It’s a question that crosses the minds of many Americans as they near retirement age: Can you retire on a million dollars? Is it enough money? The answer, unfortunately, is not a simple one. In this guide, we will explore the factors that play into whether or not you can retire on $1 million and what you need to do to make it happen. So, can you retire with $1 million? Keep reading to find out!
- Can I Retire On $1 Million? Is It Enough Money?
- How Long Will A Million Dollars Last In Retirement?
- How To Make $1 Million Last A Lifetime In Retirement, Guaranteed.
- Retiring On A $1 Million Comparison
- Social Security
- How To Retire On 1 Million Dollars, Immediately
- How To Retire On 1 Million Dollars In 5 Years
- How To Retire On 1 Million Dollars In 20 Years
- How To Retire On A Million Dollars By Age
- Living Off Interest On A Million Dollars
- How Much Does a $1 Million Payout?
- Why Buy An Annuity?
- How Long Will $1 Million Last In Retirement Calculator
- Keeping Up With Inflation
- Things To Consider When Retiring
- Next Steps
- Frequently Asked Questions
- Retirement Income Guides
- Earn The Highest Interest Rates On Savings Today
- Request A Quote
Can I Retire On $1 Million? Is It Enough Money?
You can retire on a million dollars, but it will not be easy. First, you must carefully budget and invest your money to ensure you do not outlive your savings. With careful planning, you can retire comfortably on $1 million. However, if you are not careful with your finances, you could struggle to make ends meet in retirement.
To retire on $1 million, you must have a nest egg of at least that size. If you do not have enough saved up yet, you will need to continue working and saving until you reach your goal. Once you have reached your goal, you can start planning for retirement.
There are a few things you need to consider when planning for retirement. First, you must ensure you have enough saved to cover your costs. This includes your living expenses, healthcare costs, and any other expenses you may have in retirement.
It would help if you also considered how much income you would need in retirement. You will need enough income to cover your basic living expenses and have some left over for leisure and other activities.
Finally, it would be best to consider how you would generate income in retirement. For example, you may need to continue working part-time or look into other sources of income, such as pensions or investment earnings.
With careful planning, you can retire on one million dollars. However, it will not be easy. You will need to budget carefully and invest your money wisely. If you are not careful with your finances, you could struggle to make ends meet in retirement.
How Long Will A Million Dollars Last In Retirement?
How long your one million dollars will last in retirement depends on a few factors. First, it depends on how much income you will need to cover your basic living expenses. Other retirement income sources, such as a pension or investments, will also affect how long your $1 million will last.
Another factor that will affect how long your $1 million will last in retirement is inflation. If prices rise over time, your $1 million will not go as far as it would have if prices had remained the same.
Finally, your lifestyle in retirement will also affect how long your $1 million will last. For example, if you plan to travel and live a luxurious lifestyle, your $1 million will not last as long as it would if you lived a more modest lifestyle.
Assuming you will need $40,000 per year to cover your basic living expenses, your $1 million would last for 25 years if there was no inflation. However, if inflation averaged 3% per year, your $1 million would only last for 20 years.
If you plan to live a more luxurious lifestyle in retirement, your million dollars will not last as long. For example, if you plan to travel the world and stay in 5-star hotels, your $1 million would only last for ten years.
To sum it up, how long a million dollars will last in retirement depends on your lifestyle and how much income you need to cover your basic living expenses. If you are careful with your spending, your $1 million could last many years. However, your $1 million may not last as long if you have a lavish lifestyle.
How To Make $1 Million Last A Lifetime In Retirement, Guaranteed.
The only way to guarantee you don’t run out of money in retirement is to purchase an annuity with a lifetime income rider. This will guarantee that you receive a certain amount of money each month for the rest of your life, no matter how long you live.
For example, if a 55-year-old person purchases a $1 million annuity with a lifetime income rider and wants to retire in 10 years at age 65, that person would receive roughly $10,121 per month for the rest of their life. If you live for 30 years in retirement, you will receive $3.6 million in payments. When the annuity owner dies, the remaining balance passes down to beneficiaries in a lump sum.
Retiring On A $1 Million Comparison
| Features | Annuity | 401(k) | IRA | Roth IRA |
|---|---|---|---|---|
| Withdrawal Percentage | 5.20% – 6.55% | 4% | 4% | 4% |
| Can Income Increase? | Yes | Yes | Yes | Yes |
| Can Income Decrease? | No | Yes | Yes | Yes |
| How Long Will Money Last? | Lifetime | 30 Years+ | 30 Years+ | 30 Years+ |
| Annual Fees | 0 – 1.50% | 1% – 4% | 1% – 4% | 1% – 4% |
| Taxation | Taxable/Tax-Free | Taxable | Taxable | Tax-Free |
| Death Benefit | Account Balance | Account Balance | Account Balance | Account Balance |
Example: A 60-year-old retiree starts withdrawing immediately from their $1 million portfolio, they would receive:
Social Security
The average monthly Social Security Income check-in in 2021 is $1,543 per person. In the tables below, we’ll use an annuity with a lifetime income rider coupled with SSI to give you a better idea of the income you could receive from $1,000,000 in savings. The data will be based on the following:
- Social Security Benefits will be based on couples at $3,086 total.
- Deferred annuity with an income rider providing a monthly income for life.
- The starting point will be age 62 since this is the earliest age to collect SSI.
How To Retire On 1 Million Dollars, Immediately
The table below illustrates how much monthly income can be generated immediately with a combination of annuity payments and Social Security Income (SSI).
ADDITIONAL READING: How Much Does A $1,000,000 Annuity Pay?
| Age | SSI | Annuity | Total |
|---|---|---|---|
| 62 | $3,086 | $5,292 | $8,378 |
| 65 | $3,086 | $5,608 | $8,694 |
| 70 | $3,086 | $6,125 | $9,211 |
How To Retire On 1 Million Dollars In 5 Years
The table below illustrates how much monthly income can be generated in 5 years with a combination of annuity payments and Social Security Income (SSI). If you retire in 5 years on a $1,000,000 annuity, your monthly income for life would be:
| Age | SSI | Annuity | Total |
|---|---|---|---|
| 62 | $3,086 | $8,011 | $11,097 |
| 65 | $3,086 | $8,459 | $11,545 |
| 70 | $3,086 | $9,155 | $12,241 |
How To Retire On 1 Million Dollars In 20 Years
The table below illustrates how much monthly income can be generated in 5 years with a combination of annuity payments and Social Security Income (SSI). If you retire in 20 years on $1,000,000, your monthly income for life would be:
| Age | SSI | Annuity | Total |
|---|---|---|---|
| 42 | $3,086 | $11,625 | $14,711 |
| 45 | $3,086 | $12,338 | $15,424 |
| 50 | $3,086 | $13,661 | $16,747 |
How To Retire On A Million Dollars By Age
The following guaranteed income amounts are annual and do not include Social Security Benefits.
Retire At Age 55 With $1 Million.
The following table estimates the guaranteed annual income a 55-year-old can retire with $1 million. This does not include Social Security Benefits
| Annuity Purchase Date | Annual Income At 55 |
|---|---|
| Age 40 | $118,165 |
| Age 45 | $107,026 |
| Age 50 | $75,599 |
| Age 55 | $54,800 |
Retire At Age 60 With $1 Million.
This table estimates the guaranteed annual income a 60-year-old can retire with $1 million. This table does not include Social Security Benefits.
| Annuity Purchase Date | Annual Income At 60 |
|---|---|
| Age 40 | $133,884 |
| Age 45 | $121,263 |
| Age 50 | $109,832 |
| Age 55 | $83,668 |
Retire At Age 65 With $1 Million.
The following table estimates the guaranteed annual income a 65-year-old can retire with a $1 million annuity. This table does not include Social Security Benefits.
| Annuity Purchase Date | Annual Income At 65 |
|---|---|
| Age 40 | $148,055 |
| Age 45 | $148,055 |
| Age 50 | $147,762 |
| Age 55 | $121,456 |
Living Off Interest On A Million Dollars
How much interest do 1 million dollars earn per year? Some retirees like to withdraw interest from a fixed-interest savings account like a fixed annuity or CD. For example, the interest on one million dollars is $250,922.56 over seven years with a fixed annuity, guaranteeing 3.25% annually.
Find all the current fixed annuity rates here.
3.25% Interest Rate Over 7 Years
| Year | Interest | Ending Amount |
|---|---|---|
| 1 | $32,500.00 | $1,032,500.00 |
| 2 | $33,556.25 | $1,066,056.25 |
| 3 | $34,646.83 | $1,100,703.08 |
| 4 | $35,772.85 | $1,136,475.93 |
| 5 | $36,935.47 | $1,173,411.40 |
| 6 | $38,135.87 | $1,211,547.27 |
| 7 | $39,375.29 | $1,250,922.56 |
Earn The Highest Interest Rates On Savings Today
Fixed annuities are almost identical to Certificates of Deposit (CDs) accounts and provide higher interest rates and penalty-free withdrawals for income.
| Term | Insurance Company | APY |
|---|---|---|
| N/A | CloudBank Savings Account | 5.05% |
| N/A | Ponce Bank | 5.05% |
| 12 Months | Bread Savings CD | 5.20% |
| 24 Months | Idabel National Bank | 5.05% |
| 48 Months | Americo Fixed Annuity | 5.05% |
| 5 Years | Americo Fixed Annuity | 5.25% |
| 10 Years | American National | 5.45% |
Disclaimer: This is a review. The Annuity Expert is not associated with a bank or credit union. However, fixed annuities are sold at most financial institutions. We aim to help you find the highest interest rates for your retirement savings. We may receive a small referral fee if you purchase something using a link in this article.
How Much Does a $1 Million Payout?
The following table will estimate how much guaranteed income a $1,000,000 annuity will pay out annually for the rest of a person’s life.
| Age | Immediately | In 5 Years | In 10 years | In 20 Years |
|---|---|---|---|---|
| 40 | $133,884 | |||
| 45 | $148,055 | |||
| 50 | $109,832 | $163,935 | ||
| 55 | $83,668 | $121,456 | $178,105 | |
| 60 | $61,000 | $92,729 | $134,484 | |
| 65 | $67,300 | $101,506 | $146,108 | |
| 70 | $73,500 | $109,859 | $157,132 | |
| 75 | $76,600 | $120,779 |
Why Buy An Annuity?
Annuities are the only retirement plan in the United States that provides a guaranteed income for a lifetime, even if the plan runs out of money. As a result, the annuity is a money management tool in retirement, taking all the guesswork in budgeting your day-to-day expenses. By utilizing this financial plan, a retiree will never have to worry about running out of money.
Annuity Basics
Understanding Lifetime Income Riders
How Long Will $1 Million Last In Retirement Calculator
Annuities guarantee an income for the rest of your life. Use our retirement calculator to determine how much income your million dollars can generate now or in the future. Then request a free quote below.
Note: You can purchase an annuity (with no tax penalties) with your 401(k), IRAs, retirement accounts, investments, and cash.
Keeping Up With Inflation
Some annuities offer a guaranteed lifetime income that can regularly increase to keep up with inflation. Once the income increases, the payment amount is locked in and can never go backward from that point forward.
In the example below, a 64-year-old retiree with $100k purchased an increasing income rider. They started with a $4,750-a-year payout. By the time this retiree reached age 75, their annual income had increased to $8,581 a year and continued to increase after the account was spent down to zero.
Things To Consider When Retiring
- If you can’t afford to lose money, invest your savings without the risk.
- Inflation is rising whether you like it or not. So plan accordingly or decrease your lifestyle in the future.
- Per the U.S. Department of Health and Human Services, you have a 70% chance of going into a Nursing Home, Assisted Living Facility, or Home Health Care. So buy long-term care insurance now.
- There is a 100% chance you will die, buy affordable life insurance, or, at the minimum, burial insurance for funeral expenses.
Next Steps
If you have a million dollars saved for retirement, an annuity is the best way to ensure that money lasts for the rest of your life. Request a quote today to find out how much income you can receive from $1,000,000. Annuities are the only retirement plan in the United States that provides a guaranteed lifetime income, so don’t wait – get started on your golden years today!
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Frequently Asked Questions
Can I retire at 40 with $1 million?
You can retire at the age of 40 with one million dollars. If you get an immediate annuity, you will receive $55,026 yearly for the rest of your life. The payout changes often and varies by state.
Can I retire at 45 with $1 million?
Yes, you can retire at 45 with one million dollars. You will get a guaranteed income of $57,180 each year for the rest of your life if you choose an immediate annuity. The payout changes frequently and varies by state.
Can I retire at 50 with $1 million?
You can retire at 50 if you have saved one million dollars. You will get a guaranteed income of $53,750 each year, starting immediately for the rest of your life. The income amount will stay the same and never decrease.
Can I retire at 55 with $1 million?
Yes, you can retire at 55 with one million dollars. You will receive a guaranteed annual income of $56,250 immediately and for the rest of your life. This income will stay the same and never decrease.
Can a couple retire on $1 million?
You can retire on one million dollars. Annuities can provide a guaranteed income for both spouse’s lifetimes. After researching 326 annuity products from 57 insurance companies, our data calculated that $1,000,000 would generate $53,700 annually starting immediately if both spouses were age 60, $59,400 if both spouses were age 65, and $62,400 if both spouses were age 70.
I’m 60 With $1 Million. How Much Can I Expect To Spend In Retirement?
If you buy a $1 million annuity at age 60, you will get $61,000 yearly for the rest of your life. This income will be guaranteed and will never decrease. However, if you wait until 61 to buy the annuity, your yearly income will be $66,786.
Can I live off the interest of $1,000,000?
If you have a fixed annuity with a rate of 3.25%, you can expect to collect between $29,569 and $32,107 in interest each year. This amount will depend on how often the interest is compounded and how often you withdraw money from the account.
Can you retire with a million dollars?
Yes, you can retire with a million dollars. However, it is essential to remember that your lifestyle may change, and you may have to adjust your spending accordingly.
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