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Is 1.5 million enough to retire?

Having $1.5 million saved for retirement is a great accomplishment. However, whether or not it’s enough to fully retire on depends on your unique situation.

How Much Income Can $1.5 Million Generate?

One rule of thumb is that you can safely withdraw 4% of your retirement savings each year without depleting your nest egg over a 30 year retirement. Based on this rule, $1.5 million would provide $60,000 per year in retirement income.

However, this 4% rule does not account for taxes, healthcare costs, and other expenses that can eat into your retirement income. It’s a good starting point, but your actual sustainable withdrawal rate may be lower.


If all of your retirement income is from tax deferred accounts like 401ks and traditional IRAs, you will owe income tax on your withdrawals each year. This can significantly reduce how much you actually have to live on. For example, if you are in the 22% tax bracket, $60,000 of pre-tax income would be reduced to around $46,800 after federal taxes.


Healthcare costs tend to rise significantly in retirement, with Fidelity estimating the average 65-year-old couple will need $295,000 saved just for medical expenses. Medicare premiums, copays, and deductibles add up. Unless you have generous retiree health benefits, budgeting $5,000-$10,000 per year for healthcare is prudent.

The table below shows potential healthcare costs in retirement:

Expense Annual Cost
Medicare Part B Premium $1,704
Medicare Supplement Plan $2,500
Prescription Drugs $2,000
Dental & Vision Insurance $1,500
Total $7,704

Long Term Care

Around 70% of retirees will need some form of long-term care. The average cost of a private room in a nursing home is over $100,000 per year. Long term care insurance can help offset these costs if purchased early. But paying for care out of pocket can quickly drain retirement savings.

How Much Do You Spend?

The amount of income $1.5 million in retirement savings can generate is only half the equation. The other half is how much you spend annually.

Tracking your spending for a few months before retiring can give you a realistic idea of expenses. Budget categories like housing, transportation, food, entertainment, travel, and healthcare add up quickly. Don’t underestimate costs in retirement.

As a rough estimate, plan on needing between $40,000-$60,000 per year to cover expenses, depending on your lifestyle and location. This spending amount, plus the withdrawals for taxes and healthcare mentioned earlier, give you your total annual budget.

Is Your House Paid Off?

Having your home paid off in full before retiring can make $1.5 million stretch much further. Not having to make monthly mortgage or rent payments frees up cash that would otherwise be needed from your retirement savings.

If you still owe money on your home, try to have it paid off by retirement if possible. This removes a major recurring expense from your budget.

Do You Have Other Sources of Income?

Retirement savings of $1.5 million may be plenty if you also have other consistent sources of income to draw from like:

  • Social Security benefits
  • Pension income
  • Rental property income
  • Royalties or copyrights
  • Inheritances

These can provide thousands in additional monthly income to cover retirement costs apart from your actual nest egg. Having a diversified income stream in retirement makes $1.5 million go further.

Adjusting Your Retirement Date

If $1.5 million won’t quite give you the income needed to retire fully, consider adjusting your retirement date. Even working part-time for a few years can significantly boost your savings and allow current funds more time for growth.

Phasing into retirement gradually while still earning income can help ease the transition as well.

Cutting Expenses

Take a hard look at expenses to find areas you can trim in retirement if needed to make savings last. Some potential options include:

  • Downsizing your home
  • Relocating to a lower cost of living area
  • Reducing travel and entertainment costs
  • Buying cheaper vehicles
  • Eliminating subscription services

If your bare essential retirement costs are low enough, $1.5 million may end up being sufficient.

Delaying Social Security

You can maximize your Social Security income by delaying when you claim benefits. Every year you wait past your full retirement age up until age 70 increases your benefit amount. This provides more guaranteed income that can take pressure off retirement savings.

Working With a Financial Advisor

Consulting with a financial advisor can provide more clarity on whether your savings and income sources are adequate for a comfortable retirement. An advisor can run projections on your specific situation accounting for all variables.

They can also help optimize your investments, tax strategy, and distribution plan. Getting professional assistance ensures you maximize $1.5 million in retirement.


There is no one-size-fits-all answer on whether $1.5 million is enough for retirement. It depends entirely on your specific financial situation and lifestyle choices. For some, $1.5 million allows complete retirement. For others, it may only cover partial expenses. Carefully assessing your income sources, spending, and goals will determine if this amount is adequate.

With some planning, adjustments, professional guidance, and creativity – $1.5 million can provide a financially secure retirement for many people. But you need to run the numbers and have the discipline to live within your means.