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Is $6 Million Enough to Retire at 65?


Retiring at age 65 with $6 million is entirely possible, even for people with quite comfortable lifestyles. Conservative investment and withdrawal plans allow for ample retirement income for most people retiring in those circumstances. At age 65, retirees become eligible for Medicare and not long after can claim full Social Security retirement benefits. They can also withdraw penalty-free from tax-advantaged retirement savings accounts by age 59.5. The major challenge will be accumulating $6 million, which is far more than most people have saved for retirement. Wild cards that could affect this plan include inflation, investment returns and life expectancy. A financial advisor can help you draw up a retirement strategy that considers your needs and resources.

Strategies to Retire at 65 with $6 Million

Is $6 Million Enough to Retire at 65?

If you’re considering whether you can retire at age 65 with $6 million, the first question is asking how much you will spend in retirement. One simple way to estimate post-retirement needs is to multiply your pre-retirement income by 70%. Different methods for calculating retirement income needs use different percentages, but 70% is common.

By the fourth quarter of 2022, the average salary for a 65-year-old was $54,444, according to the Bureau of Labor Statistics. This suggests that if your income in retirement is at least $38,110, which is 70% of $54,444, you can enjoy at least an average standard of living. Many variables, including spousal earnings, can affect this.

The next question is whether you can count on that income. It’s very likely you can safely generate that much and more from $6 million. For instance, one approach to retirement planning assumes you can withdraw 4% of your principal amount each year, adjusted for inflation, for at least 30 years without exhausting your nest egg.  Employing this safe withdrawal rate method known as the 4% rule, $6 million will produce $240,000 the first year and, by adjusting for inflation, maintain that much purchasing power until you are aged at least 95.

The major challenge in this scenario will be accumulating $6 million by age 65. This is a lot more than most people have saved. The average balance of retirement accounts owned by people 65 and older in 2021 was $279,997, according to Vanguard. In order to increase this amount to $6 million will require significant or even profound changes to financial behavior, including earning more, saving more and investing more successfully.

Another strategy could involve reducing your retirement spending. You may be able to do this, for example, by relocating to a city with lower costs of living. Additional uncertainties that could affect your retirement plan positively or negatively include inflation, market cycles and how long you expect to live. However, assuming you have as much as $6 million saved, retiring at 65 likely is a viable plan.

Benefits of Retiring at 65 with $6 million

Is $6 Million Enough to Retire at 65?

Age 65 is somewhat past the average age of retirement, which is 62, according to a 2021 Gallup poll. Retiring a little later, especially with $6 million saved, offers many advantages. Here are some of them:

  • Huge financial cushion. Having $6 million in savings is far more than most people have, providing higher retirement income potential and less risk of running out of money.
  • Medicare eligibility. At 65, you can qualify for Medicare, which provides health insurance for less money than private-sector insurance.
  • Higher Social Security benefits. Retirees who delay claiming Social Security benefits will reach full retirement age only a few years after age 65, qualifying for higher benefits and further helping their post-retirement budgets. Those who claim immediately at 62 will receive a significantly reduced benefit.
  • No early withdrawal penalties. Beginning at age 59.5, you can withdraw from tax-advantaged retirement accounts such as 401(k) plans without incurring a 10% early withdrawal penalty.

The Bottom Line

It is possible to retire in comfort at 65 with $6 million, assuming even a relatively lavish lifestyle and conservative approach to spending down your retirement nest egg. Accumulating that much by age 65 will likely to be challenging. This is far more than most 65-year-olds have amassed, and reaching $6 million will call for significantly higher-than-average income, savings rate and investment performance. However, by retiring at 65, people can enjoy Social Security benefits, Medicare and penalty-free retirement account withdrawals, among other advantages.

Retirement Planning Tips

  • Consider talking to a financial advisor about your savings goals and sources of income 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.
  • States vary in the way they tax retiree income. Retirement account withdrawals, pension income and Social Security benefits may all be taxed, depending on where you plan to retire. A few states, however, have no taxes on retiree income. SmartAsset’s guide to the best states to retire for taxes can help you make the decision about where to spend your post-retirement years.

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