Jennifer Schell headshot
  • Written By
    Jennifer Schell

    Jennifer Schell

    Financial Writer

    Jennifer Schell is a professional writer focused on demystifying annuities and other financial topics including banking, financial advising and insurance. She is proud to be a member of the National Association for Fixed Annuities (NAFA) as well as the National Association of Insurance and Financial Advisors (NAIFA).

    Read More
  • Edited By
    Savannah Pittle
    Savannah Pittle, senior financial editor for Annuity.org

    Savannah Pittle

    Senior Financial Editor

    Savannah Pittle is an accomplished writer, editor and content marketer. She joined Annuity.org as a financial editor in 2021 and uses her passion for educating readers on complex topics to guide visitors toward the path of financial literacy.

    Read More
  • Financially Reviewed By
    Stephen Kates, CFP®
    Stephen Kates, CFP® Headshot

    Stephen Kates, CFP®

    Founder of Clocktower Financial Consulting

    Stephen Kates is a Certified Financial Planner™ and personal finance expert specializing in financial planning and education. Stephen has expertise in wealth management, personal finance, investing and retirement planning.

    Read More
  • Updated: May 9, 2023
  • 5 min read time
  • This page features 6 Cited Research Articles
Fact Checked
Fact Checked

Annuity.org partners with outside experts to ensure we are providing accurate financial content.

These reviewers are industry leaders and professional writers who regularly contribute to reputable publications such as the Wall Street Journal and The New York Times.

Our expert reviewers review our articles and recommend changes to ensure we are upholding our high standards for accuracy and professionalism.

Our expert reviewers hold advanced degrees and certifications and have years of experience with personal finances, retirement planning and investments.

Cite Us
How to Cite Annuity.org's Article

APA Schell, J. (2023, May 9). Is 1 Million Dollars Enough To Retire? Annuity.org. Retrieved June 15, 2024, from https://dev.annuity.org/annuities/retirement/is-1-million-enough-to-retire/

MLA Schell, Jennifer. "Is 1 Million Dollars Enough To Retire?" Annuity.org, 9 May 2023, https://dev.annuity.org/annuities/retirement/is-1-million-enough-to-retire/.

Chicago Schell, Jennifer. "Is 1 Million Dollars Enough To Retire?" Annuity.org. Last modified May 9, 2023. https://dev.annuity.org/annuities/retirement/is-1-million-enough-to-retire/.

Why Trust Annuity.org
Why You Can Trust Annuity.org
Annuity.org has provided reliable, accurate financial information to consumers since 2013. We adhere to ethical journalism practices, including presenting honest, unbiased information that follows Associated Press style guidelines and reporting facts from reliable, attributed sources. Our objective is to deliver the most comprehensive explanation of annuities and financial literacy topics using plain, straightforward language.

Our Partnerships, Vision and Goals

We pride ourselves on partnering with professionals like those from Senior Market Sales (SMS) — a market leader with over 30 years of experience in the insurance industry — who offer personalized retirement solutions for consumers across the country. Our relationships with partners including SMS and Insuractive, the company’s consumer-facing branch, allow us to facilitate the sale of annuities and other retirement-oriented financial products to consumers who are looking to purchase safe and reliable solutions to fill gaps in their retirement income. We are compensated when we produce legitimate inquiries, and that compensation helps make Annuity.org an even stronger resource for our audience. We may also, at times, sell lead data to partners in our network in order to best connect consumers to the information they request. Readers are in no way obligated to use our partners’ services to access the free resources on Annuity.org.

Annuity.org carefully selects partners who share a common goal of educating consumers and helping them select the most appropriate product for their unique financial and lifestyle goals. Our network of advisors will never recommend products that are not right for the consumer, nor will Annuity.org. Additionally, Annuity.org operates independently of its partners and has complete editorial control over the information we publish.

Our vision is to provide users with the highest quality information possible about their financial options and empower them to make informed decisions based on their unique needs.

Key Takeaways

  • Retiring on $1 million is possible, but whether that amount will be enough depends on many factors.
  • Inflation, taxes, your health and longevity, your retirement lifestyle and the asset mix of your savings can all influence how much money you’ll need to retire.
  • To maximize your savings, start early, contribute as much as you can and work with a financial planner.

Can You Retire on 1 Million Dollars?

As with many questions in the realm of personal finance, the answer to “Is $1 million enough money to retire on?” is “It depends.” How much you need to save for retirement will vary for each person’s circumstances.

“If you’re over the age of 50, there’s a strong chance $1 million will get the job done,” said Jordan Taylor, a financial advisor with Core Planning. “It might be the retirement of your dreams. It might not be. That depends on a lot of extremely personal factors.”

Financial planners use certain frameworks to estimate how much money someone might need in retirement. One of the most popular rules of thumb is the 4% rule.

David Edmisten, a Certified Financial PlannerTM professional, described the 4% rule this way: “Most retirees should be able to spend somewhere between 3% to 5% of their portfolio savings balance annually in retirement.”  

Using this rule, Edmisten explained that a retirement savings fund of $1 million would provide an annual budget between $30,000 to $50,000.

“Of course, the sustainability of this approach is more complicated than a simple percentage and will be very dependent on how one invests and the additional sources of retirement income available,”

“Of course, the sustainability of this approach is more complicated than a simple percentage and will be very dependent on how one invests and the additional sources of retirement income available,” Edmisten told Annuity.org.

Factors To Consider

When estimating your retirement savings goal, consider factors like inflation, taxes, your expected retirement lifestyle, your health and how long you expect to live, your sources of income in retirement and the mix of assets in your retirement savings.

Cost of Living and Inflation

Inflation has been in the news frequently in recent years, but the rising cost of living has always posed a risk to those trying to save for retirement. Steep inflation can rapidly erode the value of your retirement savings so that your money doesn’t last as long as you think it will.

Retirees are especially vulnerable to inflation because they spend more of their income on goods and services that are more heavily affected by inflation, like housing, food, gas and health care.

“Potential retirees should complete a financial plan to stress test their retirement investments and spending plans in the face of changes in the economy. Higher inflation means higher levels of spending and lower expected returns for investments, so it’s important to see how these changes could reduce a retiree’s savings over the years.”

David Edmisten, CFP®
Lead Advisor at Next Phase Financial Planning

Taxes

When choosing how to save for retirement, consider the tax implications of different investments and savings vehicles. Each type of retirement account has different rules for paying taxes on your savings.

If you have a traditional 401(k) plan or a traditional IRA, your tax liability is deferred until you withdraw funds from the account. This can be ideal for getting a tax break while saving for retirement, but know that you’ll have to subtract taxes from your withdrawals.

Roth IRAs and Roth 401(k)s have different tax treatments than their counterparts. These accounts are funded with after-tax dollars, so you won’t owe any tax when receiving distributions from your account.

Retirement Lifestyle

“Retirement lifestyle may be the most important aspect of determining one’s financial security because it is controllable,” said Guy M. Clanton, a Certified Financial PlannerTM professional with Truepoint Wealth Counsel.

Adjusting your expectations for your retirement lifestyle can affect how long your savings will last. Clanton suggested that someone living a modest lifestyle in retirement might be able to get by on $1 million in savings.

“Conversely, an overly lavish lifestyle may put the financial plan in jeopardy,” said Clanton.

Health and Longevity

Health and longevity play a major role in how much you’ll need to retire. The U.S. Census Bureau estimates that by 2060, Americans’ life expectancy will increase to 85.6 years. As people live longer, the risk of running out of retirement savings also increases.

This risk is compounded by the fact that more older Americans will require long-term care services. Whether care is provided at home or a facility, the costs of these services can quickly deplete your savings. Products like long-term care insurance or annuities with long-term care riders help retirees protect their savings from these significant costs.

Retirement Income

Aside from your savings, you might also consider what sources of income you’ll have in retirement, such as Social Security, pensions and annuities.

Many retirees receive benefits from Social Security, but these benefits don’t always keep pace with inflation despite the yearly cost-of-living adjustments. Pensions used to be more common, but very few private-sector employers still offer them.

The dwindling prevalence of pensions has caused many people approaching retirement to invest in annuities. An annuity is an insurance product that converts a lump sum premium into a lifetime income stream to supplement retirement savings.

Asset Mix

Almost as important as how much you’re saving for retirement is how you invest those savings. Stocks have greater potential for returns but also the potential to lose money, while bonds and other fixed-income products provide little to no risk with lower growth potential.

Generally, the further you get from retirement, the more of your portfolio you should invest in stocks. As you age, you might rebalance your portfolio to be more weighted towards low-risk investments like bonds.

Step 1
Step 2
Step 3
Step 4

How soon are you retiring?

STEP 1
STEP 2
Step 3
Step 4

What is your goal for purchasing an annuity?

Select all that apply

Strategies for Maximizing Retirement Savings

No matter where you are in life or your career, there are steps you can take to maximize your retirement savings.

Maximizing Retirement Savings

Start now and save what you can.
It’s never too early or too late to save for retirement. Many experts recommend aiming to save 15% of your income for retirement. But even if you can only contribute a few dollars per paycheck, that’s still better than nothing.
Set it and forget it.
You might think that constantly buying and selling stocks in your portfolio is best, but odds are you won’t beat the market. Instead, try to touch your investments as little as possible and let the market provide steady growth over the long term.
Speak with a financial advisor.
The rules of thumb experts use when talking about retirement don’t apply to everyone. Working with a financial planner can help you make the best choices for your retirement.
Please seek the advice of a qualified professional before making financial decisions.
Last Modified: May 9, 2023

6 Cited Research Articles

Annuity.org writers adhere to strict sourcing guidelines and use only credible sources of information, including authoritative financial publications, academic organizations, peer-reviewed journals, highly regarded nonprofit organizations, government reports, court records and interviews with qualified experts. You can read more about our commitment to accuracy, fairness and transparency in our editorial guidelines.

  1. Brandon, E. (2023, February 6). 10 Ways To Reduce Taxes on Your Retirement Savings. Retrieved from https://money.usnews.com/money/retirement/slideshows/10-ways-to-reduce-taxes-on-your-retirement-savings
  2. Barnett, R. (2022, July 16). Is Inflation Costing You More as a Retiree? Retrieved from https://www.kiplinger.com/personal-finance/inflation/604933/is-inflation-costing-you-more-as-a-retiree
  3. Forbes Finance Council. (2021, December 22). Don’t Overlook These 13 Financial Factors in Your Retirement Plan. Retrieved from https://www.forbes.com/sites/forbesfinancecouncil/2021/12/22/dont-overlook-these-13-financial-factors-in-your-retirement-plan/?sh=72d41ff3557e
  4. U.S. Census Bureau. (2020, February). Living Longer: Historical and Projected Life Expectancy in the United States, 1960 to 2060. Retrieved from https://www.census.gov/content/dam/Census/library/publications/2020/demo/p25-1145.pdf
  5. CNN Money. (n.d.). Ultimate Guide To Retirement: What’s the Best Asset Allocation for My Age? Retrieved from https://money.cnn.com/retirement/guide/investing_basics.moneymag/index7.htm
  6. Lieber, R. (n.d.). How To Win at Retirement Savings. Retrieved from https://www.nytimes.com/guides/business/saving-money-for-retirement