For Americans planning to retire soon, having $1 million in savings might seem like enough, but depending on where someone decides to spend their post-working years, that money may or may not go very far.
A new study from Go Banking Rates analyzed how long a $1 million retirement fund will last nationwide.
The study assumed a retirement age of 65 or older and examined the annual cost of living expenses, such as housing, utilities, and food, in all 50 states. Researchers used the latest data from the Bureau of Labor Statistics’ 2020 Consumer Expenditure Survey and the Missouri Economic Research and Information Center.
In some states, like Mississippi and Oklahoma, a $1 million retirement fund would last about 22 years.
In other states like New York and Hawaii, which already have high cost of living expenses, the $1 million retirement fund would last less than 15 years.
For retirees in California, the annual cost of living expenses would be $72,319.57, meaning a $1 million retirement fund would last for about 14 years.
Retirement can often last 25 years or more, according to Fidelity.
Financial experts shared that $1 million may not have the same longevity as it once did in certain states due to changing factors like inflation.
It’s important to note that retirement funds will look different for everyone. Experts and financial institutions, like Fidelity, recommend that people put away about 15% of their annual income for retirement.
But it’s ok if that amount isn’t feasible for everyone to do. Fidelity still recommends people put away at least 1% of their annual income until they reach that 15% mark.
The full Go Banking Rates study can be viewed here.
FAQs
For retirees in California, the annual cost of living expenses would be $72,319.57, meaning a $1 million retirement fund would last for about 14 years. Retirement can often last 25 years or more, according to Fidelity.
How long will $1 million last in retirement in California? ›
How Long Will $1 Million In Retirement Savings Last In Your State? A 65-year-old retiree living in California can expect $1 million in savings to last under 14 years, while that amount will last almost 21 years in Texas.
How much monthly income will $1 million generate? ›
If you can live off the yield of your bonds, you can maintain this account indefinitely. At the current Treasury rate of 4.3%, a $1 million portfolio would generate about $43,000 per year, or roughly $3,500 per month.
How long will $1.5 M last in retirement? ›
The 4% rule suggests that a $1.5 million portfolio will provide for at least 30 years approximately $60,000 a year before taxes for you to live on in retirement. If you take more than this from your nest egg, it may run short; if you take less or your investments earn more, it may provide somewhat more income.
Can I live off the interest of 1 million dollars? ›
Once you have $1 million in assets, you can look seriously at living entirely off the returns of a portfolio. After all, the S&P 500 alone averages 10% returns per year. Setting aside taxes and down-year investment portfolio management, a $1 million index fund could provide $100,000 annually.
How far will $1m go in retirement? ›
For retirees in California, the annual cost of living expenses would be $72,319.57, meaning a $1 million retirement fund would last for about 14 years. Retirement can often last 25 years or more, according to Fidelity.
Is $1 million enough to retire at 55? ›
While retiring at 55 with $1 million may be possible, it requires planning and a watchful financial eye. "Most people are living into their 90s, so the $1 million will have to last 35-plus years," says Aviva Pinto, managing director of Wealthspire Advisors in New York City.
How long will 1 million last in retirement with Social Security? ›
Around the U.S., a $1 million nest egg can cover an average of 18.9 years worth of living expenses, GoBankingRates found. But where you retire can have a profound impact on how far your money goes, ranging from as a little as 10 years in Hawaii to more than than 20 years in more than a dozen states.
Is 1.5 m enough to retire at 60? ›
According to Schwab's fixed income annuity calculator, a single life, $1.5 million fixed-income annuity purchased at age 60 could pay around $8,000 per month, or $96,000 per year, for your lifetime.
How long will $3 m last in retirement? ›
Spending Needs and Savings Longevity:
For a $3 million retirement fund, anticipate a monthly income of $6,250 over 40 years, barring investment growth or loss. Factors such as lifestyle choices, inflation, and healthcare costs will influence how long your savings last.
Traditional savings accounts, generally reserved for short-term savings, available at banks generally yield low rates of interest. A million-dollar deposit with the average 0.45% APY would generate $$4,510.08 of interest after one year. If left to compound daily for 10 years, it would generate $46,027.51.
How to invest $1 million dollars for monthly income? ›
Some of the strategies to consider when turning $1 million into passive retirement income include:
- Purchasing an annuity.
- Choosing dividend stocks.
- Buying fixed-income securities.
- Starting a business.
- Investing in real estate.
- Building a portfolio.
In fact, statistically, around 10% of retirees have $1 million or more in savings.
What percentage of retirees have a million dollars? ›
If you have more than $1 million saved in retirement accounts, you are in the top 3% of retirees. According to EBRI estimates based on the latest Federal Reserve Survey of Consumer Finances, 3.2% of retirees have over $1 million in their retirement accounts, while just 0.1% have $5 million or more.
How much money do you need to retire comfortably in California? ›
Americans' “magic number” for retirement savings is at an all-time high — $1.46 million to retire comfortably, according to responses from Northwestern Mutual's 2024 Planning & Progress Study.
What percentage of retirees have $3 million dollars? ›
Specifically, those with over $1 million in retirement accounts are in the top 3% of retirees. The Employee Benefit Research Institute (EBRI) estimates that 3.2% of retirees have over $1 million, and a mere 0.1% have $5 million or more, based on data from the Federal Reserve Survey of Consumer Finances.
How much money do you need to retire comfortably at age 65? ›
Some strategies call for having 10 to 12 times your final working year's salary or specific multiples of your annual income that increase as you age. Consider when you want to retire, goals, annual salary, expected annual raises, inflation, investment portfolio performance and potential healthcare expenses.
