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The sum of $1 million is often touted as the ideal amount for retirement. Of course, this is partly due to the fact that it is a nice round number. In fact, many Americans will need more than $1 million to retire happily, while others may have to live on $500,000 or less.
As a baseline, here’s how long $1 million in retirement savings will last you after age 65 using various variables. Once you see how the base model is laid out, you can play with the numbers to tailor them to your personal financial situation.
Calculating How Long Retirement Savings Will Last
The main variables when it comes to the length of your nest egg are your lifestyle, your investment returns, and your longevity. Since you only have real control over one of these variables, your lifestyle and spending habits, retirement projections are just that – projections. However, by adding up separate numbers for your monthly retirement withdrawals and your annual investment returns, simple math can tell how long your money will last.
average cost of living
According to the Bureau of Labor Statistics, the average American household spent $77,280 in 2023, the most recent year for which data is available. This amounts to $6,440 per month.
If you put your $1 million under your mattress and withdraw $6,440 per month, your money will only last you 13 years until age 78. However, it does not take into account the effects of inflation. Assuming a 3% inflation rate, your money will last only 11.1 years, about age 76 – a more realistic calculation.
Of course, if you invest your money, it will last for a very long time. If you invest your $1 million with a 5% average annual return – which includes the effects of inflation – your nest egg will last 15.2 years by age 80. A 7% average annual return would extend this to 18.4 years.
Using the national average $6,440 monthly spending rate, take a look at how long $1 million will last using various assumptions for both inflation and your investment returns.
| investment funds | inflation rate | investment return | Fund Period |
| $1 million | 2% | 4% | 15.2 years |
| $1 million | 2% | 5% | 16.6 years |
| $1 million | 2% | 6% | 18.4 years |
| $1 million | 2% | 7% | 21.0 years |
| $1 million | 3% | 4% | 14.0 years |
| $1 million | 3% | 5% | 15.2 years |
| $1 million | 3% | 6% | 16.6 years |
| $1 million | 3% | 7% | 18.4 years |
| $1 million | 4% | 4% | 13.1 years |
| $1 million | 4% | 5% | 14.0 years |
| $1 million | 4% | 6% | 15.2 years |
| $1 million | 4% | 7% | 16.6 years |
high cost of living
Of course, if you spend more or less than the average American family, your money will last less or longer, respectively. Here’s how long your money will last if you spend $9,000 a month.
| investment funds | inflation rate | investment return | Fund Period |
| $1 million | 2% | 4% | 10.4 years |
| $1 million | 2% | 5% | 11.0 years |
| $1 million | 2% | 6% | 11.8 years |
| $1 million | 2% | 7% | 12.6 years |
| $1 million | 3% | 4% | 9.8 years |
| $1 million | 3% | 5% | 10.4 years |
| $1 million | 3% | 6% | 11.0 years |
| $1 million | 3% | 7% | 11.8 years |
| $1 million | 4% | 4% | 9.4 years |
| $1 million | 4% | 5% | 9.8 years |
| $1 million | 4% | 6% | 10.4 years |
| $1 million | 4% | 7% | 11.0 years |
low cost of living
Reducing your expenses can dramatically extend the life of your retirement fund. Here’s how long $1 million will last you if you only spend $5,000 per month.
| investment funds | inflation rate | investment return | Fund Period |
| $1 million | 2% | 4% | 20.4 years |
| $1 million | 2% | 5% | 23.3 years |
| $1 million | 2% | 6% | 27.7 years |
| $1 million | 2% | 7% | 30+ years |
| $1 million | 3% | 4% | 18.4 years |
| $1 million | 3% | 5% | 20.4 years |
| $1 million | 3% | 6% | 23.3 years |
| $1 million | 3% | 7% | 27.7 years |
| $1 million | 4% | 4% | 16.8 years |
| $1 million | 4% | 5% | 18.4 years |
| $1 million | 4% | 6% | 20.4 years |
| $1 million | 4% | 7% | 23.3 years |