Can you retire with $4 million?
Yes, you can retire with $4 million. This amount is highly likely to successfully and effectively fund your retirement, even if you’re planning for a more lavish lifestyle than most retirees.
If you leave work at 61, the average retirement age as of the latest Gallup data, you’ll have more than enough to see you through to a life expectancy of 90 or even 100. Across 29 years, $4 million could equate to a generous $11,494 a month.
If you plan to retire early, you’ll have less to work with but still have plenty of room to spend as you wish while your considerable fortune grows. Interest alone will provide a significant income at this level of wealth. Plus, if you can purchase an annuity with a lifetime income rider using a portion of your $4 million, you’ll be guaranteed a regular income no matter what.
Calculate how far $4 million could take you in retirement
Reaching $4 million in retirement savings is a significant milestone, but how you invest, withdraw, and plan will determine how long it lasts.
Use the calculator below to model your retirement and see how long your savings could support your lifestyle based on your age, retirement age, contributions, and investment strategy.
How long will $4 million last in retirement?
Scenario 1:
- Monthly withdrawal: $13,334 (4% rule)
- Rate of return: 3%
- Estimated tax rate: 22%
- Years it lasts: 37 years
Scenario 2:
- Monthly withdrawal: $26,667
- Rate of return: 3%
- Estimated tax rate: 22%
- Years it lasts: 14 years
Note: Numbers are not adjusted for inflation.
$4 million is a nest egg many can only dream of, and it should last you a long time, especially if you’re somewhat careful about how you save and spend. With this much money to fund you as a retiree, you could even explore early retirement options from about age 30 and find them entirely possible.
As a starting point for answering this question in your specific situation, it’s recommended to calculate how much you’ll need each month as a retiree based on your planned lifestyle and various expenses. By doing this, you’ll soon see if $4 million is enough. Don’t forget to account for:
- Possible future healthcare costs, especially while below the minimum Medicare age
- Any additional retirement income not included in the $4 million figure, like Social Security
- Any dependents you’ll still be caring for and supporting as a retiree
- The cost of living and tax system in the place where you choose to retire
- How your millions will be saved and invested once you’re retired/whether they’ll continue to grow
- Your likely life expectancy and retirement age
Can you retire at 50 with 4 million dollars?
In short, yes, there is much potential for early retirement at 50 or even 40 if you have $4 million set aside for your retirement. As for whether it will be possible in your particular circumstances? It all comes down to how much you comfortably need as an income yearly and monthly.
| Monthly Distributions | Feasible to Retire at 50 | Years Savings Will Last | Description |
|---|---|---|---|
| $10000 | Yes | 64 | Plenty of time to cover expenses |
| $13,333 (4% rule) | Yes | 37 | Enough for most retirees with planning. |
| $15500 | Yes | 30 | Shorter horizon with a comfortable lifestyle. |
According to a 2023 NerdWallet survey, 25% of adults aspire to retire before the age of 50. While this may not be an option for many, it could be feasible for you with $4 million in your pocket.
Can you retire at 60 with 4 million dollars
If you want to retire at 60, $4 million should be more than enough money.
Let’s consider the following calculation: if you retire at 60 with $4 million and want this money to last until you reach the age of 80, you will receive an annual income of $200,000. This equates to a monthly income of $16,666,
This monthly income – which does not factor in income from other sources or how much you must set aside for taxes – should be able to provide you with a comfortable retirement lifestyle.
If you need the money to last even longer, until the age of 90, for example, you will still be left with a sizable chunk of money each year - $133,333.
Assuming a 3% return rate and an estimated tax rate of 22%, $4 million can comfortably sustain retirees beyond a life expectancy of 90 years.
What is the average retirement savings in the US?
The average amount that you’ll find in a US taxpayer’s retirement savings pot has been growing over time.
The Economic Policy Institute now puts the mean household figure at around $100,000, rising to almost $250,000 for savers between the ages of 56 and 61. As you may have expected, this is well under the $4 million you plan to retire with and is indicative of the excellent position you find yourself in.
However, it’s important not to assume this average is a place to aim for. Yes, you’re in a good position, but there is perhaps not as much of a gulf between your savings and the ideal retirement amount as you think.
The Federal Reserve’s Report on the Economic Well-Being of U.S. Households 2022 tells us that just 31% of non-retirees feel their retirement savings are “on track,” a notable confidence drop compared to 2017. Many would like to save more but are, for one reason or another, unable to. Also included in the report is the following data set:
| Age group | Percentage with any retirement savings | Percentage who feel their retirement savings are on track |
|---|---|---|
| 18–29 | 62% | 30% |
| 30–44 | 75% | 39% |
| 45–59 | 84% | 45% |
| Over 60s | 87% | 52% |
What are the retirement income taxes applicable to retirees with $4 million?
Taxation should be an essential consideration as you determine how much income you’ll have access to as a retiree.
There are seven federal income tax brackets as of 2023, ranging from a bottom rate of 10% to a top rate of 37%. You’ll likely fall into one of the higher brackets, making proper tax planning essential to avoid unexpected bills. Plus, you’ll need to remember:
- Your Roth accounts will be after tax, so distributions as a retiree will come to you tax-free.
- If you’ve made any investment gains over a year or more, you’ll be taxed on these as long-term capital gains rather than traditional income.
- At least 15% of your Social Security entitlement will be tax-free.
- State-level income tax will also be levied in most places in the US.
"Securing a comfortable retirement means proactively diversifying your savings through plans like 401(k) and IRAs, carefully timing your social security benefits and considering long-term care planning.
Regularly reviewing your investment strategy, especially as retirement nears, is vital to balance risk with income needs. Addressing these practical steps early can make a significant difference in achieving the retirement lifestyle you've envisioned."
How do I increase my retirement savings?
In all likelihood, $4 million will be more than enough for you as a retiree, and you’ll be able to pass a good amount on to your beneficiaries.
But, if you need to save even more, know that your existing lump sum can do much of the work for you if invested correctly.
The bottom line
There will always be much to consider as you plan your retirement and settle on your ideal savings amount.
With careful planning and intelligent investing of your existing wealth, you could leave the working world early and carry yourself quite happily through to 90 years.
For help with any retirement or estate planning aspect, don’t hesitate to connect with an experienced, qualified financial advisor via Unbiased.