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Is $3 million enough to retire at 65?

Whether $3 million is enough to retire at 65 depends on a variety of factors like your annual spending, expected returns, inflation rate, and more. Here is a closer look at how to determine if $3 million can sufficiently fund your retirement.

How Much Annual Income Can $3 Million Generate?

The 4% safe withdrawal rate is commonly used to estimate how much retirement income your savings can reliably generate each year. With $3 million, that equals $120,000 per year (3,000,000 x 0.04). However, this 4% rule was based on historical returns and a 30-year retirement timeline. Given today’s low bond yields and longer life expectancies, some experts recommend keeping withdrawals around 3-3.5% instead.

Withdrawal Rate Annual Income
4% $120,000
3.5% $105,000
3% $90,000

As you can see in the table above, at a 3.5-4% withdrawal rate, $3 million can generate between $90,000 to $120,000 in annual retirement income. The rate you choose depends on your risk tolerance and desired income level.

Will Your Annual Spending Align With the Income?

Now you need to consider whether your estimated annual spending in retirement will align with the income $3 million can produce. According to the Bureau of Labor Statistics, the average annual expenditure for households headed by adults 65+ is around $55,000. However, your spending needs are unique to your lifestyle and location.

To estimate your annual spending, tally your current living expenses and factor in any expected changes in retirement:

  • Will you still be making mortgage/rent payments?
  • Will travel and hobby costs go up or down?
  • Will you relocate to a lower cost-of-living area?
  • What about healthcare costs not covered by Medicare?

Aim to have at least 80-90% of your pre-retirement income to maintain your standard of living. If your estimated spending exceeds the income $3 million can generate, you may need to rethink your withdrawal rate, target retirement age, or additional savings goals.

How Will Inflation Impact Your Buying Power?

Inflation can significantly impact your buying power over a 30+ year retirement. Assuming a 2% annual inflation rate, your $90,000 of annual income from $3 million would equate to just over $50,000 in 30 years! Be sure to factor in inflation when deciding on a withdrawal rate and estimating future costs. You may need to gradually increase withdrawals each year to keep pace.

What Returns Are You Assuming On Your Savings?

The income $3 million can generate also depends heavily on what returns your retirement savings can achieve. The 4% rule assumes an asset allocation of 50% stocks and 50% bonds, with average annual returns around 7-8%. If you intend to be more conservative with heavier cash and bond holdings, your returns will likely be lower. In that case, you may need to consider a lower withdrawal rate of 3% or less.

On the other hand, being too aggressive with your asset allocation and suffering larger losses during market declines can rapidly deplete your savings and jeopardize your retirement plan. It is best to be realistic with your return assumptions and review your investment strategy annually in retirement.

How Long Will Your Retirement Be?

The length of your retirement factors hugely into whether $3 million will be enough. The 4% rule is based on a 30-year retirement. However, with rising longevity, there is a good chance your retirement will extend farther than that, especially if you retire at 65. Living five or more years longer than expected can seriously impact your savings’ sustainability.

According to the Social Security Administration, a healthy 65-year-old man today can expect to live on average until age 84, while a 65-year-old woman can expect to live to age 86.5. Review your health and family history to determine your likelihood of an above-average life expectancy.

Do You Have Other Retirement Income Sources?

One way to take pressure off your $3 million savings is having other consistent income streams in retirement:

  • Social Security benefits
  • Pension income
  • Rental property income
  • Part-time work
  • Annuities

These can supplement the annual income your savings provide to give you more flexibility and peace of mind. Even an extra $1,000 per month can make a difference over a 30+ year retirement.


At current life expectancies and returns, $3 million may provide sufficient retirement income if you maintain an average annual spending around $50,000-70,000, use a 3-4% safe withdrawal rate, and have some supplemental income sources. However, there are many unknowns over a 30+ year retirement. Having some extra savings or the ability to adjust spending down the road can help create more certainty. Working just a couple extra years can also significantly boost your nest egg’s sustainability.