Is $6 Million Enough to Retire at 50?

If you’ve saved up $6 million by age 50, you’ll most likely have positioned yourself for a long, comfortable retirement. However, you’ll still need to navigate taxes, income calculations and economic forces, all of which can cause some financial pressure during your golden years. Here’s how to turn your $6 million into a self-sustaining income for your early retirement.

And if you need additional help planning for retirement, consider speaking with a financial advisor.

Can I Retire at 50 With $6 Million?

Retiring at 50 — about 14 years earlier than the average retirement age — requires careful planning and a detailed financial strategy. While a $6 million nest egg may seem more than sufficient, the key is ensuring your savings can generate enough income to support your lifestyle for three decades or longer. That means clearly defining your anticipated expenses, desired lifestyle and expected investment returns.

One important consideration is access to your retirement funds. Traditional accounts like 401(k)s and IRAs generally aren’t accessible without penalty until age 59½. If you retire at 50, you’ll need to bridge the gap using alternative sources of income. This can include taxable brokerage accounts, rental income from real estate or other non-retirement investment vehicles.

To determine whether you’re truly ready to retire at 50, it’s wise to run the numbers using a retirement calculator. Factoring in variables like your current savings, expected Social Security benefits and cost of living in your state can help you evaluate whether your plan is on track, or whether you’ll need to make adjustments to meet your goals.

How to Determine How Much You Need to Retire

No matter when you retire, you’ll face the same challenges as most retirees during their golden years: paying taxes, covering living expenses and generating income. The following steps can help you estimate these factors to develop an accurate retirement plan.

Calculate Your Costs in Retirement

The cornerstone of realistic retirement planning is understanding your expenses, as your cost of living sets the stage for how much income you’ll need to generate.

Your spending behavior impacts your monthly expenses. For example, a huge mortgage payment or numerous trips overseas can strain your budget. Additionally, the state you live in impacts your standard of living.

Taxes also modify your retirement expenses, especially when you have multiple income streams. For instance, living in a state with minimal income tax benefits, such as California or Rhode Island, means state taxes are a financial burden, unlike a tax-friendly state like Nevada. Likewise, it’s paramount to consider how assets like real estate or cryptocurrency impact your tax situation. Furthermore, property and sales taxes vary by location and influence your monthly bills.

Make Sure to Include Health Care Costs

Health care expenses generally become more expensive as you age, so you’ll also want to include them in your retirement plan. For example, Fidelity estimates that a 65-year-old couple in good health will spend approximately $330,000 on health care during retirement. Retiring at 50 means you’ll also need to plan for healthcare coverage during the 15 years before you become eligible for Medicare. You can estimate this amount by designating 15% of your annual income to medical expenses. That said, chronic health conditions mean you’ll spend more.

Retiring young can also mean caring for children who haven’t left the nest yet. As a result, it’s essential to factor in dependent costs. Estimates vary, but the average annual cost of caring for a child is estimated at approximately $17,000. It’s important not to forget this expense when laying out your budget.

Pinpoint Income Streams

The next piece of your retirement plan is identifying your sources of income. Specifically, you’ll probably want to invest your $6 million in assets that provide a high enough return to pay for your expenses. Otherwise, you’ll end up withdrawing the principal to afford retirement, causing your savings to dwindle every month and eventually run out.

For instance, say your $6 million nest egg generates a 4% annualized return. So, your annual income is $240,000. If you’re invested in low-risk assets, you can count on that income to remain stable. Conversely, you can increase your returns through stocks, but will incur more risk and possibly lose money. It’s best to diversify your assets and split your money among numerous assets, as doing so generally mitigates risk and increases income.

Social Security is also part of the conversation about income, even for early retirees. Specifically, you can start receiving Social Security at age 62, but will maximize your benefit if you wait until 70. So, although you’ll wait at least 12 years before collecting this benefit, it can supplement your budget in later years.

Crunch the Numbers

Perhaps you and your spouse plan to retire at 50 with a 14-year-old child in the house. Your life expectancies are 90, so you plan for a 40-year retirement. In addition, you’ll retire in Nevada, so you can avoid state income taxes. Lastly, you’ll be living in a house you own, but haven’t paid off yet. Here are your annual expenses:

$30,000 for housing
$36,000 for healthcare
$9,000 for utilities and property taxes
$7,000 for food
$10,000 for entertainment, phone, and internet
$7,500 for auto upkeep and insurance
$17,000 for raising your child

So, your annual expenses are $116,600 total, or about $9,700 each month.

Next, let’s look at your assets and income streams. You have $2 million in a brokerage account, a $1.5 million annuity, $500,000 worth of real estate, $1 million in certificates of deposit (CDs), and $1 million spread across several savings accounts. Here’s a specific breakdown of your income:

Brokerage account return is 4.5% per year for a total of $90,000, or $7,500 a month. Your annuity will provide another $7,500 per month, but you won’t start receiving payments until age 59 ½, so that income won’t be available for the first 9 ½ years of retirement.
Real estate creates $5,000 of monthly rental income.
CD has a 4% return, giving you another $40,000 per year or $3,333 per month.
Savings accounts have a 3% return, generating $30,000 per year or $2,500 per month.

So, your total income (not counting the annuity) is $18,333 per month, or $219,996 per year. But before you count your cash, taxes take a chunk out of your income.

Filing jointly with your spouse puts you in the 24% federal income tax bracket. This rate applies to your rental income, CDs and savings accounts. $129,996 of your income is from these sources, for which, in 2024, you’d pay $18,816 in taxes.

Account for Capital Gains

Your brokerage account incurs long-term capital gains taxes of 15%. So your brokerage account income drops to $76,500 annually, or $6,375 a month. Remember, this is a simplified example because your brokerage account may produce short-term gains at some point and incur standard income taxes on part of your returns.

In addition, you’ll pay off your mortgage by age 54, and your child will move out the same year, decreasing your expenses by almost $50,000 per year. Your income will also jump by $7,500 more per month before taxes once you start receiving distributions from your annuity at age 59 ½. Not only will you be able to afford your annual expenses of $116,600 once you retire, but your budget will become even roomier before you hit 60.

Plan for Inflation

However, inflation annually raises your cost of living, even without supply chain issues or global conflicts – albeit at a lower rate of 3%. As a result, $116,600 of annual expenses will grow to $156,701 in 10 years. So, it’s best to reinvest the extra income your assets generate to store up for the years to come.

Fortunately, you’ll receive another income stream to help offset inflation when you reach 62: Social Security. In 2024, the average 62-year-old’s monthly check was about $2,710. Therefore, a working couple would collect $5,420. Remember, you can delay taking Social Security for a higher distribution. Specifically, you’ll boost your check by 8% for every year you wait.

How to Boost Your Retirement Income

While $6 million can provide over $200,000 per year when you retire at 50, financial challenges can still arise. For example, you or your spouse might develop a medical condition, or one of your investments could tank. You can prepare for rough waters with these tactics:

Delay Social Security Benefits

Again, delaying Social Security eventually increases your income by 8% per year, maxing out at a 32% boost at age 70. So, you can take it whenever you need to supplement your budget, but you won’t benefit by waiting after 70.

Boost Your Interest Rate

If your interest rates on your savings accounts and CDs are lackluster, you’ll have less income from those assets. Because inflation and economic dynamics have raised interest rates, you can shop around to find better returns. Specifically, banks offer rates upwards of 4% on high-yield savings accounts and CDs. Securing a better rate helps you increase your income without sinking money into risky stocks.

Understand Your Tax Ramifications

As seen in the example above, various assets incur different taxes. For instance, your federal income tax bracket of 22% will only increase with more regular income. So, you could transfer cash from your CDs into your brokerage count, which has a 15% capital gains tax rate due to your income level. Doing so will be especially helpful once your annuity kicks in and raises your income by several thousand dollars per month. In other words, knowing how you’re taxed will help you make optimal financial decisions.

How to Make Your Savings Go Further in Retirement

Aside from boosting your income, you can also get the most out of each dollar you make by doing the following:

Use a Budget

Budgeting is the best way to understand if you’re spending more than you make and how to cut back. Plus, the plethora of budgeting tools and apps has made budgeting easier than ever.

Lower Investment Costs

Be mindful of management fees that can eat into your investment income. Because all assets and funds aren’t equal, shopping around can lower your fees and optimize investment performance. It can pay to research and choose investments with low management costs, such as passively managed funds, to save on fees and maximize your returns.

Protect Your Health

Factoring in health care costs is essential when planning for retirement. Likewise, lowering those expenses can help your nest egg go the distance in retirement. You can do so by being proactive with your health. Your dietary and physical habits can keep you in good shape as you age. Plus, annual wellness visits can head off health complications.

Pay Off Debt

Debt can be deadly for an otherwise healthy budget if it gets out of control. For example, carrying balances month to month on your credit card can incur interest charges of 20% or more. This could be four or five times higher than your investment return, so paying it off is the best investment you can make. Instead of putting money in stocks or bonds, your best annual percentage yield (APY) lies in knocking down your debt. You can use the snowball method, paying off smaller balances first, or the avalanche method, prioritizing debts with the highest interest rates to save on interest.

Bottom Line

A $6 million nest egg can provide a healthy income stream for early retirees. Combining income from diverse assets, such as a brokerage account, CD ladders and real estate can help you generate annual distributions well above your budgetary needs. This is good news, since inflation will raise your cost of living as you age. Plus, you can combat financial challenges with strategies to raise your income and make your money last, such as changing your tax situation and finding lower asset management fees.

Tips for Retiring at 50 with $6 Million

Investing $6 million can be a challenge. Trying to decide between stocks, bonds, real estate investment trusts (REITs), and a host of other assets can leave you wondering how to make the most of your money. Fortunately, a financial advisor can help you create a solid retirement plan with wise investments. 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 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.
If you don’t have $6 million, don’t worry. The size of your nest egg won’t prevent you from investing like a millionaire. SmartAsset’s investment calculator can also show you how your money can grow over time.