Next video:
Loading the player...

You might easily be able to retire on $1 million. Then again, you might not. It all comes down to your personal situation.

Many financial professionals say 4% is the amount a retiree should be able to withdraw each year while expecting his portfolio to survive at least 30 years. That’s $40,000 a year from $1 million that should last from ages 65 to 95. Add Social Security, and that’s around $70,000 a year.

If your lifestyle in retirement will require more, you can’t retire on $1 million. Knowing how much you need for retirement boils down to projecting all future expenses, which is tricky. You can come up with a budget that accounts for every penny you’ll need to maintain a desired lifestyle, but what if something happens? $1 million is not enough for many retirees.

It’s extra-risky to retire early, before Social Security and Medicare kick in, with only $1 million. You limit your options. More money set aside provides added flexibility, and increases the chances that you’re able to do what you want until you die. Once you reach $1 million, focus on what you can control, or at least affect, like your health and variable costs.

Matching future income estimates with expenses requires accounting for everything. That includes wedding gifts for grandkids, vacations, car repairs or whatever need arises.

If you want to retire with $1 million, define what your retirement will be, take stock of your assets, debts and expenses, and look at what the future holds. $2 million might be a better goal to strive for.

Related Articles
  1. Retirement

    What's The Minimum I Need To Retire?

    Make sure your golden years are golden, not merely a struggle for existence.
  2. Retirement

    Signs You're Ready to Retire

    Learn the five signs that indicate you are OK to retire. Discover what steps are crucial to determining an effective and successful retirement plan.
  3. Retirement

    Making Your Own Comprehensive Retirement Plan

    Your retirement plan should include much more than how much you will save and how much you need. It must take into account your complete financial picture.
  4. Retirement

    How to Calculate What You Need for Retirement

    You might not be able to predict all the variables that impact retirement planning, but there are tools to help make simple calculations.
  5. Retirement

    Budgeting for the 4 Phases of Retirement

    Retirement consists of four stages, each with different expenses and different budgeting needs. Here's how to manage your money through them all.
  6. Retirement

    10 Signs You Are Not OK to Retire

    Carrying a lot of debt? Haven’t yet figured out a long-term financial plan? These are just two of the reasons you shouldn’t rush into retirement.
  7. Financial Advisor

    5 Questions to Ask Yourself Before Retiring

    Before you retire, it's important to ask yourself these questions to ensure you're ready.
  8. Financial Advisor

    When to Plan for Retirement Income vs. Savings

    Accumulating a nest egg is the first step in effective retirement planning. The second is making sure you have enough income after retiring.
  9. Retirement

    How to Evaluate Your Retirement Plan

    Here are four things to consider to make sure you are financially prepared for retirement.
  10. Financial Advisor

    Closing in on Retirement? Read These Tips

    If you're within 10 years of retiring, you and your financial planner should heed these essential tips.
Hot Definitions
  1. Davos World Economic Forum

    The annual meeting of the World Economic Forum hosted at Davos—a small ski town in Switzerland—in January each year is among ...
  2. Smart Home

    A convenient home setup where appliances and devices can be automatically controlled remotely from anywhere in the world ...
  3. Efficient Frontier

    A set of optimal portfolios that offers the highest expected return for a defined level of risk or the lowest risk for a ...
  4. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  5. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking the ...
  6. Border Adjustment Tax

    A tax levied on goods based on where they are sold – exported goods are exempt from tax; those imported and sold in the ...
Trading Center