Although 65 is a conventional retirement age, reaching this point with $2 million is quite a feat. This sum can generate investment and interest income to support you well in the decades to come. However, saving this amount takes effort. And it's crucial to allocate it properly among asset types.
The Bottom Line
With an average income, you can expect it to last 35 years or more. However, everyone's retirement expectations and needs are different. It's important to evaluate whether the money you have saved is enough to fund the lifestyle you want and for how long.
According to the Association of Superannuation Funds of Australia's Retirement Standard, to have a 'comfortable' retirement, a couple who own their own home will need an income of about $70,500. A single person will need an annual income of more than $50,000.
Experts say investors usually need about 80% of their pre-retirement income in retirement. So if they earned $100,000 per year pre-retirement, they'd need $80,000 per year in retirement. Investors who live well below their means will need less than 80% of their pre-retirement income when they leave the workforce.
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.
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):
Yes, $2 million should be enough to retire. Annuities provide an income option to pay a guaranteed monthly amount for two lives. Once the first spouse dies, the annuity will continue to pay the same or a reduced amount for the remaining surviving spouse's lifetime.
While there are a few questions you'll need to answer before you can know definitively, the quick answer is that you can certainly retire on $5 million at age 65. Though you may have to make some adjustments, depending on your lifestyle.
There are various rules of thumb that relate to savings, whether it's retirement or emergency savings, but a general consensus is to set aside between 10 percent and 20 percent of your income each month for savings.
Yes, it is possible to retire with $1 million at the age of 65. But whether that amount is enough for your own retirement will depend on factors that include your Social Security benefits, your investment strategy and your personal expenses.
What do we consider a “comfortable” retirement? A helpful cost of living benchmark prepared quarterly by the Association of Superannuation Funds of Australia (ASFA), shows an average single person needs approximately $595,000 in superannuation before retiring, while a couple requires around $690,000.
The basic idea is that if you retire with $500,000 in assets, you should be able to withdraw $20,000 per year for 30 years (or longer). However, this rule has been debunked in recent years, and the appropriate withdrawal rate is roughly 2.8%.
As a result, retiring at 50 with $2 million means initially living on $5,833 each month and then adjusting for inflation each year. Of course, you can withdraw a higher amount before age 62, but you might take away from your principal if your portfolio underperforms.
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.
Based on the 80% principle, you can expect to need about $96,000 in annual income after you retire, which is $8,000 per month.
The good news: As long as you plan carefully, $3 million should be a comfortable amount to retire on at 55. If you're ready to be matched with local advisors that can help you achieve your financial goals, get started now.
Start saving at an early age.
Compound interest does much of the work for you. If you wait until age 35 to start saving, you'll need to save over $10,000 per year to hit $1 million by 65, assuming the same investment returns. Next:Become a super saver.
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.
Living off interest of 2 million dollars is doable, but you'll need a reliable, high-earning investment vehicle. A fixed annuity can give you even more interest than a CD, at 3 percent or more, offering more confidence in how long will 2 million last in retirement.
If you want to retire with $2 million, you'll need to invest about 12% of a salary of $100,000 starting in your 20s. Waiting until you're older will require a larger portion of your pay. If you wait until your 30s, then that number is closer to 17% of your salary.
On a monthly basis, this means that the pre-tax interest income on $2 million would be $8,333. This works out to $1,923 of interest per week, or $274 of interest per day.