Did you know that if you had $1 million in dollar bills, it would literally weigh a ton and take you about 12 days to count it all? No matter how you slice it, that’s a lot of money!.
For a long time, a $1 million nest egg was the measure of retirement planning success. It was considered enough to enjoy a dream retirement and leave an impressive legacy behind.
But lately, the of the $1 million nest egg has started to fade. There are a lot of articles out there called “How to Get By on $1 Million in Retirement.” They tell you how to make your savings last by tapping into your home equity or retiring abroad.
Let’s find out if a real ton of money is still enough to get you through your golden years in comfort.
Have you ever dreamed about hitting that magical seven-figure mark in your bank account? I know I have! That $1 million milestone feels like the ultimate financial achievement – the point where all money worries supposedly vanish forever But can you really live off $1 million dollars in today’s economy?
To get straight to the point, let’s talk about what a million dollars can really do for you in 2025.
The Million-Dollar Reality Check
First things first: $1 million is still a LOT of money! If you stacked it all up in bills, it would weigh a ton and take 12 days to count them all. That’s pretty impressive!.
However times have changed. According to Northwestern Mutual’s 2025 Planning and Progress Study Americans now believe they need closer to $1.26 million for a comfortable retirement. That’s a significant jump from the old “$1 million dream” we’ve heard about for decades.
However, do not worry! It is possible to live off of $1 million in 2025 with careful planning and smart investment strategies. You need to know how to make your money work for you instead of just spending it.
Living Off Your Million: The Golden Goose Strategy
Think of your retirement savings like the goose that laid golden eggs. Your goal isn’t to slaughter the goose (spend your principal) but to live comfortably off the eggs (investment returns).
Here’s how the math breaks down
- Historically, the stock market returns about 10-12% annually over the long term
- If your $1 million is invested in good growth stock mutual funds:
- At 10% returns = $100,000 annual income
- At 7% returns (being more conservative) = $70,000 annual income
Compare this to the average American household income of around $79,000 per year, and you can see that $1 million invested properly can potentially generate a comfortable living.
But here’s the catch – you gotta keep that money invested and working for you!
Factors That Will Make or Break Your Million-Dollar Lifestyle
Whether your million will last depends on several key factors:
1. Geography Matters… A LOT
The place where you live has a huge impact on how far your money goes. The cost of housing, state taxes, and living in general are very different across the country.
For example, retiring in Manhattan versus retiring in a small town in the Midwest could mean the difference between scraping by and living like royalty on the same amount of money.
2. Inflation: The Silent Money-Eater
Remember when gas was $1.47 per gallon back in 2001? Now it’s around $3.47. That’s inflation for ya!
With an average inflation rate of about 3%, your $1 million today will only have the purchasing power of about $550,000 in 20 years. This means if you’re planning to retire in 20 years, you might actually need closer to $1.8 million to maintain the lifestyle that $1 million would buy you today.
3. Taxes Will Take a Bite
Even in retirement, Uncle Sam wants his cut! If all your money is in traditional 401(k)s or IRAs, every dollar you withdraw gets taxed as ordinary income.
Pro tip: Roth accounts are your friend! Money withdrawn from Roth IRAs and Roth 401(k)s in retirement is generally tax-free, which means your million goes much further.
4. Health Care Costs Can Be Brutal
Here’s a scary number – a couple retiring today might need up to $413,000 just for healthcare expenses during retirement. Yikes!
Strategies to manage this include:
- Opening a Health Savings Account (HSA) while you’re still working
- Applying for Medicare when eligible
- Getting long-term care insurance around age 60
5. Your Lifestyle Expectations
This is the biggie – how do you actually want to live?
If your retirement dreams include private jets and luxury cruises every month, a million dollars won’t cut it. But if you’re looking for a comfortable, middle-class lifestyle with occasional splurges, $1 million invested properly can absolutely get you there.
What Does a Millionaire’s Lifestyle Really Look Like?
Many folks have a skewed perception of what millionaires actually do with their money. According to The National Study of Millionaires, most millionaires:
- Live below their means
- Spend less than $200 monthly at restaurants
- Still use coupons and look for deals
- Shop with grocery lists to avoid impulse buys
In other words, most real millionaires don’t live like the Kardashians! They maintain disciplined spending habits that help their money last.
Interest vs. Returns: Making Your Million Work Harder
When figuring out how to live off a million dollars, you have two main approaches:
Option 1: Interest-Bearing Investments
These are generally safer but provide lower returns:
| Investment Type | Avg. Interest Rate (2025) | Value of $1M After 5 Years |
|---|---|---|
| Bonds | 4.66% | $1,255,751 |
| High-Yield Savings | 1% | $1,051,010 |
| Certificates of Deposit | 0.03-0.39% | $1,019,653 |
| Annuities | 3% | $1,075,380 |
Option 2: Growth Investments
These carry more risk but potentially much higher returns:
- Stock market (S&P 500) average annual return: 10%
- $1 million invested at 10% = $100,000 annual income potentially
- In strong years (like 2021’s 26.61% return), that same million could generate over $250,000!
The ideal approach for most people is a balanced portfolio that includes both interest-bearing assets for stability and growth investments for keeping pace with inflation.
The 4% Rule: A Safe Withdrawal Strategy?
One common guideline is the “4% rule” – withdrawing 4% of your portfolio in the first year of retirement, then adjusting that amount for inflation each year afterward.
For a $1 million portfolio, that means:
- Year 1: $40,000 withdrawal
- Subsequent years: Previous year’s withdrawal + inflation adjustment
This approach was designed to make your money last for a 30-year retirement. However, with people living longer and interest rates fluctuating, some financial advisors now recommend a more conservative 3-3.5% withdrawal rate.
How to Make Your Million Last Longer
If you’re worried about stretching your million through retirement, here are some practical strategies:
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Delay Social Security – For every year you delay claiming (up to age 70), your benefit increases by about 8%
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Consider a part-time job – Even earning $15,000 annually can dramatically extend the life of your portfolio
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Relocate to a lower cost area – Moving from a high-cost coastal city to a more affordable region can effectively increase your spending power
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Minimize housing costs – Downsizing or relocating to a lower-cost area can free up significant cash
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Use tax-efficient withdrawal strategies – Work with a tax pro to minimize your tax burden in retirement
Can You Build a Million Dollar Nest Egg?
If you’re not at the million-dollar mark yet, don’t worry! Here’s some encouraging math:
- A 20-year-old saving just $330 per month with a 7% annual return would reach $1.26 million by age 65
- A 40-year-old would need to save about $1,547 monthly to reach the same goal
The earlier you start, the easier it is to reach that million-dollar milestone thanks to the magic of compound interest.
The Bottom Line: Yes, You Can Live Off $1 Million (With Caveats)
So, can you live off $1 million dollars in 2025? The answer is YES – with proper planning, reasonable expectations, and smart investment strategies.
Your million-dollar nest egg can provide a comfortable middle-class lifestyle if you:
- Invest it properly for growth
- Live in an area with reasonable cost of living
- Maintain disciplined spending habits
- Plan for healthcare costs
- Consider tax-efficient withdrawal strategies
The key is seeing your million dollars as a wealth-generating asset rather than a pile of cash to spend. With this mindset, your million can absolutely support you through decades of retirement.
Ready to Build Your Million-Dollar Plan?
If you’re serious about reaching that seven-figure milestone or making your current savings last, consider working with a financial advisor who specializes in retirement planning. They can help you develop a personalized strategy based on your unique situation and goals.
Remember – with disciplined saving, smart investing, and intentional spending, living off a million dollars isn’t just possible – it can be downright enjoyable!
Is $1 Million Really Enough to Retire On?
Let’s be clear: you can retire with $1 million today if you plan carefully and have a good investment plan. This is true even if a blogger writing from their mom’s basement tries to tell you otherwise!
How? Let’s break it down.
Do you remember that old fable about the goose that laid the golden eggs? Think of all your retirement accounts as your goose, and the growth your investments produce each year inside those accounts (aka the money your money makes) as the golden eggs you plan to live off of in retirement.
The idea is this: You want to have enough money in your retirement account so that you can live off the growth of your investments each year (the golden eggs) without touching the base of your retirement savings (the goose).
Let’s imagine you have $1 million in your retirement accounts by the time you retire. Historically, the stock market has an average annual rate of return between 10–12%. 1 So if your $1 million is invested in good growth stock mutual funds, that means you could potentially live off of $100,000 to $120,000 each year without ever touching your $1 million goose.
But let’s be even more conservative. Even if your account produces average returns somewhere in the ballpark of 7% each year—that’s still $70,000 worth of income to work with. (Keep in mind that the average household income in America today is around $79,000 per year.2)
The million-dollar question now becomes: Can you live off somewhere between $70,000 and $120,000 each year in retirement? That’s a question only you can answer!.
Of course, keep in mind that 10–12% is an average. Some years your money will grow even more than that. Other years you might see smaller returns or even negative returns. If you’re not careful and you stop paying attention to how your investments are performing, you could burn through your nest egg faster than you think and end up relying on Social Security (Social Insecurity is more like it).
That’s why you need to keep working with a financial advisor in retirement—someone who can help you manage your investments and make sure you don’t accidentally shoot your goose!.
Cost of Living
Whether you’re shopping for a gallon of milk from the grocery store or looking for the latest tech gadget, one thing is true: The cost of goods goes up over time. That’s just a fact of life!.
Look at the price of gas. At the beginning of 2001, you could have filled up your tank for around $1.47 per gallon. Fast-forward to summer 2024 and the average price for a gallon of gas ballooned to $3.47!3 Thanks a lot, inflation . . .
Yep, the inflation rate has been a lot higher than normal recently, but the average rate is around 3%. Assuming things get back to normal sometime soon, $1 million today will have the same purchasing power as $1.8 million two decades from now.4 That means if you plan to retire in 20 years, you might need an extra $800,000 in your nest egg to live the kind of lifestyle $1 million would buy you in retirement now.
That’s why you should invest 15% of your gross income into good growth stock mutual funds. Work with an investment professional who can help you find funds that have a long track record of solid returns, which will help your money grow faster than inflation!.
How $1,000,000 Can Be Enough For Retirement
FAQ
Can you live off interest of 1 million dollars?
Yes, it’s possible to live off the interest of $1 million, but a comfortable lifestyle depends on your spending, investment returns, location, and expenses like healthcare, with the 4% rule suggesting a $40,000 annual withdrawal as a guideline.
Can you survive off of 1 million dollars?
Many retirees who follow the 4% rule. With a $1 million nest egg, They withdraw 4% the first year, or $40,000, and they live on this amount. In the second year, they take out the same 4%, plus the rate of inflation for that year. If inflation were 2%, the second year’s withdrawal would be 102% of $40,000, or $40,800.
Is $1,000,000 enough to live off?
Depending on your retirement goals, a £1 million pension pot may be enough to sustain a comfortable lifestyle for an individual, but only with careful planning. Maximising your retirement savings can provide long term financial security against inflation, market fluctuations, and unexpected expenses.
Are you rich if you have 1 million dollars?
Having a net worth of $1 million is a significant financial achievement and can make you wealthy in the eyes of many, but it is not a universal definition of “rich,” as it depends on individual circumstances like lifestyle, location, age, and whether the money is liquid.
Can you live off the interest of 1 million dollars?
You can live off the interest of 1 million dollars. However, the amount of interest income you generate and, thus, the lifestyle you can lead will significantly vary depending on how you choose to invest your capital.
Can you live off 1 million dollars?
The point is, it’s definitely possible to live off of 1 million dollars (even if you retire early). Tons of people work all their lives to save up 1 million dollars. And then they have absolutely no clue if they can live off 1 million dollars or how to do it!.
Can you retire on 1 million?
Can You Retire on $1 Million? Yes, it’s possible to retire on $1 million today. You might even be able to live off the money from a $1 million nest egg if you plan carefully and have a good investment plan.
How can you live off 1 million dollars if you retire?
How can you live off 1 million dollars if you retire at 55 years old? If you earn 6% on your money, you can withdraw $62,200 a year and still have $26k left when you turn 100. Again though, keep in mind that at the 40 year mark, your purchasing power will be roughly 1/4th the amount of today (thanks to inflation).
Can you live off a portfolio if you have $1 million?
Once you have $1 million in assets, you can look seriously at living entirely off the returns of a portfolio. After all, the S&P 500 alone averages 10% returns per year. Setting aside taxes and down-year investment portfolio management, a ….
Can you live off a $1 million nest egg?
In fact, with careful planning and a solid investment strategy, you could possibly live off the returns from a $1 million nest egg. When figuring out how much you’ll need for retirement, be sure to factor in cost of living and inflation, withdrawal taxes, health care expenses, and lifestyle preferences.