00a0in the future.\n <\/p>\n

1. Cost of Living<\/h3>\n

Whether you\u2019re 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\u2019s just a fact of life! \u00a0\n <\/p>\n

Look at the price of gas. At the beginning of 2001, you could have filled up your tank for around $1.47 per gallon. Fast-forward to summer 2024 and the average price for a gallon of gas ballooned to $3.47!3\u00a0<\/sup>Thanks a lot, inflation . . .\n <\/p>\n

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.4<\/sup>\u00a0That 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.\n <\/p>\n

That\u2019s why you should\u00a0invest 15% of your gross income\u00a0into 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!\n <\/p>\n<\/p><\/div>\n

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2. Taxes<\/h3>\n

Even in retirement, Uncle Sam\u00a0still<\/em>\u00a0takes his share, and income taxes can really trip you up, especially if all your retirement savings are in tax-deferred accounts like a traditional\u00a0401(k)\u00a0or traditional IRA. The money you take out from those accounts in retirement will get hit with income taxes\u2014just like the income you earned from your job.\n <\/p>\n

That means you might need to withdraw a few thousand dollars extra from your savings each year to pay your taxes\u00a0and<\/em>\u00a0maintain the kind of lifestyle you want in retirement. And because you\u2019re withdrawing more, you\u2019ll need to have more saved to avoid running out of money during retirement.\u00a0\n <\/p>\n

But if you\u2019re saving for retirement with a\u00a0Roth IRA\u00a0or a\u00a0Roth 401(k), that\u2019s a whole different story. With Roth accounts, your contributions are made with\u00a0after<\/em>-tax dollars. That means in most cases, once you turn 59 1\/2, you won\u2019t owe income taxes on any or most of the money you withdraw from those accounts. Woo-hoo!\n <\/p>\n

So if you\u2019re deciding between a Roth or traditional retirement account, here\u2019s the bottom line: Roth beats traditional\u00a0every<\/em>\u00a0time!\n <\/p>\n

Keep in mind that you also might need to pay taxes on your Social Security benefits depending on your situation. That\u2019s why it\u2019s\u00a0always\u00a0<\/em>a good idea to talk to a\u00a0tax pro\u00a0to make sure your tax bases are covered.\n <\/p>\n

3. Health Care Expenses<\/h3>\n

It\u2019s not always fun to think about, but do not<\/em> underestimate health care costs in retirement. Here\u2019s the hard truth, a couple retiring today could need up to $413,000 in savings to cover health care expenses in their golden years.5<\/sup> If that seems like a decent-sized chunk of your retirement savings, it is.\n <\/p>\n

Thankfully, you can prepare by opening a health savings account (HSA), applying for Medicare when you\u2019re eligible, and getting long-term care insurance once you turn 60. These strategies can help you manage medical expenses and provide that ever-so-lovely peace of mind.\n <\/p>\n

4. Lifestyle in Retirement<\/h3>\n

Cost of living and taxes will help you figure out how much money you\u2019ll need in your golden years. But there\u2019s one more factor\u2014and it\u2019s the most important one\u2014you!<\/em>\n <\/p>\n

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.\n <\/p>\n

And remember to keep a proper perspective about what a $1 million lifestyle actually looks like. A lot of folks buy into the myth that millionaires fly around in private jets and dine out on lobster and filet mignon every night, but, as you\u2019ll see, that\u2019s just not true. More on that in a bit.\n <\/p>\n

How to Make Your Retirement Savings Last<\/h2>\n

Yeah, so . . . let\u2019s manage some expectations here. According to\u00a0The National Study of Millionaires<\/em>, the vast majority of millionaires:\n <\/p>\n