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Education Center » Is $1 million enough to retire on?

Is $1 million enough to retire on?


It depends. Here’s how to figure out how much you may need to live the life you want in retirement.

“For some people, $1 million in savings, and the annual interest it earns, may be plenty; others might need more. Tempting as it is to put a single number on retirement, the answer to how much you’ll need to save really depends on a careful look at the life you expect to lead,” says Debra Greenberg, a director in the Retirement and Personal Wealth Solutions Group at Bank of America Merrill Lynch. “Your retirement plan should reflect your personal goals, where you’ll live, what type of home you’ll have and the travel or other activities you hope to pursue.”

Primary factors to consider when determining if $1 million is enough to retire

“Your retirement plan should reflect your personal goals, where you’ll live, what type of home you’ll have and the travel or other activities you hope to pursue.”

–Debra Greenberg, director, Retirement and Personal Wealth Solutions, Bank of America Merrill Lynch

Your current age and the age at which you plan to retire

Your expected lifespan, based on family and personal medical history

Your post-retirement goals (travel, philanthropy, etc.)

Where you plan to live

What type of home you’ll have

Whether you plan to work during your retirement years

Keep in mind your family medical history and the fact that today’s longer lifespans may mean more years you’ll have to pay for. You don’t want to outlive your money. But if you’re worried that you don’t have enough, don’t be discouraged. With a better understanding of your needs, you can review your current savings and expected income and make any necessary adjustments.

How much income could my current investments provide for me?

For a rough idea, the chart below shows the annual income generated from three different “retirement nest eggs.” “In addition to personal savings, don’t forget to consider additional income you may have from sources such as Social Security or a pension,” Greenberg says.

Even if your retirement account looks impressive on paper, the income it generates will need to help sustain you through decades of retirement, when you’ll face rising healthcare costs, inflation and unexpected expenses.

The Retirement Planning Calculator, which considers financial and personal information to estimate your income in retirement, can help determine whether you’ll fall short of your income needs.

Will your savings be enough for the retirement income you’ll need?

You may be surprised how much—or how little—even generously-sized accounts could potentially provide over the course of a retirement. The examples below illustrate how much a 65-year-old can safely withdraw in the first year of retirement.

* The accumulated investment savings by age 65 could provide an annual retirement income, adjusted for future inflation (in today’s dollars), of this amount for life if withdrawn at a sustained spending rate of 4%.

Source: Bank of America Merrill Lynch, August 2017. Illustration is for hypothetical purposes only.

The chart shows how much a person can safely withdraw in their first year of retirement based on how much they have in their retirement savings account when they turn 65. The numbers are adjusted for inflation, and the three examples displayed show a 65-year-old can safely withdraw $12,000 from a savings of $300,000; $40,000 from a savings of $1,000,000 and $60,000 from a savings of $1,500,000.

Looks like I’m not quite where I want to be. How do I close the savings gap?

If the results show a gap, don’t panic. That’s common, and you have a number of options to help close it. Depending on your situation, you may want to:

Increase your retirement savings contributions

Work a bit longer

Take a part-time job in retirement

Delay the age—up to the age 70—at which you start Social Security, which can boost your monthly benefit later on

Estimating your retirement income needs is not an exact science, and your needs—as well as your vision for retirement—will evolve. No matter your life stage or how much you’ve saved, a careful review of your expected needs and income can help you prepare for the years ahead.

Learn more and take action

  • How much do you need for the retirement you envision? Use the Retirement Planning Calculator to find out.
  • Letting your retirement savings grow as long as possible is the best decision for your long-term finances. Read why an early retirement account withdrawal could do more harm than good.
  • If your company’s 401(k) plan is through Merrill Lynch, you can increase your contribution rate and manage your investments at Benefits OnLine®.


Neither Merrill Lynch nor any of its affiliates or financial advisors provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.


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