Is $1 Million Dollars Enough to Retire?

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Is $1 Million Dollars Enough to Retire?

Having $1 million in savings at retirement seems like an ambitious goal. But with the cost of living steadily rising, having one million dollars to live comfortably through the golden years may not even be enough. Have you ever wondered how many retirees have $1 million, and is it enough to retire? 

The good news is the rate of retired millionaires has more than doubled in the last 30 years. According to a report by United Income, one out of every six retirees in America is a millionaire. In addition, the end-of-the-year analysis by Fidelity shows there is a record number of 401(k), 403(b), and Individual Retirement Account (IRA) millionaires. At the end of 2021, there were 442,000 401(k), 87,000 403(b), and 376,100 IRA millionaires.

In a survey where workers were asked to calculate how much money they would need for a comfortable retirement, 39% of the respondents believed they would have to save $1 million.

But will $1 million even be enough to retire, let alone last you for the rest of your life? 

Is $1 Million Enough to Retire

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Changes to the 4% Rule of Thumb

Financial experts have traditionally stated that retirees should withdraw a maximum of 4% of retirement savings in the first year (adjusting for inflation in subsequent years) so that the money lasts them through retirement. The 4% rule of thumb comes from the Trinity study in 1998, a paper titled “Retirement Spending: Choosing a Sustainable Withdrawal Rate.” However, experts are now saying it should be 3.3% due to lower projected returns for stocks and bonds due to market conditions.

So if you have a one million dollar retirement portfolio, a 4% withdrawal in the first year would be $40,000, whereas a limit of 3.3% will be $33,000. This can be a significant decrease, especially when consumer spending is rising. Bear in mind, though, the average retirement portfolio is smaller.

Is $1 Million Dollars Enough Savings to Retire?

Several factors impact the amount of money people need to have available in retirement savings to continue to live a life of financial security.

Lifestyle Choices

Some retirees will enjoy the slow pace and tranquility in the next chapter of their lives, perhaps focusing on hobbies and grandchildren. As a result, they likely won’t have to dig deep into their savings. Others will go where the wind takes them, traveling from one destination to another. This lifestyle will require retirees to have a hefty amount of savings available. In fact, almost half of retirees spend more than expected on traveling.

Your lifestyle choice is an essential factor when determining your financial goals. So before you sit down with an advisor or create your budget, think about how often you plan to travel or make large purchases. 


Where you live your retirement life can significantly impact the amount of money you need to live comfortably post-retirement. GOBankingRates analyzed the Bureau of Labor Statistics’ 2020 Consumer Expenditure Survey data. The results showed that $1 million would last you between 11 and 24 years, depending on where in the United States you live. Since some southern states have a lower cost of living than the northern states, southern residents may be able to stretch the million dollars a little longer.


Healthcare costs in America can be staggering. According to the Fidelity’s Retiree Health Care Cost Estimate, in 2021, an average retired couple at age 65 may need around $300,000 after-tax saved to cover health care expenses.

With people living longer and retiring earlier than before, at an average age of 62, retirees need to tap into the healthcare system more than before. Also, since Medicare is not accessible until age 65, many early retirees have to find other ways to fund their healthcare costs for a few years.


Rising inflation rates reduce our purchasing power. Inflation is a factor to consider because as prices rise, so will the bills and the need to have more savings for retirement. A sharp increase in consumer prices has skyrocketed the current inflation rate, measured in January 2022, to a 40-year high.

Based on these factors, retirees may need even more than $1 million in savings to help them live the lifestyle they want to lead while paying their expenses comfortably.

How To Maximize Your Savings for Retirement

Start Investing Early

The amount you need to invest will depend on your age. You can contribute less money to retirement savings in your 20s because you have more time to accumulate wealth. You can also make more risky investments with a higher growth rate because you are investing long-term. As you get older, you will have to save more money every month to reach $1 million for retirement.

It is never too late to start saving for retirement. A worker can even start at 50 and accumulate a decent nest egg. However, to reach $1 million or more and have enough to retire, you should start younger.

This chart shows the power of compound interest and investing early. It shows how much money you will accumulate if you invest $250 a month starting at age 25 and assumes an 8% average annual return. 

Start at 25: You’ll accumulate $878,570 by age 65

Start at 35: You’ll accumulate $375,073 by age 65

Start at 45: You’ll accumulate $148,236 by age 65

The earlier you start investing, the more likely you will reach your financial goals.

Make a Budget

It’s worth it to create a simple budget to minimize your expenses. The difference between your monthly income and expenses is the amount you can save and invest per month.

First, figure out your monthly net income, which is your after-tax pay and all of your fixed and variable expenses for the month. Since variable costs can be more challenging to track, calculate the monthly average over the last 12 months. Try to budget to zero so that your income equals your expenses, and every dollar is accounted for.

If you struggle with making a budget, one helpful rule of thumb is the 50-30-20 Budget Rule.

Other Budget Factors

Discretionary Spending

Discretionary spending is money used for non-essentials such as entertainment and fulfilling ‘wants, not needs.’ The best way to determine which discretionary expenses to cut out is to rank them in order of importance, making it easier to narrow down the purchases that matter to you. 

Priority still must be given to monthly expenses, debt repayment, and savings before non-essential spending. 

Emergency Fund

Paying into an emergency fund every month is a critical investment. This fund is separate from a savings account and is used only for unforeseen expenses. For example, if your car unexpectedly breaks down or you lose your job, the money in this fund would cover those bills. 

Americans have quickly realized the importance of an emergency fund. For example, 51% of survey respondents said that an emergency fund is now a higher financial priority than before the pandemic started.

A typical rule of thumb is to save three to six months’ worth of your expenses in this account. This also ensures that you don’t dip into your retirement funds when you have an emergency. 

Automate Your Savings

It’s best to set up an automatic transfer from your checking account to your savings account as soon as your paycheck is deposited.

401(k) Employer Matching Programs

Many companies have a matching retirement contribution plan. Ask your human resources (HR) or payroll department about setting up an automatic deduction of pre-tax income amounts each pay period to go towards your retirement savings. If your employer matches, for example, up to 6% of your salary, make sure you direct at least 6% of your paycheck to the retirement plan.

As your salary grows, so will your employer contributions (up to a limit), and so will your retirement savings. One approach that works is build a lazy portfolio with passive index funds with little upkeep.

Operate your budget for at least three months and then evaluate your progress. The key to a successful budget is a solid commitment to the tracking process and consistency to help you reach your financial goals.  

Consider a Side Hustle

To help you achieve your goal of saving $1 million for retirement, consider a way you can make some extra money aside from your full-time career. According to a survey of 2,001 adults over the age of 18, one in three or 34% currently has a side hustle. In addition, making extra money on the side to pay off debts or meet short-term or long-term financial goals is a growing trend.

Final Thoughts on Is $1 Million Enough to Retire

An increasing number of people are retiring with one million dollars in savings, and many people still in the workforce are striving to achieve this goal. Of course, whether $1 million is enough to retire or not depends on your circumstances and expenses, but this dollar amount can be a good goal.

Determine your financial goals, create a sound budgeting plan and start saving now to help you retire with the comfort and security we all hope to experience in the next chapter of our lives.

Thanks for reading Is $1 Million Enough to Retire!

You can also read Life Insurance Facts – Reasons You Should Invest Early.

Author BioNadia Tahir is a freelance writer and content creator. She mostly writes in the areas of lifestyle and personal finance. She also enjoys writing on her blog about motherhood at This Mom is On Fire.

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