Is $1 Million Enough to Retire? What to Consider

Is $1 Million Enough to Retire? What to Consider

By Erin Gobler

Key takeaways

• $1 million might not be enough to retire in today’s economy.
• The amount you’ll need to retire depends on your location, lifestyle, housing, healthcare costs and other income sources, among other factors.
• You can stretch your retirement savings by working longer, reducing the amount you spend or a combination of both.

Having $1 million in investments seems like a significant financial milestone, but is it enough to retire? According to a 2026 study by Northwestern Mutual, the average amount Americans expect they’ll need to retire comfortably is $1.46 million.

The real answer differs for everyone, depending on factors such as their annual spending, tax exposure and income streams. A financial professional can help you analyze your unique situation and determine whether $1 million is enough to support you during retirement—and what to do if it isn’t. 

Is $1 million enough to retire?

There’s no single answer to the question of whether $1 million is enough to retire, as it drastically varies from person to person. Whether it’s enough depends on several key factors, including your location, lifestyle and sources of income.

“A question I ask every prospective client is, ‘What does “enough” mean to you?’” said Breanna Seech, a CFP and senior wealth advisor with Mariner, noting that while it might be enough for someone who lives modestly and has a paid-off home, it likely isn’t enough for most people in today’s economic climate.

The best way to determine whether $1 million is enough to retire is to run the numbers for yourself. If you start with the end goal in mind—when you want to retire and how much you want to spend each year in retirement—then you can work backward to figure out how much you’ll need in your retirement nest egg to allow for that.

An online calculator, such as the one Finra offers, can help you estimate how much you’ll need to comfortably retire and how much to invest each year to reach that goal.

How long can $1 million last in retirement?

The length of time $1 million can last in retirement depends on how much you spend each year and how you’ve invested your money. It stands to reason that the less you spend each year, the longer your savings will last.

“Somebody can blow through $1 million in five to eight years, and somebody else can stretch that and make it last,” said Christie Whitney, a CFP and senior vice president of wealth management with Rebalance.

Properly investing your retirement savings can also help extend its life, according to Whitney.

“Equities are the best hedge against inflation, and we can’t be too concerned as you’re heading into retirement about getting so conservative with your investments,” Whitney said. “While you’re probably not comfortable [investing all your money in equities], we need to maintain a healthy amount of stock exposure in our portfolios because retirement is so much longer now.”

Location often plays a considerable role in how long $1 million can last, since the cost of living varies widely by state.

According to a 2025 study by GoBankingRates, $1 million would last at least 30 years in retirement in 36 states with the help of Social Security, and as long as 70 years in five states. However, in three states—California, Hawaii and Massachusetts—a $1 million nest egg would be gone in fewer than 20 years.

How much income can $1 million generate in retirement?

The amount of income $1 million can generate in retirement depends on how conservative or aggressive you choose to be with your withdrawals. 

“There’s been a long-standing rule that if you withdraw 4% of your nest egg per year, you will sustain that amount and not run out of money,” Whitney said. “So, thinking about it in those terms, people with $1 million can withdraw $40,000 per year.”

The 4% rule accounts for inflation, allowing you to withdraw 4% in the first year and adjust your withdrawals for inflation each year after. However, after taxes, the income you retain could be lower.

The 4% rule assumes a 30-year time horizon. If you’re retiring early and need your nest egg to last longer, you might want a lower withdrawal rate. It also assumes an asset allocation of 50% stocks and 50% bonds.

According to data from the Federal Reserve Bank of St. Louis, the average annual expenditures for people age 65 and older in 2024 (the most recent data available) was $61,432, up more than $1,000 from the previous year. Based on those figures and the 4% rule, $1 million likely wouldn’t be enough for most people. However, most people also have Social Security income, which can make up some or all of the difference.

While the 4% rule is well-known in the personal finance industry and can be a good baseline, it’s not appropriate for everyone. An experienced financial advisor can take a closer look at your specific situation to determine an appropriate withdrawal rate.

Factors that determine whether $1 million is enough

Your annual spending is the most important factor determining whether $1 million is enough to retire, but many variables play into that.

Some of the most important factors that determine whether $1 million is enough include:

• Your lifestyle
• Cost of living
• Healthcare expenses
• Retirement timeline
• Longevity
• Inflation 
• Asset allocation 
• Other sources of income, such as Social Security, pensions and rental income

“It’s relative to the individual,” said Brian Schmehil, a CFP and managing director of wealth management with The Mather Group. “Everybody has their own personal inflation rate depending on how much of their expenses are fixed versus discretionary. What somebody needs in San Diego, California is way different than what they would need in Knoxville, Tennessee, and a lot of other factors come into play.”

Social Security and other retirement income

For most people, their retirement savings aren’t the only income that supports them during retirement. Nearly 97% of adults age 60 to 89 either already receive Social Security benefits or will receive them, according to 2024 data from the Social Security Administration. The average monthly payment, as of January 2026, is $2,071.

Some people might also receive income from employer-provided pensions, though that’s considerably less common than it used to be. Additionally, some retirees earn money from rental properties, investments or part-time work.

The good news is that money from outside income sources decreases the amount you must save for retirement. For example, if you and your spouse plan to spend $100,000 per year during retirement and bring in a combined $50,000 from Social Security and other income sources, you might only need to save enough to support an additional $50,000 per year.

While Social Security has been a backbone of the nation’s retirement for more than 85 years, many, especially younger workers, worry about whether it will be there to support them during retirement. One AARP study found that 64% of U.S. adults lack confidence in the program’s future, with the primary reasons being a lack of trust in the government and fears of the program running out of money. 

While many investors worry about the future of Social Security, financial experts are more confident. The program’s reserves are on track to be depleted by 2032. Taxpayer contributions will continue to fund the majority of payments, and there’s still time for Congress to act.

Financial advisors generally factor in Social Security payments when determining retirement needs, but you can stress test your retirement plan by running the numbers without the addition of those payments.

“I think the best advisors really listen to what their clients’ concerns are,” Seech said. “I can’t speculate what might or might not be here in the future, but what I can do is ease your worries by showing you what your planning looks like with and without Social Security.”

Taxes and healthcare costs in retirement

Two costs—taxes and healthcare—can have a major impact on how far $1 million will go in retirement.

How taxes reduce your retirement income

No matter how much you have in your retirement account, taxes often reduce what ultimately ends up in your bank account.

Pre-tax accounts, including traditional 401(k) plans and individual retirement accounts (IRAs), allow you to make pre-tax or tax-deductible contributions. In return, you pay ordinary income taxes on the money you withdraw from the account during retirement. Roth accounts, on the other hand, require after-tax contributions, but don’t tax qualified withdrawals.

“So if that $1 million is in a Roth IRA, that $1 million is yours,” Schmehil said. “But if you have a pre-tax 401(k) or traditional IRA, not all of that account balance is yours. Some of it is going to the federal government.” Most states also tax retirement income.

Federal income tax rates range from 10% to 37%, while state income tax rates can exceed 10% in California, Hawaii, New York, New Jersey and the District of Columbia for high incomes. Depending on your household income, you could pay a considerable amount of tax.

One way to avoid a tax shock at retirement, according to the experts we spoke to, is to take advantage of Roth accounts to ensure at least some of your money is available to you without an additional tax bill. Since you’ve already paid income taxes on those dollars, you won’t be taxed when you withdraw them during retirement. Furthermore, qualified Roth distributions aren’t included in your taxable income, meaning they won’t push you into a higher tax bracket.

Planning for healthcare costs in retirement

Healthcare is one of the highest and most unpredictable costs retirees face. A 65-year-old can expect to spend roughly $185,000 on healthcare expenses during retirement, according to the 2026 Fidelity Retiree Health Care Cost Estimate. Someone in poor health could spend far more, and unfortunately, insurance doesn’t cover everything.

Healthcare expenses in retirement might include insurance premiums, copays and coinsurance, excluded services and long-term care (which is generally not covered by Medicare).

“The [first question I ask] is, ‘What is the age or target age for retirement?’” Seech said. “If you want to retire before you’re Medicare-eligible, which would be before 65, you have to purchase insurance through the healthcare exchange. That looks different based on your income. So we’re [making] projections to [ask], ‘What do those premiums look like today?’ In some cases, I’ll inflate them by 5% per year to show very conservative planning.”

Seech said she takes a similar approach once you turn 65 and start planning for Medicare costs. “It is not an exact science by any means, but we use the data we have available to us today with, in some cases, some very aggressive inflation numbers to look at what that could cost for someone out of pocket as they look at retirement down the road.”

How to make $1 million last in retirement

While $1 million isn’t enough for everyone to retire with today, you can make it last if you adjust your lifestyle accordingly. 

“The advice I would give someone if they’re set on retiring is that you have levers you can pull,” Seech said. “You can work longer, or you can spend less money [or a combination of the two]. If you want to retire now, then you might have to spend less money.”

As we mentioned, the 4% rule allows you to withdraw $40,000 of your $1 million nest egg in the first year of retirement—that’s $3,333 per month—adjusting your withdrawals for inflation in future years. If your current lifestyle requires more than that, find places to cut back.

“Somebody might not be willing to work another year or two, but they’re willing to do other things like downsize down the road or not travel as much later on in retirement,” said Schmehil. “So the job of a financial planner is to lay out a lot of these possibilities, give them the pros and cons of their decisions and what they can and can’t do. Ultimately, the retiree is the one who is going to have to change their spending or work longer to potentially alleviate some of those risks.”

When to consider working with a financial advisor

A financial advisor or wealth management firm can help you plan out your retirement savings goals, but it doesn’t necessarily make sense to meet with them early on in your working years.

“If you’re only investing $10,000, $20,000 or $30,000 and you make a wrong decision, maybe the cost of that wrong decision is actually worth it because of the learning experience,” Schmehil said. “You might not be able to find a financial advisor that’s willing to work with you at those asset levels. If you do, they’re probably going to charge you a lot more relative to what you have, and it’s not going to justify the advice they’re giving you at this stage in your life.”

Schmehil encourages younger investors to take ownership of their financial situation to make sure they’re saving enough in tax-advantaged accounts so they’re prepared down the line. According to Schmehil, online resources have democratized financial information and advice, so those who don’t have enough money to work with a financial advisor can still get the information they need. However, it’s important to verify all data via reputable sources before implementing it into your financial plan.

Once you’re further along in your investing journey, you’ll reach a time when it makes sense to work with a professional.

“I think the best time to work with a financial advisor is when the costs of working with that individual or that firm justify the results,” Schmehil said. At that point, Schmehil said, one misstep in your strategy could cost you six figures, whether it’s a portfolio management mistake or a poor tax decision.

That being said, there are exceptions to this advice. Someone with a complex financial situation might benefit from professional advice earlier on, even if they end up paying a higher percentage of their assets.

FAQ

Can a couple retire with $1 million?

Whether a couple can retire with $1 million depends on their annual expenses and other sources of income. A couple with relatively low expenses and other reliable income sources, such as Social Security, might easily retire with $1 million. Meanwhile, couples in high-cost-of-living areas might find that it’s not enough.

What impact does inflation have on retirement savings?

Inflation reduces the purchasing power of your retirement savings over time. As costs increase, you’ll need to withdraw more money each year to maintain your standard of living, which can drain your savings more quickly than expected. Some sources of retirement income, including Social Security, adjust for inflation.

Can I retire at 55 with $1 million?

Retiring at 55 with $1 million is more challenging than retiring at 65 with the same amount. Not only does your nest egg have to last longer, but you’ll also be responsible for buying health insurance to bridge the gap until you’re eligible for Medicare. Additionally, withdrawing money from your retirement savings early means less time for your investments to grow. However, if you keep your living expenses low enough, especially higher costs like housing, it might be possible.

Keep in mind that you typically can’t take penalty-free withdrawals from retirement accounts until you reach age 59 ½, though the rule of 55 allows you to tap into the workplace retirement plan of your current employer if you retire in or after the year you turn 55.

Where can you retire comfortably with $1 million?

Many people can retire comfortably in states with low costs of living, such as West Virginia, Mississippi, Arkansas, Louisiana and Oklahoma. There are plenty of other states where $1 million might be enough to retire if you keep your costs low.