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Can you retire with a million dollars?


Can you retire with a million dollars?A few weeks ago, I was invited to join a panel on this topic – Can you retire with a million dollars? I was on vacation at the time so I couldn’t attend, but my answer is a big YES. Of course you will have a perfectly fine retirement with a million dollars.

In March 2013, the Spectrem Group found that about 9 million U.S. households have a net worth of at least $1 million. That’s 9 million households out of 114,800,000 households. So we have over 100 million households that aren’t millionaires. There are millions of retirees who aren’t even close to being a millionaire. How do these people live?

Your retirement number

Most financial advisors will tell you that you need to replace 80% of your income before you retire. If your household makes $50,000/year, then you need to be able to generate $40,000/year before you dare retire. This means you need about $1,000,000 in investment so you can withdraw 4% ($40,000) every year. Frankly, this is a little ridiculous. How many households with $50,000/year income can save up a million dollars? You can use the Financial Mentor’s calculator at the end of the post to see how long it will take you to become a millionaire.

How do non millionaires retire?

How does a regular family retire? Most of us can’t keep working in our careers forever. We get older and at some point we have to move on. Retirees make do when they don’t have a million dollars in their investment accounts. Heck, my parents and in-laws are retired and they certainly are not millionaires. They are doing just fine, though. What are their secrets?

Secrets to retiring without being a millionaire

  • Payoff all your debt before retirement. A lot of people are carrying debt into retirement these days, and that’s a bad idea. If you don’t have any debt, your cost of living can be very affordable.
  • Social security benefit. If you are near retirement now, you should get your full social security benefit. If you’re in your 20s or 30s, then it’s more questionable. Personally, I think we’ll get something even if it’s not as much as estimated.
  • Work in a job with pension. These jobs are getting rarer these days, but they are still out there. Firefighters, teachers, and other public servants don’t need as much saved up because they have a pension to help pay the bills.
  • Make some money post retirement. Retiring doesn’t mean you have to stop making money. I think everyone should explore alternative ways to bring in extra income. Retirees can create a business, consult, coach, blog, sell crafts, and many other things. Having an active retirement is much more fulfilling than playing golf all day anyway.
  • Refill your piggy bank as needed. This one is from our reader davidmichael. He and his wife rejoin the labor force whenever they need to refill their cash account. They travel and have fun the rest of the time until they run low on money again. Working a few months out of the year sounds fine to me.
  • Sign up with Medicare/Medicaid if you qualify. Health care can be very expensive as you get older. If you qualify for any assistance, then you should sign up for it. There are many local programs that assist seniors as well so don’t ignore them.
  • Relocate to a lower cost of living area. This one is harder for most Americans, but moving to a foreign country is a great way to reduce your expense. You can live a very comfortable lifestyle in South America or Southeast Asia for a fraction of cost in the US. Why not branch out a little and see the world?
  • Move in with your family. Another difficult choice for Americans, but more and more people are living in a multi generation households. Doing so saves a lot of money and can bring the family closer together.

Many of our readers are young and they have large retirement target like 5 million dollars. I wish them good luck, but it’s also possible to retire with less than a million. I’m an advocate of living a frugal lifestyle and enjoying life more. That means early retirement so you can spend more time doing what you want.

*Note* I think a million dollars is plenty if you’re in your 50s or 60s. However if you are younger, you probably need a bit more. Inflation will keep reducing the value of a million dollars and in 20 years, it will be worth nearly half that.

Do you think you need a million dollars or more to retire? 

If you need help keeping track of your finances, try using Personal Capital to manage your budget and net worth. It can help you keep track of your income, expenses, and net worth, all in one place. Personal Capital is geared for investors and has many great tools. See my review of Personal Capital and how they helped me reduce what I’m paying in investment fees.

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Joe started Retire by 40 in 2010 to figure out how to retire early. He spent 16 years working in computer design and enjoyed the technical work immensely. However, the job became too stressful and Joe retired from his engineering career to become a stay-at-home dad/blogger at 38. Today, he blogs about financial independence, early retirement, investing, and living a frugal lifestyle.

Passive income is the key to early retirement. This year, Joe is increasing his investment in real estate with CrowdStreet. He can invest in projects across the U.S. and diversify his real estate portfolio. There are many interesting projects available so sign up and check them out.

Joe also highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help DIY investors analyze their portfolio and plan for retirement.

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{ 79 comments… add one }
  • Adam March 23, 2017, 5:13 am

    Thanks for clearing up a few misconceptions I had about retirement. I’m 35 and realised after leaving my last job that several assets I’ve built up over the years now total over $1 million after selling at repaying their debts, so I’m highly considering pulling the trigger and selling off everything at 35, becoming debt free, and with the aim to work for myself by re-investing the money. There are still days that I worry that I’m being premture, or short-changing my future self, but articles like this one, and friends/family all reassure me that the people I see in retirement often have far less than I assumed they did, even people in high paying positions, but they all seem to be living just fine and aren’t poor. Thanks!

    • retirebyforty March 23, 2017, 9:21 am

      Good luck! I think most early retirees are doing fine. We just have to keep our eyes open for opportunities that will inevitably come up. There will be plenty of ways to make money after you retire.

  • Brad February 1, 2016, 2:50 pm

    I loved your comment……”we have many young readers with a big retirement target of $5 mil”…….
    Too funny! Maybe we should inform them how many people actually have that kind of money. 1.8 mil people have over $2mil, but only 66,000 have $20 mil or more.
    $1, $2, or even $3mil can be saved and/or invested over a working life time with massive discipline and hard work. Over $5mil isn’t possible for the 99% of people making under $300 something a year……
    Good luck! You will need it.

    • Chris May 27, 2016, 5:35 pm

      Contemplating retirement now. Age 41 and have a wife who does not work and 2 elementary age kids. House paid off and I have $1.1 million in fixed income securities that generate 86k/year. My job pays me $95k so the interest would basically cover my current salary.

      Education expenses and medical bills are what is the big unknown, however…

      • Brian T Paster November 2, 2016, 10:15 am

        Hey Chris that is impressive at 41. Do enlighten me what fixed assets
        with one million yields $89,000. Fixed assets like Tips, bonds whatever could yield you
        almost 9 % ? In 2016 even stock portfolio yielded 2% at best. The Yale university endowment made an amazing 4%

  • gary August 11, 2014, 12:49 pm

    “That’s 9 million households out of 114,800,000 households. So we have over 100 million households that aren’t millionaires.”

    Can’t point this out too many times. Certain groups of people would have you believe that if you aren’t in the top 10%, you are in dire poverty. Well, having money is better, and in terms of health-care, this society does an awful job for older people with limited money, but as for retiring, the “You can’t retire on a million!” is just a advertising pitch for financial planners who charge fees or sell books, as far as I’m concerned.

  • retireby50 October 29, 2013, 5:28 am

    my wife and i are 46. we have 1.2 million in retirement account and 1.2 million equity
    in rentals. another 1.2 million in taxable account. another 300k reserved for kids college.
    How can i generate 140k annual income with these money and play golf full time?

    • retirebyforty October 29, 2013, 8:37 am

      Do you really need 140k/year to play golf full time? You probably need 4 million at the rate you’re spending.

  • headingthere August 26, 2013, 4:00 pm

    My wife and I are both in our early 40’s. Base on the current housing prices in Bay Area California, we have crossed our biggest target to reach one million net worth. We are diversified by having $400k in 401k and IRA, $400k in home equity on our rental property, and $225k equity from our primary home. We do not have cash savings in the bank because I want to payoff my rental property in 4 years.

    I have rental income which is almost the cost of my primary home mortgage. My goal is to payoff the my mortgage on my rental property, then the rent will be use to cover the mortgage of my primary residence.

    Being that said, if I loose our job after I pay-off my rental property, can I live from the sale proceeds of $200k from my primary residence (say after 4 year, that equity can be 200K) in South East Asia?

    • retirebyforty August 27, 2013, 8:35 am

      Great job! You are doing very well. Hopefully you don’t lose your job though, unless it’s your choice.

      • headingthere August 27, 2013, 10:24 am

        I have no choice but to keep our jobs until our 3 kids are finish in college for at least 8 more years. Cost of living where we live is very very expensive and a job is a must for a household with only one million dollar asset. I figured out moving to a less expensive place where my wife and I grew up is more practical so we can live with our investments.

        We are aiming for better education for the kids so they will not be financially dependent to us. At the same time, we are saving money so later on we will not depend on them.

  • thepotatohead August 5, 2013, 2:18 pm

    I hope to have around $1 million in my TSP account by the time I retire, which is hopefully by 50. I would also get a small pension if I stay with the federal government, so that will help out big time.

    • retirebyforty August 5, 2013, 2:44 pm

      Oh wow, that would be great. How old are you now? Can you really get $ 1 million in the TSP by 50?
      Good luck!

  • Marissa @ FinanceTriggers August 4, 2013, 7:46 am

    There are a few things that need to be taken into consideration for one to retire with $1,000,000. Lifestyle, location, etc. are just some of those.

  • Felix Lee July 27, 2013, 5:35 am

    I’d be happy and contented to have a million dollars when I retire. I want to travel to different places when I retire.

  • Marissa @ Thirty Six Months July 21, 2013, 9:13 pm

    I honestly don’t think that 1 million is enough simply because of the age that I want to retire.

  • Merle Rutledge July 21, 2013, 8:22 pm

    I have done all this and more. Sadly, I have nothing close to a million dollars. Building up a portfolio, only to see it take two titanic hits – one in 2001-2003 and the other in 2008-2009 has been… beyond stunning. A lot of advice in columns like this are very “20th century” in heir thinking, which means the real impact of unbelievable market and fund volatility is not factored in. To some degree, to retire you have to invest, but these days, to invest is to risk losing half to three quarters of all you have. A lot of these articles are very basic and generic, this one being a perfect example. Invest early and often, live below your means, get a good job with good retirement benefits… it’s all been done – by many millions of us, and it got us no where near what it should have. We need articles about THIS reality, as this is where so many of us are at.

    • Brian T Paster November 2, 2016, 10:08 am

      Merle is so right. The catch 22 you dont see when you retire is income. So where do you get income today. Stock market or rental properties. Rentals are not passive they take work and if you have management you better check on the manager. Than you have stocks and try drawing on you’re nest egg if it takes a 2008 hit. You better have two piles of money. The 3 ml lion you have in the market and the separate cash fund when the market is on the drop.

  • Edmond Fowler July 20, 2013, 12:08 pm

    If you’ve got a million-dollar nest egg, Soto recommends that you set aside $200,000 off the top for medical expenses in retirement and use the remaining $800,000 to purchase an inflation-protected annuity that would pay out $45,000 a year. This amount plus Social Security (typically about $25,000 for the maximum earner, plus $12,500 for the spouse) will generate an income of about $82,500 for a couple. Many financial advisers tell you to try to replace 80 percent of the income needed while working. By this conservative standard, $1 million would maintain the standard of living of a household making $103,000.

  • freebird July 19, 2013, 10:56 am

    My method for calculating my retirement number is a bit different. First of all pre-retirement income doesn’t matter because it’s your post-retirement expenses that need to be covered. In other words if my boss suddenly triples my salary, this won’t prevent me from retiring because my requisite nest egg just tripled in size– so long as my expenses stay flat I’m still good to go. Second, the number should include only income-producing assets, so if you want to include your paid off home, you need to also include imputed rent into your expenses. Third, I think the retirement number should be 33 times your projected post-retirement annual expenses net of pension and social security income. This gives a 3% “safe withdrawal rate” that should last as long as you live.

    In my case, I have no pension, I’m not expecting Social Security, and I plan to spend about 60K annually (including taxes), so I need 2M in income producing assets to retire completely.

    • retirebyforty July 19, 2013, 2:39 pm

      That’s what I use too. Most people need to think for themselves and don’t fall for the 80% of your income rule of thumb.

  • Anton Ivanov July 17, 2013, 5:51 pm

    I think you can retire with less than $1 million. It all depends on how much retirement income you need, that’s it. If you plan to live a frugal lifestyle and have no debt (not mortgage either) then you can easily live on a minimal budget in retirement.

    • retirebyforty July 18, 2013, 9:02 am


  • Pauline July 17, 2013, 5:36 pm

    I live on about $1,000 per month so at 4% withdrawal could retire on $300K, a million would go much farther. It depends where your assets allocations are, having $1M net worth in your primary home won’t sustain you in retirement.

    • retirebyforty July 18, 2013, 9:02 am

      That’s great. That’s why I plan to move to a lower cost location at some point. The quality of life is much better for the same money spent.

  • Thomas | Your Daily Finance July 17, 2013, 9:34 am

    I million is more than enough depend on when you retire. If I retired as 65 with no car or mortgage payment, daycare, or kids being in the house I really don’t need 40k per year. Between food, gas, and traveling there would be nothing to cover outside of insurance. The problem is that a lot of people never payoff their homes and keep getting those car payments.

    • retirebyforty July 18, 2013, 8:54 am

      I agree. People should really payoff their home before retirement. I’d probably go with cheap used car at that point in life.

    • Brian T Paster November 2, 2016, 9:59 am

      i wish that was true. If you own you’re house outright you still have property taxes, maintenance and insurance before you even think of healthcare of some kind, medicare does not pay all. Than there is food, there is utilities, gas fior you’re paid off car, insurance for the car, clothes, hopefully books. movies on cable and walking and a night at a nice restaurant.
      Okay did I say vacation.? nope. you are at about 40,000 a year for just the basics with house paid off . Now add inflation on you’re 40,000 until you are dead. You better hope you have atleast a million unless you live in Honduras.

  • getagrip July 17, 2013, 5:45 am

    Given I know people who live on much less than the estimated $40K a year a million dollars could generate, my answer would be of course you can retire on a million dollars.

    The real question is would it fund the kind of retirement you envision for yourself? I think that answer depends on the individual and how realistic they are being about what they want when they quite the 9 to 5 world.

    For myself I look at percentages. My goal is replacement of 80% of pretax income to live as we live today, and for me that can currently be achieved by age 60. On days where this seems too much, I look at the optimistic end of things by considering what we won’t be paying for in retirement, for example:

    7.6% Social Security and Medicare
    15% Current Retirement Savings (22.6% with just these two, hence the confidence in the 80% value)
    7.8% Current College Payments and Savings
    12% Current Mortgage (including accel principal payments, excluding escrow)
    8% Kids support in the form of food, utilities, car insurance, etc. (I know I’m lowballing this)
    2% Term insurance policies

    If these numbers held I’d be looking at needing to replace only 47.6% (100-52.4) of my pretax income. If I want to be really optimistic and consider Social Security will cover 20% even if the benefits drop to 75% by the time I take it, now I’m looking at 27.6%. Tack on 10% for health care increases and long term care insurance and I’m still looking at only having to fund 40% or so of pretax income.

    While there are no guarantees, at least that takes some of the pressure off as I shoot for the 80% number and as I get older I may determine I can live on much less than I do today, which can drop the age I realistically am able to quite the 9 to 5.

  • Martin July 16, 2013, 10:58 pm

    I was just thinking about it the other day what would I do if I win a Powerball 2 million bucks and get home 1 million after taxes. If I invest it into dividend paying stocks I can be receiving around 48k annually at my current portfolio yield. After taxes it would be somewhere around 40k annually income. With that income I can imagine myself retiring. I would have to move to a cheaper location than where we currently live, but it is feasible. Now how to get 1 million bucks quickly?

    • retirebyforty July 17, 2013, 9:06 am

      First, you’d have to get off your duff and go buy a lotto ticket.
      I should buy one this week too. 🙂

      • Martin July 17, 2013, 10:33 am

        oh man!! That’s why I never won a sh…t!!

  • The Passive Income Earner July 16, 2013, 9:50 pm

    The calculator says I have 13 years. I hope it’s less once the mortgage is paid off, my investments should be on overdrive.

    I think many (in the past) benefited from pension plans. The landscape has changed over the past 15 years and more so for Gen Y. For many, it means saving for longer but I want to reach financial independence in my 50’s (mortgage done at 45 – 6 years away).

    @davidmichael, thanks for the wise words. I agree about the unexpected – Even with a young family, I have to regularly adjust my budgets due to unexpected needs that I could not plan. I can only imagine how it can be later on.

    • retirebyforty July 17, 2013, 9:05 am

      I agree with our assessment. Once your mortgage is paid off, you can channel all your resources into your dividend stocks. That’s very exciting and it’s only 6 years away.

  • Simon July 16, 2013, 9:40 am

    While I think its posssible to retire with a million dollars, I also think one can do with less. It boils down to knowing yourself, living a bit more frugally and maybe working albeit lightly in your retirement years. Having paid off your debt early on would help matters along!

  • davidmichael July 16, 2013, 6:41 am

    This is a great topic, Joe, and I think good suggestions for retirement on less than a million. Seems like I am the only one retired (age 76) responding in this website, so my observations are based on the realities of life and not so much on the current views of those younger than 40.

    Yes! It would be nice to have a million or more. But at what risk and what costs? By time you have a family and get the kids through high school and then college and take care of the basic needs including medical, it’s really not that easy to save a million unless there is a definite plan like you have for building passive income. And then there is life and the many unforseen turns it takes along the way. So many of my friends have died in their early days of retirement with millions in the bank. So there is something to say about “living each day fully.” I recommend the book,”Your Money or Your Life” by Joel Dominguez and Vicki Robin. It’s a nice antidote to the hype of Wall Street and the insatiable propaganda in the US saying it’s necessary to make a million to feel like a success. What’s more important is to think out of the box and design a life that is important and meaningful to each individual. In our case, we choose to go back to work every five years for a short time to refill our cash bucket which augments our Social Security Income. We did have the equivalent of a million in retirement but a crazy turn of events wiped out the annuities and pensions. The stock market crash of 2000 wiped out the rest, except for our I-Bonds. There is only one thing to expect in retirement, “Expect the unexpected.”

  • Kin @ Journey of Success July 15, 2013, 8:08 pm

    A solid yes for me. However, I think it totally depends on how well one person understands himself, what enough means to himself, and what he wants and does not want in life.

  • The College Investor July 15, 2013, 7:30 pm

    The last option seemed to be the least feasible. I will probably move in with my kids during retirement period if I have no choice. It’s always good to have your own separate space and to give chance for your kids to live their lives without your everyday presence, after all you can still maintain closeness without spending most of your time in one house.

  • Paul @ The Frugal Toad July 15, 2013, 6:27 pm

    The average 401k balance for those 55 years of age and over is $255k. The fact is the vast majority of Americans will have nowhere near $1 Million in investments by retirement date. Could I retire on a million dollars? Absolutely. A more appropriate question would be how are you going to retire on less than $1 Million?

    • retirebyforty July 16, 2013, 9:35 am

      Yeah, I goofed up the title on this one. My mistake.

  • Prasun Choudhury July 15, 2013, 6:15 pm

    As mentioned in many of these posts, it depends on your retirement age to judge if 1 million will take you through your lifespan. One related issue on retirement savings is inflation and how one evaluates the worth of $1M, 10 – 15 years down the line. I think one’s primary living cost can be broken up into rent/mortgage (property tax, HOA, insurance if one owns the house/condo), utilities (gas, electricity, internet/cable, etc), car (insurance, gas, basic car maintenance), food/groceries, phone bills, standard entertainment (movies, watching sports, gym/health club membership, etc). The cost for health insurance, drugs can have a huge impact on one’s living cost and it is somewhat unknown how this will pan out in future (it can be high even now for elderly people or people with individual health insurances).

    I feel, if someone owns a house (i.e. mortgage is constant or the house is paid off), one’s cost of living won’t change significantly even with considering the inflation in 5 – 10 years timeframe. I haven’t made detailed calculations, but I feel the primary change in my cost of living in the last 10 years has been due to the rental/housing cost, which has varied significantly based on different geographic locations (and rental cost has changed based on the economy/job market).

    Any thoughts?

    • retirebyforty July 16, 2013, 9:34 am

      Food and gasoline price has gone up significantly over the last 10 years as well.
      If you don’t drive much, then that’s one less thing to worry about.
      Housing is definitely crazy now in certain parts of the country. California is so expensive.

      • Prasun Choudhury July 16, 2013, 11:40 am

        I agree with these changes in cost of living. The rental and real estate in CA is somewhat crazy and I feel the pinch as I live in Bay area! For rental, I have seen rentals for same apartments rising from $1750 per month to $2100 per month from early 2000 (when the economy was still good) to 2013. The changes in house/condo/townhomes have been even more radical and the costs have doubled in many areas. The gas prices have also gone up significantly from $1.5 (around 1998) to nearly $4 per gallon (current price) in 15 years. As you said, here I was banking on the fact that one would be driving less after retiring as one won’t need to do the everyday commute to work (and the option of using public transit exists at least in some cities like Portland, San Francisco, etc). The food prices have surely gone up too but I don’t have numbers to quantify the change. Some of the costs have come down as well like long distance and international phone calls (as an example, calling 1 min to India used to cost $0.75 in 1998 and now its less than 2 cents). I guess not everyone uses international calls a lot but I remember my phone bills were around $100 while being a grad student and now it’s way less.

    • Brian August 3, 2016, 7:27 pm

      I am 54 ,house paid off , 3.2 to 3.8 in other assets . I really did put those numbers on calculator. I think it’s hard to retire on rhat aND I am only lettingused live on 2400 a month . I think if you live to 94 uou better make sone interest on that money or even that amount is gone

  • Nice post and you cited most of the factors that I use in discussing retirement with clients and prospective clients. We start with their overall cash flow need, subtract Social Security, pensions and other resources to figure what they will need to be able to withdraw from their nest egg. While I agree that a frugal client can retire with less than $1 million (and I have several doing just that) I would also say that $1 million or more should be a target for all retirement savers. At some point no matter how much you scale back, relocate to a lower cost area and the like $1 million just isn’t what it used to be. I suspect inflation will rear its ugly head again at some point as well.

    • retirebyforty July 16, 2013, 9:32 am

      Thanks for your comment. I think more people should save for retirement too, but the reality is 90%+ of retirees won’t be a millionaire. They’ll have to make it work somehow.

  • Mr. Utopia July 15, 2013, 4:14 pm

    I wonder how many people could achieve the $1 million target or more if they’d actually been more mindful of the future when they were younger? I believe so many just don’t stop and think about 20-40 years down the road. They live in the present (like buying that next car or where to go on vacation) and have a “the future will take care of itself mentality.” In other words, it doesn’t feel like a real problem or issue at the time…sort of like “out of sight, out of mind.”

    • retirebyforty July 16, 2013, 9:31 am

      I agree. Many people already have a hard time paying the bills month to month. When you’re stuck in a cycle, it’s hard to plan ahead.

  • krantcents July 15, 2013, 4:10 pm

    Since, I will have no debt and a retirement (Social Security/pension) for my fixed expenses, I could easily retire on less than a million dollars. I will use my savings (403B, IRA, Roth IRA and brokerage accounts) to satisfy my wants such as travel and other things. BTW, I do not plan to relocate or work in retirement. If I do work, it will be to have extra money. Yes, I will remain in California because my children live here and some day grandchildren.

    • retirebyforty July 16, 2013, 9:30 am

      I think you’re set. You have been preparing for a long time and you’re in a great position.

  • Tortoise Banker July 15, 2013, 1:56 pm

    Great post! I live in a high cost of living area, and meet many people with small “nest eggs” living mainly on social security and they’re still able to pull it off. Sometimes you just need to stop and smell the roses a bit. Not everyone will be able to save what they need to, but most everyone will find a way to make it work.

    • retirebyforty July 15, 2013, 3:38 pm

      Exactly! Most people will figure it out.

    • I BRIAN August 3, 2016, 7:19 pm

      I hope you are right . I am 54 now with house paid off abd 3.4 to 3.8 investable asets abd I think it’s very possible to go broke . I think if you own your house aND you are okay . Also assets go up abd down 3 million today is 2.6 tom. Tham 3.5 later
      But I think you will need to have 3 million retiring today . With house and car paid off

  • Pretired Nick July 15, 2013, 11:43 am

    It’s always interesting how the human mind gravitates toward round numbers. The million in and of itself is meaningless, as you pointed out. All that matters is whether your passive income is higher than your expenses. It’s just so much easier for people, especially the media, to cough up a round number and assume that’s their target. People also tend to fixate on the savings goal number while ignoring their debt (again as you pointed out). A million is probably nowhere near enough if you have a big mortgage, but more than enough if your mortgage has been paid off.

    • retirebyforty July 15, 2013, 3:36 pm

      I think a million is plenty if you don’t have a mortgage. That’s plenty to live on. Hopefully, you don’t have to pay a huge amount of taxes though.

  • Rita P @ Digital Spikes July 15, 2013, 11:13 am

    Well if I retire by between 40 to 50 then it would be good to have million dollars. Goal is to have time to utilize that money when I am younger and not older , then i would be happy to have 1mn

    • retirebyforty July 15, 2013, 3:34 pm

      That’s a good way to look at it. It’s always more fun when you’re young. What’s the use to be a millionaire when you’re 80. You can’t do much anyway and will have to spend all of it on medical procedures….

      • davidmichael July 16, 2013, 6:10 am

        Whoa Nellie…
        Since I am age 76 and you indicate all of us are dodos by 80 physically incapable of enjoying retirement, I want to dispel this picture. Believe me, retirement and doing things you want to do is just as much fun at 80 as 40. For instance, I am on vacation this week with my daughter’s family (doctor) where we all rented a beautiful beach house for $2600 a week on an island in Casco Bay on the Maine coast. I use to fish here commercially when I was younger to pay for my college costs. I’m up at 5 AM every day photographing the fisherman as they set out to work and I hope to sell many of them as part of our retirement funding. Then we’ll fly back to Oregon where we’ll volunteer for the Oregon State Parks at Port Orford Marine Coastguard Museum for a month before spending a month near Oakridge, Oregon flyfishing and kayaking our way through the many lakes and rivers in central Oregon. Then, onto work with Amazon Fulfillment Center in Fernley, Nevada for three months during the Christmas season. In other words, my wife and I are very active seniors living the same sort of life we did 20 years ago when we first retired. The probablity is that we will be active into our nineties. And…we live on 30% of our former working income when we were rich and famous. That’s $3000 a month folks. It’s nice to have a million or two, but not necessary. Susie Orman may need $2,000,000 or more, but we are quite happy on our social security income. Rule #1…Live beneath your means. Rule #2…Don’t forget rule #1. Happy Travels.

        • MrB October 23, 2013, 5:36 am

          I just loved your reply. I am just 54 and retired and hope to be as active as you when I get to your age. Take care my friend!

        • Brian T Paster November 2, 2016, 9:47 am

          That is because you are 76 . If you were 50 Suzi would be right. If you have 1 million at 80 versus 1 million at 50. at fifty if you retire you are toast

  • Anon E. Mouse July 15, 2013, 8:42 am

    In your post, you were clear about “1 million of investments”, but I see some folks in the comments already confusing “net worth” with that number.

    It’s important to keep those concepts separate. For example it’s really easy to end up with $400,000 in assets that contribute to net worth, but don’t provide any income (house, cars, etc..). That leaves you with $600,000 investable, which it’s much harder to retire on.

    IMO (and this isn’t rocket science, of course), the single biggest contributor to retiring early is living well below your means. If you make $50K, and you want to retire with 100% of your income, that’s a lot easier if you live off $25K. The obvious benefit is that you only need half the savings to meet your income goal. The slightly less obvious, but much more important, benefit is that you have far, far more money available to save. So you’ll reach that number very fast.

    When we started saving seriously (~2001, shortly after college), I set a retirement target of $2.5M in investable assets. I adjust that by 5% per year for inflation (I’m a pessimist), and we now need ~$4.3M. I further divide it into “pots”; 40% in long-term (retirement accounts), 40% in mid-term (deferred income, etc..), and 20% in short-term (cash, non-retirement accounts, etc..).

    /Could/ we retire with $1M? Probably. But it wouldn’t be the retirement we envision.

    • Steve July 15, 2013, 9:19 am

      Indeed. Though, many household net worth statistics exclude home equity (perhaps because it’s impossible to measure accurately and hard to even estimate).

    • retirebyforty July 15, 2013, 3:33 pm

      You are still young so good luck! I’m sure you are already well on your way to your target. I’ll post a follow up on the categories next time. It still seems a little crazy that you NEED $4.3M. 🙂

  • Squirrelers July 15, 2013, 8:39 am

    It depends on when a person plans to retire, where they live, and at what age.

    Could I retire now, at 40, on 1 million? No, not where I live and how I would like to live. Could I do it if I was 65? Yes, I think so.

    • retirebyforty July 15, 2013, 3:31 pm

      You’d probably have to make some adjustments, but I’m sure you’ll do fine with a million. Maybe you’d have to move to a cheaper location and not support your kid’s education. They can get a loan. 🙂

  • zolar July 15, 2013, 8:07 am

    Agree that it ain’t easy to retire with one million .
    Retire without one million also can have happy ending if we know how to spend and saving..

    • Marissa @ Thirty Six Months July 21, 2013, 2:58 am

      I completely agree with you, Zolar. I guess it really depends on the person’s lifestyle. If he’s living a grandiose life, a million is definitely NOT enough. But if he’s living a simple life then a million is surely more than enough.

      • BRIAN August 3, 2016, 7:08 pm

        I don’t know where peiple,het the idea you can retire on 1 million
        I habe a house paid off worth 750 to 800,000 after taxes and about 3.4 investable assetsm not all liqoud abd trying to live on 30,000 a yrar 54 in Cslifornia. I still think it likely to go broke if you live to long

  • SavvyFinancialLatina July 15, 2013, 7:58 am

    Our goal is to generate side income. I don’t want to depend on my corporate job forever.

  • John S @ Frugal Rules July 15, 2013, 7:47 am

    I think it is very possible to retire with one million, especially if you’re in your 50’s-60’s – like you said. I do agree that it’ll likely be higher for those of us that are younger. We’ll be shooting for many of the things you outlines, though I don’t see a pension anytime soon. 😉

    • retirebyforty July 15, 2013, 3:29 pm

      A million dollars wouldn’t go very far in 2050. 🙁
      Not sure if I’ll be around then though…

  • Mike July 15, 2013, 6:13 am

    I think the big thing is to be able to start generating those online forms of income a few years BEFORE you need to start thinking about retiring. For example, if one plans to retire at the age of 65, they might want to start thinking about starting their online income ventures around the age of 50 just to be on the safe side. For those 15 years, that extra money should be used to better reduce any other financial obligations that might be present (like paying off debts or a mortgage) and might also go into stocks or other wise investments. I think that is just smart business.

    • retirebyforty July 15, 2013, 3:27 pm

      I agree completely. I wish I started blogging 10 years ago. I would have been much further along. Making side income doesn’t happen overnight. It takes time to build a business.

  • [email protected] July 15, 2013, 5:52 am

    I must admit that I plan to have more than a million dollars upon retirement. For me, I don’t think it has anything to do with needing it to live comfortably, I think it has to do with how I worry about money. I know what a wreck I would be if I lost my job and I think the same would be true if I retired without a serious buffer.

    That said, all of the tips of retiring without being a millionaire are good. I will likely do all of these anyway. It is hard for me to believe that someone in their 60’s still carries a mortgage or, worse, other types of debt.

    • retirebyforty July 15, 2013, 8:51 am

      You have a lot of time left and you’ll have inflation to help you accumulate a million dollars. 🙂
      Debt is the worst. It makes cutting expenses difficult because you have to pay the bank a fixed a mount every month.

  • I did not try the calculator because I would never be able to retire if I was shooting for a million dollar net worth.

    This past Saturday night Suze Orman told a married couple with a current net worth of 1 million dollars that the man should keep working until he is 70 because they just don’t have enough. I used to be a big fan of Suze but I don’t think anyone NEEDS a million dollars. It would be nice but you can retire on a lot less.

    • retirebyforty July 15, 2013, 8:50 am

      That’s nuts. If he enjoys his job, that’s one story. You never know how much time you have and I wouldn’t want to keep pushing it that long. They probably spends a lot of money and have big plans for retirement…

      • I am a health care worker and seeing peoples’ lives changed or ended instantly because of illness of accident is something I see every day. I want to work because I want to be there and not because I have to be there.

        I was on vacation last week and just being home and doing nothing was pretty great.

    • Brian T Paster November 2, 2016, 9:40 am

      Jane I believe Suzi is right. If you are 50 and only have 1 million plus your house paid off I would if I could work till 70

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