Do you think it's possible to retire on $1 million?
A cool $1 million has long been considered the gold standard of retirement savings. These days, it's only a fraction of what you will really need.
For instance, a 67-year-old baby boomer retiring now with $1 million in the bank will generate $40,000 a year to live on adjusted for inflation and assuming a sustainable withdrawal rate of 4 percent, said Mark Avallone, president of Potomac Wealth Advisors and author of "Countdown to Financial Freedom."
It's worse for a 42-year-old Gen Xer, whose $1 million at retirement will only generate an inflation-adjusted $19,000 a year when all is said and done. And a 32-year-old millennial planning to retire at 67 with $1 million would live below the poverty line.
That's what Avallone, a certified financial planner, calls "million-dollar poverty."
LOL! This is written like who consults with wrote it!
First of all, why are they assuming the millionaire today can't live in $40k? That's completely reasonable, especially if they live in a low cost-of-living city https://esimoney.com/where-you-live-has-a-big-impact-on-your-net-worth/ and/or have their house paid off https://esimoney.com/how-to-buy-a-house-and-pay-off-the-mortgage-in-less-than-10-years/.
Second, let's say the 42-year-old retired NOW with $1 million. He could take $40k out of that PLUS it's highly likely he will earn more money here and there. Very few young retirees never earn another penny in their lives once they retire. And if they have something like .
On the opposite end of the spectrum is a post that says you can -- and gives examples of just that, listing how to reach financial independence by age 35.
So which is it? Is $1 million enough to retire on or not?
The truth is, it depends on:
- How much you plan to spend in retirement -- If you need to spend $30k, it probably is enough. If you need to spend $100k, it probably isn't.
- How much you can earn off that $1 million -- If you can earn 10% income off it by , then you are probably ok. If you have to withdraw at 4%, maybe it's ok and maybe not.
- What you have -- Personally, I wouldn't leave work life without it. ;)
Those are my thoughts. What's your take on the situation?