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Is $10 Million Enough to Retire?


A $10 million nest egg will pay for a comfortable retirement for the majority of retirement savers. However, whether that much is enough to fund any specific retiree’s golden years depends on a number of factors. This includes pre-retirement lifestyle and spending habits, the number of years a retiree will live after retirement and the returns earned on a portfolio of investments.

A financial advisor could help you create a financial plan to protect your retirement savings and reach your financial objectives.

Key Factors to Consider When Retiring With $10 Million

Funding a comfortable retirement is a project with a lot of moving parts. And, depending on your circumstances, it can be difficult to estimate with accuracy. However, you can calculate an approximate answer whether $10 million is enough for retirement by considering these four main factors:

  1. Length of retirement. Perhaps the most vital piece of information when evaluating the sufficiency of a retirement nest egg is how long the money will have to last. This depends on two elements: When you retire and how long you’ll live. As with other key pieces of this puzzle, there are no firm figures. The average age of retirement is 64, but your date of retirement is up to you. According to the Social Security Administration, the average 65-year-old can expect to live another 16.9 years if male and about 19.5 years if female. However, these are only averages and your life may be longer or shorter.
  2. Expenses in retirement. How fast you spend your money clearly affects your retirement. Making a budget will help you answer this question. A Bureau of Labor Statistics study from 2020 found that the average annual expenditures of a household headed by a person aged 65 or older was $24,721 per year. Again, this is an average. Many factors influence retirement spending, with the most notable being your personal wealth and health.
  3. Amount of income. Another vital matter is the rate of return on your investments. Based on recent returns, a $10 million portfolio could generate from a fraction of 1% to as much as 10%, equal to a few thousand dollars to $1 million per year, depending on your selection of investments. Of course, past returns are not necessarily indicative of future returns. However, a 5% return on a $10 million fixed-rate annuity, which is currently achievable with annuities, would produce a reliable $500,000 per year.
  4. Withdrawal rate. Rather than subsisting entirely on investment returns, you can withdraw part of the principal. A traditional rule of thumb is to withdraw 4% per year. A plan for withdrawals is called a decumulation strategy and will consider factors ranging from your health to your plans for leaving a financial legacy to heirs.

Retirement Unknowns

A $10 million retirement fund leaves a lot of room for variations in many of the key factors that control whether your retirement will be financially comfortable or challenging.

Losses due to legal troubles, failed businesses, financial abuse by trusted associates and excessively lavish lifestyles have produced similar economic disasters for any number of previously prosperous people. For those of more ordinary means, medical costs are often the most common cause of personal bankruptcy.

You should also take into account other universal uncertainties. The future course of taxes, inflation, interest rates and investment returns can impact your retirement portfolio. And therefore, you should rebalance your retirement investments and review your strategies accordingly.

Bottom Line

SmartAsset: Is $10 Million Enough to Retire?

A retirement portfolio of $10 million will very likely cover the retirement needs of most people. Whether it’s enough to support a comfortable retirement for any given person depends on different factors. Important ones include age at retirement, life expectancy, lifestyle and spending habits and how much the portfolio earns. While many key elements can’t be predicted with certainty, and wild cards can also impact any financial plan, an eight-figure nest egg is likely to be more than enough.

Retirement Planning Tips

  • A financial advisor can provide expert insight into the preparation of a plan that will take into account the size of your retirement savings and expected circumstances in retirement. SmartAsset’s free tool matches 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.
  • SmartAsset’s Retirement Calculator is a free and convenient way to get a handle on your financial situation in retirement. It considers your retirement age, income, location and other factors to tell how much you need in retirement savings.

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