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We’re 65, Have $1 Million Saved and $30K in Social Security Benefits. Can We Live on $70K Per Year?


Suppose you and your spouse are both 65 years old, have $1 million in savings and collect $30,000 per year in Social Security. Is that enough to fund a $70,000 per year retirement?

It will depend on your personal circumstances, especially where you live, but $70,000 may be enough for some households. Whether your assets can generate $70,000 per year is a bit more difficult to answer, though. Here are a few important things to consider. And if you need more help planning for retirement, consider working with a financial advisor.

Consider Your Cost of Living

Can you afford to retire and live on $70,000 per year? Jeremy L. Suschak, a CFP® with DBR & Co., says it’s generally manageable, but ultimately depends on the circumstances of your individual retirement. Where do you plan to live, for example, and what are the costs of living? What assets do you have to fall back on at need, and what debts or liabilities do you have? Do you support dependents, and what kind of lifestyle do you want to lead? 

Perhaps most of all, what is your health situation? 

“It will help if lifestyle expenses are low and there is zero or minimal debt in place,” Suschak told SmartAsset. “Having proper insurance coverage will also be critical so that significant, unanticipated out-of-pocket expenses do not derail the spending limits.” 

A $70,000 per year income is right around the U.S. median, so it can work for many households. Just make sure it can work for yours.

Evaluating Your Portfolio

A man thinks about his investment plan for retiring at age 65.

Can your portfolio generate $70,000 per year? In answering this question, think about how much income your savings and investments will generate.

Suppose you follow the 4% rule, meaning you draw down 4% of your portfolio in your first year of retirement. Here, this would give you $40,000 in your first year of retirement and then a bit more each subsequent year to account for inflation. Combining your withdrawals with a $2,500 per month Social Security benefit, you’ll be able to meet your $70,000 income goal. Be warned, though: You would run out of money within approximately 20 years.

But the good news is that you can do even better.

The above scenario assumes you keep your portfolio entirely in cash. If you invest it, even modestly, you can potentially extend the longevity of your portfolio and/or generate more income. For example, say that you put everything into bonds. Right now that would give you a yield of around 5%. Combined with Social Security that would generate about $80,000 per year indefinitely. Or say that you buy a $1 million annuity. That would likely pay over $107,808 (again combined with Social Security), guaranteed for life. 

Can this portfolio generate $70,000 per year? Yes. But it can do even more if you let it. 

Set up the right portfolio for your financial goals with a financial advisor.

Don’t Forget About Taxes

It matters quite a bit whether the money in your portfolio has already been taxed or not.

If you hold this money in a 401(k), a traditional IRA or another pre-tax account, you will pay income taxes on your distributions, as well as taxes on 85% of your Social Security benefits. Keep this in mind, because your after-tax income will end up being less than $70,000.

On the other hand, if you have $1 million in a Roth IRA or Roth 401(k) you will not pay taxes on portfolio withdrawals. That money has already been taxed so it’s had the luxury of growing tax-free. You will still pay taxes on 85% of your Social Security benefits though, so expect about $3,300 per year in federal income tax.

Account for Inflation

A 65-year-old married couple runs the numbers on their plan for retirement.

Finally, don’t forget about inflation

While your Social Security benefits are indexed to inflation, interest and annuity payments are not. While comfortable in 2023, a $70,000 income does not have a lot of cushion. So you may want to invest for some growth, otherwise by the end of your retirement inflation might make this a very tight budget.

Talk to a financial advisor today to plan a path to your financial goals.

Bottom Line

With $1 million in the bank and a $30,000 Social Security benefit, you can generate $70,000 per year in retirement income with high likelihood. And the good news is that you can probably do even better than that with a bit of smart money management. 

Retirement Tax Tips

  • We didn’t have time to discuss state-specific taxes here but don’t overlook this important part of the retirement planning equation. SmartAsset’s retirement tax friendliness tool can help you understand how your state taxes the income of retirees.
  • A financial advisor can help you build a comprehensive retirement plan. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

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