How To Retire on 3 Million Dollars

Shawn Plummer

CEO, The Annuity Expert

Some retirement planners say the new rule of thumb is $3 million for retirement but is this true. You may be able to retire on $3 million if you know where to invest your money. Although this amount may seem like a lot of money, it is reasonable when you break it down. Plus, you can ensure a comfortable retirement lifestyle by investing your money in the right places. So, if you are wondering whether or not you can retire on $3 million, read on for some helpful tips!

Can You Retire On $3 million? Is It Enough Money?

The short answer is yes. You can retire on $3,000,000. However, it will take careful planning to ensure that your money lasts as long as you need it to. Here are a few things to consider if you’re looking to retire on three million dollars:

  • How long do you expect to live in retirement?
  • What are your estimated annual income needs in retirement?
  • Third, how much can you realistically expect to withdraw from your investment portfolio each year without running out of money?
  • Finally, are you comfortable taking on more risk to potentially earn a higher return on your investment?

If you’re unsure about the answers to these questions, don’t worry. We will discuss each of them in more detail below.

How Long Will $3 Million Last In Retirement?

One of the most important factors to consider when deciding if you can retire on $3 million is how long you expect to live in retirement. The average life expectancy in the United States is about 79 years. However, this number will differ for everyone based on factors such as family history, lifestyle, and health.

If you retire at age 65 and expect to live to the average life expectancy of 79 years, your three million would need to last for about 14 years. However, if you retire at 55 and expect to live to the average life expectancy, your nest egg would need to last for about 24 years.

As you can see, the longer you expect to live in retirement, the more critical it is to have a plan in place to make sure your money lasts as long as you need it to.

What are Your Estimated Annual Income Needs In Retirement?

Another critical factor to consider when deciding if you can retire on $3 million is your estimated annual income needs in retirement. This number will differ for everyone based on factors such as your lifestyle and desired standard of living in retirement.

A good rule of thumb is to estimate that you will need about 70-80% of your pre-retirement income to maintain your standard of living in retirement. So, if you currently earn $100,000 per year, you would need an annual income of at least $70,000-$80,000 in retirement.

How To Make $3 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 $3,000,000 annuity with a lifetime income rider and wants to retire in 10 years at age 65, that person would receive roughly $364,368 per year for the rest of their life. When the annuity owner dies, the remaining balance passes down to beneficiaries in a lump sum.

Social Security

The average monthly Social Security Income 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 provide you a better idea of the income you could receive off a $3,000,000 in savings. The data will be based on:

How to Retire on 3 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 READINGHow Much Does A $1,000,000 Annuity Pay?

If you retire on $3,000,000 starting immediately, your monthly income for life would be:

AgeSSIAnnuityTotal
62$3,086$15,876$18,962
65$3,086$16,824$19,910
70$3,086$18,375$21,461
Total = Monthly Income for Life

How to Retire on 3 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). The “Age” column is the annuity purchase date. If you retire in 5 years on a $3,000,000 annuity, your monthly income for life would be:

AgeSSIAnnuityTotal
62$3,086$24,033$27,119
65$3,086$25,377$28,463
70$3,086$27,465$30,551
Total = Monthly Income for Life

How to Retire on 3 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). The “Age” column is the annuity purchase date. If you retire in 20 years on $3,000,000, your monthly income for life would be:

AgeSSIAnnuityTotal
40$3,086$34,875$37,961
45$3,086$37,014$40,100
50$3,086$40,983$44,069
Total = Monthly Income for Life

How To Retire On $3 Million By Age

The following guaranteed income amounts are annual and do not include Social Security Benefits.

Retire At Age 55 With $3 Million.

Annuity Purchase DateAnnual Income At 55
Age 40$354,495
Age 45$321,078
Age 50$226,797
Age 55$164,400

Retire At Age 60 With $3 Million.

Annuity Purchase DateAnnual Income At 60
Age 40$401,653
Age 45$363,790
Age 50$329,496
Age 55$251,005

Retire At Age 65 With $3 Million.

The following guaranteed income amounts are annual and do not include Social Security Benefits.

Annuity Purchase DateAnnual Income At 65
Age 40$444,164
Age 45$363,790
Age 50$443,287
Age 55$364,369

Why Use 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

Estimate Your Retirement Income Payments

Take advantage of 17 different annuity calculators to generate estimates, then request a quote.

Keeping Up With Inflation

Some annuities offer a guaranteed lifetime income with the ability to increase regularly to keep up with inflation. Once the income increases, the payment amount is locked in and can never go backward from that point forward.

Things To Consider When Retiring

Next Steps

Now that you know it is possible to retire with three million dollars, the next step is to start planning for retirement. If you’re not sure where to start, we recommend contacting us. We can help you develop a retirement plan that fits your unique needs and goals. We hope this guide has helped show you that retiring with three million dollars is a realistic goal. So don’t wait any longer- contact us today for a free consultation!

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Frequently Asked Questions

Can I retire at 40 with $3 million?

You can retire at the age of 40 with three million dollars. If you get an immediate annuity, you will receive $165,078 yearly for the rest of your life. The payout changes often and varies by state.

Can I retire at 45 with $3 million?

Yes, you can retire at 45 with three million dollars. If you get an immediate annuity, you will receive $171,540 yearly for the rest of your life. The payout changes often and varies by state.

Can I retire at 50 with $3 million?

Yes, you can retire at 50 with three million dollars. At age 50, an annuity will provide a guaranteed income of $161,250 annually, starting immediately for the rest of the insured’s lifetime. The income will stay the same and never decrease.

Can I retire at 52 with $3 million?

Yes, you can retire at 52 with three million dollars. At age 52, an annuity will provide a guaranteed income of $164,250 annually, starting immediately for the rest of the insured’s lifetime. The income will stay the same and never decrease.

Can I retire at 55 with $3 million?

Yes, you can retire at 55 with three million dollars. At age 55, an annuity will provide a guaranteed income of $168,750 annually, starting immediately for the rest of the insured’s lifetime. The income will stay the same and never decrease.

Can I retire at 60 with $3 million?

Yes, you can retire at 60 with three million dollars. At age 60, an annuity will provide a guaranteed income of $183,000 annually, starting immediately for the rest of the insured’s lifetime. The income will stay the same and never decrease.

Is $3 million enough to retire at 65?

A three million dollar annuity will provide a 65-year-old with roughly $201,900 per year for the rest of their life. When the annuity owner dies, the remaining balance passes down to beneficiaries in a lump sum.

Retirement Income Guides

Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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