Can You Really Retire Comfortably With Less Than $1 Million?

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Johnny Greig /

The sum of $1 million has long been touted as the goal that investors should have for their retirement accounts. With costs going up every year — particularly in the last few years, when the inflation rate briefly topped 9% — many experts have suggested that number should be raised. But is a $1 million nest egg really required, or can you retire comfortably with less than $1 million?

To get some background color on that question, GOBankingRates conducted a survey of 1,056 adult Americans in mid-March 2023. Among the questions asked of respondents was the minimum amount they thought experts recommended that they save to be comfortable for retirement. Nearly 60% of respondents believed that experts would suggest they need less than $1 million to be comfortable in retirement.

This data seems to suggest that yes, you can make it through retirement with less than $1 million. But the reality is that every retiree’s personal financial situation is different, and there is no “right number” for every individual. The question is whether or not you personally can live comfortably with less than $1 million in retirement. Here are the answers to help you figure that out.

Yes, Depending on Where You Live

Costs across America vary greatly. Depending on where you live, a $1 million nest egg can either afford you a quite comfortable lifestyle or not nearly be enough. On just a state-to-state basis, the cost of living in America’s most affordable state, Mississippi, is only 85% of the national average. However, if you wish to live in the country’s most expensive state, Hawaii, you’ll be paying 84% above the national average. This means that if $1 million could theoretically be “the right number” for retirement in the average American state, you’d only need $850,000 in Mississippi but a whopping $1.84 million in Hawaii.

Are You Retirement Ready?

Of course, these numbers are just broad averages. Living in cities is typically more expensive than living in rural areas, and living in New York or San Francisco will be more costly than living in Omaha, for example. The point is that where you reside can play a large role in determining how far your nest egg might last.

Yes, If You Can Downsize

Downsizing is often the right move for retirees, who are likely empty nesters and may even just be single individuals. If you lived in a four-bedroom house for most of your life, perhaps while raising a family, you likely don’t need that type of square footage in retirement. Depending on your specific housing situation, downsizing can reduce costs like your mortgage or rent payments, your property taxes, your maintenance costs and the amount you pay for utilities. Since all of these things can add up to a significant amount of money every month, downsizing can help you live off less than $1 million in retirement.

Yes, If You Can Work Part Time or on a Side Gig

If you’re not sure you can trim your expenses much in retirement, another way to stretch your retirement savings is to work a side gig or pick up a part-time job. While no one wants to work in retirement, many retirees actually enjoy keeping their minds active working a few hours in a field they love. If this work can bring in a few hundred or thousand dollars every month, you can significantly extend the duration of your retirement savings. 

A simple example can clarify what a difference that extra income can make. Imagine that you have a nest egg of $500,000, keep that money invested at a 4% rate of return and live off $4,000 per month. Under those conditions, your retirement savings will last about 13.6 years. But if you can pull in just $800 extra per month — or about $200 per week — from outside work, your savings will instead last 21.2 years. That’s nearly eight additional years, an extension of more than 50%. 

Are You Retirement Ready?

Not Likely, If You Lead an Extravagant Lifestyle and Live In an Expensive City

If your vision of retirement is flying private jets to exotic destinations, living on a yacht or having a second home in Switzerland, you won’t likely be able to sustain yourself for very long in retirement if you have less than $1 million. Even living relatively simply in a high-cost area like Hawaii or New York City can make it difficult to retire with less than a seven-figure nest egg. 

The math proves this. If you need $10,000 a month to fund your lifestyle, even $800,000 — invested at a rate of 4% annually — will only last you about eight years. This isn’t likely long enough to fund your entire retirement. 

The Bottom Line

You can live off a retirement nest egg of less than $1 million, but how comfortable you will be depends on a number of factors. Many retirees simply live off Social Security, so it can certainly be done, but if you’re looking to be comfortable, you might have to make some changes in your lifestyle or where you live. You may also need to generate some additional income. As different people have their own definitions of what “comfortable” means, what works for you may not be what works for someone else. 

More From GOBankingRates

Are You Retirement Ready?

Methodology: GOBankingRates surveyed 1,056 Americans aged 18 and older from across the country on between March 17 and March 20, 2023, asking twelve different questions: (1) When you were growing up, which financial topics did your parents talk to you about? (Select all that apply); (2) At what age did you become comfortable with basic money skills (i.e., writing a check, balancing your accounts, budgeting)?; (3) At what age did you start saving and planning for retirement?; (4) How much cash do you think you should have on hand in case of a national emergency?; (5) Do you think a lack of financial understanding has impacted your ability to be financially prepared for the future?; (6) How much did a lack of financial literacy cost you in the last year due to things like not knowing the best way to save for retirement, not being comfortable with investing, not using a budget, etc.?; (7) Which major financial task is most confusing to you?; (8) What percentage do you think you are required to put down on a home when buying?; (9) Do you feel prepared to handle any possible cuts to Social Security benefits?; (10) How has inflation changed how you handle your finances? (Select all that apply); (11) What’s the minimum you think experts would recommend you have saved to be comfortable in retirement?; and (12) Which of the following do you find most confusing about Social Security?. GOBankingRates used PureSpectrum’s survey platform to conduct the poll.


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