If you're currently living a frugal lifestyle and don't have any plans to change that after you leave the workforce, $3 million is likely more than enough. But if you hope to keep your big house and nice cars and travel widely, $3 million might not be enough. You also need to consider taxes.
You can probably retire in financial comfort at age 45 if you have $3 million in savings. Although it's much younger than most people retire, that much money can likely generate adequate income for as long as you live.
Although being a millionaire sounds nice, it's not that impressive anymore thanks to inflation. In order to be a real millionaire, you will need to have a net worth of at least $3 million, not $1 million. A $1 million net worth provided a great lifestyle before 1990. Not so much today.
Based on the median costs of living in most parts of America, $5 million is more than enough for a very comfortable retirement. Based on average market returns, $5 million can support many households indefinitely.
Is $4 million enough to retire at 60? Yes, you can retire at 60 with four million dollars. At age 60, an annuity will provide a guaranteed level income of $244,000 annually starting immediately for the rest of the insured's lifetime.
If you're retiring at 55 instead of 66, you have 11 extra years of expenses and 11 fewer years of income that your savings will need to cover. The good news: As long as you plan carefully, $3 million should be a comfortable amount to retire on at 55.
Yes, you can retire at 60 with three million dollars. At age 60, an annuity will provide a guaranteed income of $183,000 annually, starting immediately for the rest of the insured's lifetime.
The Bottom Line
Retiring at 50 is a great goal to have. If you have $3 million saved, it's likely that you'll be able to retire comfortably. You'll need to factor in your living expenses, inflation and the expected rate of return on your investments.
Yes, for some people, $2 million should be more than enough to retire. For others, $2 million may not even scratch the surface. The answer depends on your personal situation and there are lot of challenges you'll face. As of 2023, it seems the number of obstacles to a successful retirement continues to grow.
How many $4 or $5 millionaires are there in the US? Somewhere around 4,473,836 households have $4 million or more in wealth, while around 3,592,054 have at least $5 million.
Australians wanting to be in the country's top 1% for wealth need to have an individual net worth of US$5.5 million ($8.3 million), Knight Frank's 2023 Wealth Report has found.
What percentage of the U.S. population has $3 million dollars? According to The Kickass Entrepreneur, there are about 5,671,000 households in the U.S. that have a net worth of $3 million or more.
It found the number of “high-net-worth individuals” – defined as those with a net wealth of more than $US1 million – was set to grow by 71.1 per cent between 2022 and 2027 in Australia: from 2,214,326 in 2022 to 3,789,629 in 2027.
The Bottom Line
If you have $3 million saved, it's likely that you'll be able to retire comfortably. You'll need to factor in your living expenses, inflation and the expected rate of return on your investments.
Millionaires next door, who have $1 million to $5 million in investable wealth. Mid-tier millionaires with $5 million to $30 million to invest. Ultra-HNWIs, those with more than $30 million8.
This obviously depends on what annual income you want to fund but if you want to be able to afford a comfortable retirement—which is an income of just over $48,000 a year for a single according to the ASFA Retirement Standard—then you need a balance of at least $500,000.
The amount needed for retirement will be different for everyone, but for most people $2 million will be more than adequate. Here's a simple example of how a person could utilise that $2 million dollar amount over a 30-year period (60 to 90 years-old):
A nest egg worth $4 million can provide many retirees with enough money for everyday expenses, as well as general freedom to do what they want. If you're preparing to retire with $4 million, there's a number of specific tasks you'll want to complete to ensure your continued success.
Is $2 Million Enough to Retire at 55? A $2 million nest egg can provide $80,000 of annual income when the principal gives a return of 4%. This estimate is on the conservative side, making $80,000 a solid benchmark for retirement income with this sum of money.
Now, 4% of $4 million is $160,000, so as long as you expect your retirement to last for about 30 years and that amount sounds like enough-or more than enough-for you, you're in a good place.
To some people, $3 million will sound like a lot. You probably think $3 million is enough to retire if you're among that crowd. But retiring with $3 million at 65 can last depending on your longevity, lifestyle and other factors.
While the cost of living varies from place to place, a nest egg this size would likely give more than enough money for decades of comfortable living. Even if you live another 50 years, $5 million in savings would allow you to live on $100,000 per year.
Retiring at 45 with $2 million takes diligent saving and detailed planning, but it is possible. However, you'll have between 20 and 25 years to save, so you must save nearly $3,000 each to hit your goal.
The Bottom Line
With $5 million you can plan on retiring early almost anywhere. While you should be more careful with your money in extremely high-cost areas, this size nest egg can generate more than $100,000 per year of income. That should be more than enough to live comfortably on starting at age 55.
A recent analysis determined that a $1 million retirement nest egg may only last about 20 years depending on what state you live in. Based on this, if you retire at age 65 and live until you turn 84, $1 million will probably be enough retirement savings for you.