$1 million is a huge amount of money. Have you ever wondered if that's enough to retire on? The simple answer is, it depends on your financial situation and needs. So what does $1 million actually get you in retirement? Let's break it down.
Traditionally, it was advised that you use no more than 4% of your retirement nest egg annually. Recently, however, that recommendation has changed to 3.3% annually. It is also important to note that certain life factors such as not owning a home or having high medical costs. Note: financial experts use a formula to come up with this percentage. The formula also assumes that your retirement portfolio is balanced - focuses more on bonds and cash-type investments. The formula also does not account for any taxes, fees or additional benefits you receive.
So, based on the average situation and factoring in the assumptions above, how much will you be able to spend each month if you have a $1 million nest egg?
Based on 4%: $3,333/month, or $40,000/year.
Based on 3.3%: $2,750/month, or $33,000/year.
Note: I am not a financial expert or advisor. If you have questions about retirement, please speak with a financial professional.