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Investing & Retirement

Can You Retire on $1 Million?

7 Minute Read

By anyone’s standards, $1 million is a lot of money. In fact, if you had $1 million in dollar bills, it would literally weigh a ton and take you about 12 days, nonstop, to count it all!

For a long time, a $1 million nest egg was the measure of retirement planning success. It was considered enough to enjoy a dream retirement and leave an impressive legacy. But lately, the image of the $1 million nest egg has begun to tarnish.(1) Now it’s common to find articles like "How to Get By on $1 Million in Retirement," complete with advice about tapping your home equity or retiring overseas to make your savings last.

Is an actual ton of money really not enough to get you comfortably through your golden years?

$1 Million Almost Gets the Job Done

According to the Bureau of Labor and Statistics (BLS), people age 55–64 spend a little more than $56,000 annually per household on food, housing, clothing, transportation and other lifestyle expenses, including health care.(2) How much will these pre-retirees need to have saved in order to cover these costs without income from work?

Don’t worry. This isn’t math class. I’ll give you the answer! To cover $56,000 in annual expenses, you’d need almost $4,700 each month. If you want to retire ten years from now, my free Retire Inspired Quotient (R:IQ) tool calculates that you’ll need a nest egg of over $1,230,000—a little more than $1 million. And that number may change depending on your rate of return, withdraw rate, and inflation—details you can customize in the RI:Q.

So, the short answer is that $1 million is almost enough for the average person retiring today to pay their bills. Check out my new book Everyday Millionaires to read more about building wealth and retiring a millionaire.

It’s Possible to Retire With Less

If you’re facing retirement soon but your nest egg is coming up a little short, don’t give up. There are ways to reduce your expenses and make a smaller amount of savings work without giving up your home or moving overseas.

Housing, for example, is by far the largest expense both before and after retirement, so any savings in your housing budget will go a long way toward filling your savings gap. According to the Bureau of Labor Statistics, 56% of homeowners ages 55-64 still have a mortgage.(3) Their monthly mortgage payments average $989—a total of almost $12,000 per year.(4) If you still owe on your home, paying off your mortgage before you retire could dramatically reduce your annual spending.

If you reduce your expenses, your nest egg doesn’t have to be as big. But be careful of cutting it too close. Other things like travel, taxes, and time can affect how much you’ll actually need to make ends meet over 30 or more years of retirement.

How Much Do You Need to Retire?

You can calculate how much money you need for retirement based on the average expenses of those 55–64, but chances are, your number looks different than the average. You may plan to spend only $40,000 a year, or you may be used to an income of over $100,000 with no plans of cutting back in your golden years.

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How much money you need in retirement depends on your goals, your tax situation, and how much time you have until you stop working.

The great news is that it’s not hard to get a ballpark figure for how much you need to have saved based on your financial situation and your plans for retirement. 

"Remember, retirement isn’t an age; it’s a financial number." —Chris Hogan

Now let’s dig into some of the most important factors that can affect your retirement expenses.

How Often and Where Do You Want to Travel?

The BLS report on older Americans’ spending patterns includes a category for entertainment, but it’s a modest amount—almost $3,000 a year for the age group that spends the most.(5) If you’re looking forward to a lot of travel in retirement, $3,000 won’t get you far. Your options are to boost your retirement savings, reduce your spending in other categories, or keep a part-time job to fund your adventures.

How Will Taxes Affect Your Savings?

Income taxes have the potential to really trip you up, especially if all your retirement savings are in tax-deferred accounts like a 401(k) or IRA. The money you withdraw from those accounts in retirement is subject to income taxes, just like the income you earned from your job.

For example, based on today’s tax rates, if your annual household expenses total $56,000, you’ll need to withdraw nearly $77,000 a year from your savings in order to pay your taxes and have enough left over to cover those costs.

Because you’re withdrawing more, you’ll need to have more saved to avoid running out of money during retirement. In this case, if you’re retiring 10 years from now, you’d need almost $1.7 million in savings, according to the R:IQ tool.

Now, if you’re saving in a tax-advantaged account like a Roth IRA or a Roth 401(k), income taxes will have less of an impact since you won’t owe income taxes on any or most of the money you withdraw from those accounts.

Keep in mind that you may pay taxes on your Social Security benefits, depending your situation. That’s why it’s always a good idea to consult a tax pro to help make sure your tax bases are covered.

How Long Until You Retire?

Remember that these numbers are based on someone planning to retire soon. If retirement is decades away, the picture can change drastically. For example, to cover the same $56,000 in expenses 25 years from now, you’ll need to have saved almost $1.9 million, thanks to inflation. And that’s assuming you were saving in a Roth 401(k) or Roth IRA, which is tax-free in retirement.

Don’t have $2 million? Don’t worry. You have plenty of time to build up your savings, but you need to make it a priority—starting today! Remember, the earlier you start investing, the longer your money has to grow.

And if you feel like you’re a little late to the game, don’t panic. You still have time to make a difference in the size of your nest egg. Start by meeting with an investing pro who can help you come up with a plan to reach your retirement goals. Then it’s time to get to work!

Related: Imagine how much faster your nest egg could grow with an extra $700 or more. You could find money like that simply by having an independent insurance agent check your insurance rates.

Find an Investing Pro

Everyone has a different financial situation with unique plans for their retirement years. There’s no easy answer for how much you need to retire. The truth is that number looks different for everyone. That’s why you need an investing pro.

An investment advisor can help you come up with a customized plan, based on your current financial picture and your goals for the future. Trust me, I know all about investments, but even I meet regularly with an investing professional!

Need help finding a financial advisor? Our SmartVestor program can connect you with top-rated investing pros in your area who have earned our recommendation. They can help you make the most of your time and money now and keep your plan on track so you can feel secure about your retirement future.

Find your pro!

About Chris Hogan

Chris Hogan is a #1 national best-selling author, dynamic speaker and financial expert. For more than a decade, Hogan has served at Ramsey Solutions, spreading a message of hope to audiences across the country as a financial coach and Ramsey Personality. Hogan challenges and equips people to take control of their money and reach their financial goals, using The Chris Hogan Show, his national TV appearances, and live events across the nation. His second book, Everyday Millionaires: How Ordinary People Built Extraordinary Wealth—And How You Can Too is based on the largest study of net-worth millionaires ever conducted. You can follow Hogan on Twitter and Instagram at @ChrisHogan360 and online at or

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