Retiring on $1 million at 50 will depend on longevity, health costs, lifestyle, retirement income, inflation and other factors. Here are different scenarios. So if you’re entranced by the idea of retiring early, you might be running through various scenarios. And you might be wondering exactly how much money you will need to sock away to retire as soon as possible. We’ll take a look at how you can retire at 50 with $1 million saved.
If you want individualized help planning for early retirement, you should consider working with afinancial advisor.
What Retirement Lifestyle Do You Want?
The truth is that if you can absolutely retire at 50 with $1 million, you might have to make some big sacrifices. That doesn’t just mean giving up luxuries like world travel or a foreign car. If you want to continue making mortgage payments on your home or help your kids with college costs, $1 million might not go far enough.
You can use the 4% to give yourself a baseline expectation of how much you’d need to save to live a certain lifestyle. The 4% rule is a simplistic rule of thumb that says if you withdraw 4% of your total retirement savings, adjusted for inflation, each year, your savings should last around 30 years.
In this scenario, that means you could withdraw approximately $40,000 each year and your savings would last until you turn 80. If that doesn’t sound like enough, you can consider ways to lower your annual expenses such as downsizing your home, or you can plan to put aside more money before you retire. For example, if you wanted to up your annual retirement income to $50,000, you’d need to save $1.25 million instead.
You can use SmartAsset’s free retirement calculator to play with different scenarios and estimate how much you’ll need to save and at what age you’ll need to retire to have the lifestyle you want.
What $1 Million Will Look Like in Retirement
Per the 4% rule, you can expect roughly $40,000 a year in income from your retirement savings, which will last for approximately 30 years. Even if that amount of income sounds perfect for you, you have to consider what will happen if you live past 80. No one wants to run out of money in their 80s. You can look at your personal health numbers and family history to get an idea of your lifespan, but there’s no guarantee.
Another important thing to consider is how much Social Security you’ll get. Your Social Security payout is determined by the age you claim Social Security, how much money you made and some other factors. You can use SmartAsset’s Social Security calculator to estimate your benefit amounts.
Let’s say you were born in 1985, you’re single and your annual income is $60,000. We’ll also assume a 2% rate of annual general inflation. In that case, if you take Social Security as soon as you’re able—at the age of 62—you’ll receive $26,440 a year in Social Security payments.
If you can wait until the age of 65, that amount goes up to $32,735. If you claim Social Security at 65 in this scenario, your annual income will go from $40,000 a year to $72,735 a year with your new benefits.
Planning for Healthcare Costs
If you’re committed to retiring at 50 with $1 million, you’ll need to plan your health care coverage. Medicare doesn’t kick in until age 65. So you’ll have to cover your own healthcare expenses until then if you currently depend on an employer plan.
That said, if you want to use marketplace insurance via the Affordable Care Act, you might qualify for tax credits if you make less than 400% of the federal poverty limit. In 2023, the federal poverty limit is $14,580 and 400% of that is $58,320.
So if you’re living on $50,000 a year, you could very well qualify for help with your insurance plan while you wait for Medicare to kick in. You can use this calculator from Healthcare.gov to see what savings you could qualify for.
Considering Estate Planning
Retiring at 50 years old with $1 million likely means you want to stretch your savings. And that will involve being creative with the assets you currently have like a house, car, jewelry or other valuable items.
For example, if you have a mortgage or vacation home paid off, you can pass it down to your family. That way, you don’t have to spend extra money on a new home and you can continue to use your money with other income streams.
How Inflation Impacts Retirement Savings
You might be wondering why you need to factor inflation into your retirement plans. Unfortunately, while Social Security benefits scale with inflation, you’re likely to see painful impacts in other areas of your retirement.
The biggest impact you’re likely to notice is the rising cost of goods on a set income. You’re probably noticing this even now—according to the U.S. Bureau of Labor Statistics, $40,000 in January 2000 has the same buying power as $70,893 in January 2023 (the most recent data available).
Even in the past three years, inflation has been painful. Because of inflation, $40,000 in January 2020 has the same buying power as $46,388 as of January 2023. During periods of inflation in retirement, you’ll be in a better position if your retirement savings and income come from diverse sources.
That way it’s more likely that if one income stream tanks, another might rise. Especially if you have investments in sectors that typically rise with inflation.
What Kind of Savings Accounts Do You Need?
If you want to retire at 50, you’ll need to make special plans. Most tax-advantaged retirement accounts, including the most common ones like individual retirement accounts (IRAs) and 401(k) plans, will usually penalize you for taking withdrawals before the age of 59 ½. This means you’ll need to plan to use traditional savings accounts or other investment accounts during this time frame.
Stocks, bonds, mutual funds, exchange-traded funds (ETFs), certificates of deposit (CDs) and other investments are a good way to get a return on your money without locking it up until you’re nearly 60. It’s already a great idea to diversify your savings. So by putting some of your savings in 401(k) plans and IRAs to save on taxes while putting some in other vehicles that offer greater flexibility or higher returns, you can put yourself in a better financial position.
Bottom Line
There’s no doubt that $1 million is a lot of money. but considerations like inflation, healthcare expenditures and tax bills can whittle it down fast. Start planning in great detail as early as possible to be able to enjoy your retirement years to the fullest.
Tips for Retiring Early
- Retiring at 50 necessitates multiple income streams, which can complicate your taxes. If you’re lost, you can gethelp from a financial advisor. SmartAsset’s free toolmatches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals,get started now.
- Having a spending plan is essential for retiring early. Your monthly income will dictate your lifestyle. To that end, here’show to make a retirement budget.
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FAQs
SmartAsset: Can I retire at 50 with $1 million? If you're committed to retiring at 50 with $1 million, you'll need to plan your health care coverage. Medicare doesn't kick in until age 65. So you'll have to cover your own healthcare expenses until then if you currently depend on an employer plan.
Is $1 million enough to retire at 50? ›
Can I retire at 50 with $1 million? You can retire at 50 if you have saved one million dollars. You will get a guaranteed income of $53,750 each year, starting immediately for the rest of your life. The income amount will stay the same and never decrease.
What is a good amount of money to retire at 50? ›
The question is often asked, “How much money do I need in 401k to retire at 50?” While it can vary depending on your lifestyle and expenses, financial advisors often recommend having at least 10-12 times your final salary saved.
Is $500,000 enough to retire at 50? ›
Zigmont said that it is possible to retire with $500,000 in savings — but this will likely not be enough for most people. “It is possible to retire on $500,000 if your expenses are less than about $20,000 per year,” he said. “For most people, this means having no debt and being in a low cost of living area.
Can I retire with $2 million dollars at age 55? ›
Yes, you can retire at 55 with 2 million dollars. At age 55, an annuity will provide a guaranteed income of $130,000 annually, starting immediately for the rest of the insured's lifetime.
At what age can I retire with $1 million dollars? ›
A recent analysis determined that a $1 million retirement nest egg may only last about 20 years depending on what state you live in. Based on this, if you retire at age 65 and live until you turn 84, $1 million will probably be enough retirement savings for you.
Can I retire with $1 million dollars at 55? ›
But retiring with $1 million is still possible, even as early as age 55, if you're smart about it. It will require some careful planning since you'll have to wait 10 years for Medicare, but it can be done. If you're not sure how to get started, consider working with a financial advisor.
Is retiring at 50 realistic? ›
You can't realistically retire at age 50 unless you forgo a lot of the traditional spending that comes along with being 20, 30 or even 40. In other words, to reach your goal, you'll have to significantly reduce your discretionary spending now so that you can enjoy that money later.
Can a 50 year old retire on $3 million? ›
Retiring at 50 is a great goal to have. If you have $3 million saved, it's likely that you'll be able to retire comfortably. You'll need to factor in your living expenses, inflation and the expected rate of return on your investments.
How much do you need in 401k to retire at 50? ›
Now, most financial advisors recommend that you have between five and six times your annual income in a 401(k) account or other retirement savings account by age 50. With continued growth over the rest of your working career, this amount should generally let you have enough in savings to retire comfortably by age 65.
Retiring at 45 with $2 million takes diligent saving and detailed planning, but it is possible. However, you'll have between 20 and 25 years to save, so you must save nearly $3,000 each to hit your goal.
Can I retire at 45 with $3 million dollars? ›
You can probably retire in financial comfort at age 45 if you have $3 million in savings. Although it's much younger than most people retire, that much money can likely generate adequate income for as long as you live.
Can I retire at 53 with $5 million dollars? ›
With $5 million you can plan on retiring early almost anywhere. While you should be more careful with your money in extremely high-cost areas, this size nest egg can generate more than $100,000 per year of income. That should be more than enough to live comfortably on starting at age 55.
Can I retire at 51 with $3 million dollars? ›
The Bottom Line
Retiring at 50 is a great goal to have. If you have $3 million saved, it's likely that you'll be able to retire comfortably. You'll need to factor in your living expenses, inflation and the expected rate of return on your investments.
Can I retire at 45 with $5 million dollars? ›
The Bottom Line
If you've saved $5 million, you should be able to retire at 45 without any worries as long as you've made a solid plan. With some wise investments and careful budget planning, you can have a long and happy retirement without any worries about running out of cash.
Can I retire at 48 with $5 million dollars? ›
The answer to this question is a resounding yes! You can retire on five million dollars. You could retire quite comfortably on that amount of money.
What percentage of Americans retire with $1 million dollars? ›
According to the Schroders 2023 U.S. Retirement Survey, working Americans age 45 and older expect they will need about $1.1 million in savings in order to retire, but only 21% of people in that age group expect to have even $1 million. That's down slightly from the 24% in 2022 who said they expected to save that much.
Can you 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.
Can my wife and I retire with $1 million dollars? ›
It's definitely possible, but there are several factors to consider—including cost of living, the taxes you'll owe on your withdrawals, and how you want to live in retirement—when thinking about how much money you'll need to retire in the future.
Do most people retire with a million dollars? ›
Putting that much aside could make it easier to live your preferred lifestyle when you retire, without having to worry about running short of money. However, not a huge percentage of retirees end up having that much money. In fact, statistically, around 10% of retirees have $1 million or more in savings.
Retiring at age 40 is entirely feasible if you have accumulated $5 million by that age. If the long-term future is much like the long-term past, you will be able to withdraw $200,000 the first year for living expenses and adjust that number up for inflation every year more or less forever without running out of money.
What is the average 401k balance for a 65 year old? ›
Average and median 401(k) balance by age
| Age | Average Account Balance | Median Account Balance |
|---|
| 35-44 | $97,020 | $36,117 |
| 45-54 | $179,200 | $61,530 |
| 55-64 | $256,244 | $89,716 |
| 65+ | $279,997 | $87,725 |
2 more rowsJan 20, 2023
Pros of retiring early include health benefits, opportunities to travel, or starting a new career or business venture. Cons of retiring early include the strain on savings, due to increased expenses and smaller Social Security benefits, and a depressing effect on mental health.
How hard is it to retire at 50? ›
Retiring at 50 isn't easy, mainly because you'll have fewer years to accumulate assets. How you can make up for that loss of time varies. If you're fortunate enough to draw a large salary, you could afford to invest more modestly and still have enough wealth to retire by 50.
What is a respectable age to retire? ›
Among those looking ahead to retirement, many expect to step away from work at age 65, according to the 2023 Retirement Confidence Survey. Although 65 is the anticipated median retirement age, workers report retiring at a median age of 62, the survey found.
Can I retire at 57 with $2 million dollars? ›
Yes, for some people, $2 million should be more than enough to retire. For others, $2 million may not even scratch the surface. The answer depends on your personal situation and there are lot of challenges you'll face. As of 2023, it seems the number of obstacles to a successful retirement continues to grow.
Can a 45 year old retire on 1.5 million dollars? ›
Retiring in comfort at 45 with $1.5 million is likely doable as long as your retirement living expenses are no more than average, your investments generate a typical return and you have good health. Challenges include waiting 17 years for Social Security and 20 years for Medicare.
Can I retire at 56 with $5 million dollars? ›
The Bottom Line
With $5 million you can plan on retiring early almost anywhere. While you should be more careful with your money in extremely high-cost areas, this size nest egg can generate more than $100,000 per year of income. That should be more than enough to live comfortably on starting at age 55.
What is a good 401k balance at age 55? ›
The average 401(k) balance by age
| Age | Average 401(k) balance | Median 401(k) balance |
|---|
| 50-55 | $161,869 | $43,395 |
| 55-60 | $199,743 | $55,464 |
| 60-65 | $198,194 | $53,300 |
| 65-70 | $185,858 | $43,152 |
5 more rowsSavings by age 30: the equivalent of your annual salary saved; if you earn $55,000 per year, by your 30th birthday you should have $55,000 saved. Savings by age 40: three times your income. Savings by age 50: six times your income. Savings by age 60: eight times your income.
Federal Reserve SCF Data
| Age range | Median Retirement Savings |
|---|
| Americans aged 35-44 | $60,000 |
| Americans aged 45-54 | $100,000 |
| Americans aged 55-64 | $134,000 |
| Americans aged 65-74 | $164,000 |
2 more rows1,821,745 Households in the United States Have Investment Portfolios Worth $3,000,000 or More.
Can I live off the interest of 2 million dollars? ›
At $200,000 per year in average returns, this is more than enough for all but the highest spenders to live comfortably. You can collect your returns, pay your capital gains taxes and have plenty left over for a comfortable lifestyle. The bad news about an index fund is the variability.
Can I retire at 50 with $5 million dollars? ›
A $5 million nest egg can provide $200,000 of annual income when the principal gives a return of 4%. This estimate is on the conservative side, making $200,000 a solid benchmark for calculating your retirement income versus expenses.
Can I retire at 55 with 4 million dollars? ›
Medicare is another valuable benefit that isn't available for most 55-year-old retirees. Until you reach the usual qualification age of 65, your post-retirement budget will have to include paying premiums for private health insurance. You can probably retire at 55 if you have $4 million in savings.
Can a couple retire at 55 with $3 million dollars? ›
The good news: As long as you plan carefully, $3 million should be a comfortable amount to retire on at 55. If you're ready to be matched with local advisors that can help you achieve your financial goals, get started now.
Can I retire at age 60 with $1 million dollars? ›
So, can you retire at 60 with $1 million, and what would that look like? It's certainly possible to retire comfortably in this scenario. But it's wise to review your spending needs, taxes, health care, and other factors as you prepare for your retirement years.
Can I retire at 55 with 1.5 million? ›
If you have $1.5 million saved up and want to retire at 55, this may be enough for you. The reality is that it all depends on your withdrawal rate — the amount of money you consistently take out of your accounts to support yourself — and how long you live. A reasonable withdrawal rate, for instance, is 4%.
Can you retire at 55 with $10 million? ›
The simple answer is yes. You can retire on 10 million dollars. However, there are a few things to consider before making this decision. First, you need to make sure that you have enough saved up to cover your expenses.
Can I retire at 50 with 3.5 million dollars? ›
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 average age at which most people retire is 62, according to a 2021 Gallup Poll. But if you have $4 million in savings, it's entirely possible to retire by age 55.
Is $10 million enough to retire at 50? ›
While $10 million is a lot of money, retiring at 50 means you can plan on approximately 40 years of retirement if you expect to live to around the average age. Even if nothing catastrophic happens to you or the economy in the meantime, inflation alone can make a dent in what you can expect from your savings.
How much money is enough to never work again? ›
It's called the 25 times rule, and it's very simple. You multiply your annual spending by 25, and that is the minimum amount of money you would need invested to fund your lifestyle without working.
At what age can you retire with $500000? ›
With some planning, you can retire at 60 with $500k. Remember, however, that your lifestyle will significantly affect how long your savings will last. If you're content to live modestly and don't plan on significant life changes (like travel or starting a business), you can make your $500k last much longer.
What percentage of US population has $5 million dollars? ›
Somewhere around 4,473,836 households have $4 million or more in wealth, while around 3,592,054 have at least $5 million. Respectively, that is 3.48% and 2.79% of all households in America.
Can I retire at 45 with 500k? ›
Key Takeaways. It may be possible to retire at 45 years of age, but it will depend on a variety of factors. If you have $500,000 in savings, according to the 4% rule, you will have access to roughly $20,000 per year for 30 years.
Can a couple retire comfortably with $1 million dollars? ›
Will $1 million still be enough to have a comfortable retirement then? It's definitely possible, but there are several factors to consider—including cost of living, the taxes you'll owe on your withdrawals, and how you want to live in retirement—when thinking about how much money you'll need to retire in the future.
How many people have $1000000 in retirement savings? ›
In fact, statistically, around 10% of retirees have $1 million or more in savings.
What is a good 401k balance at age 50? ›
By age 50, you should have six times your salary in an account. By age 60, you should have eight times your salary working for you. By age 67, your total savings total goal is 10 times the amount of your current annual salary. So, for example, if you're earning $75,000 per year, you should have $750,000 saved.
What is the average 401k balance at age 50? ›
The average 401(k) balance by age
| Age | Average 401(k) balance | Median 401(k) balance |
|---|
| 40-45 | $90,774 | $26,989 |
| 45-50 | $123,686 | $33,605 |
| 50-55 | $161,869 | $43,395 |
| 55-60 | $199,743 | $55,464 |
5 more rowsOnce a symbol of extravagant wealth, $1 million is now the retirement-savings goal for millions of Americans. For retirees able to accumulate $1 million in savings, the funds translate into inflation-adjusted income of $40,000 in the first year of a three-decade retirement using the 4% spending rule.
Can I retire at 60 with $1 million dollars? ›
So, can you retire at 60 with $1 million, and what would that look like? It's certainly possible to retire comfortably in this scenario. But it's wise to review your spending needs, taxes, health care, and other factors as you prepare for your retirement years.
Can I retire with 1.5 million at 55? ›
If you have $1.5 million saved up and want to retire at 55, this may be enough for you. The reality is that it all depends on your withdrawal rate — the amount of money you consistently take out of your accounts to support yourself — and how long you live. A reasonable withdrawal rate, for instance, is 4%.
Can a couple retire at 50 with $3 million? ›
The Bottom Line
Retiring at 50 is a great goal to have. If you have $3 million saved, it's likely that you'll be able to retire comfortably. You'll need to factor in your living expenses, inflation and the expected rate of return on your investments.
What percentage of Americans have a net worth of over $1000000? ›
There are 5.3 million millionaires and 770 billionaires living in the United States. Millionaires make up about 2% of the U.S. adult population. While an ultra-high net worth will be out of reach for most, you can amass $1 million by managing money well and investing regularly.
How much do most people retire with? ›
The Federal Reserve's most recent data reveals that the average American has $65,000 in retirement savings. By their retirement age, the average is estimated to be $255,200.
How many Americans retire with $1 million dollars? ›
According to the Schroders 2023 U.S. Retirement Survey, working Americans age 45 and older expect they will need about $1.1 million in savings in order to retire, but only 21% of people in that age group expect to have even $1 million. That's down slightly from the 24% in 2022 who said they expected to save that much.
What net worth is considered rich in retirement? ›
You might need $5 million to $10 million to qualify as having a very high net worth while it may take $30 million or more to be considered ultra-high net worth. That's how financial advisors typically view wealth.
How many Americans have $1 million in 401k? ›
The 442,000 millionaire mark in 2021 was a peak since the first 401(k) plan was first established in 1978 but the year that followed was a very uncertain one and so many people saw significant drops to their accounts.
