Is $1 Million Enough? An Expert Take on How Far It Goes in Retirement

dmbaker / iStock.com

Commitment to Our Readers

GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.

20 Years
Helping You Live Richer

Reviewed
by Experts

Trusted by
Millions of Readers

A $1 million net worth doesn’t have the same weight it used to. Decades ago, it meant you’d “made it.” Now it barely buys bragging rights in some ZIP codes. The reality is, $1 million may sound and feel like a lot of money for retirement, but these funds may only last one or two decades these days because of housing costs and skyrocketing healthcare expenses.

Despite this, you shouldn’t panic. Instead, you can become proactive about your retirement. Even though $1 million doesn’t go as far as it used to, there are ways you can stretch your dollars.

First Take

• Where you retire determines whether $1 million may last for one decade or two decades. 
• In California, having $1 million for retirement doesn’t go very far. The funds may only last for 10 to 12 years.
• People are living longer, so they need enough funds to last 30 years of retirement. In almost all cases, $1 million will not be enough.
• Healthcare costs are one of the biggest expenses in retirement. You should expect almost a third of your funds to go to healthcare. 
• You need to understand your own personalized spending plan to determine how far $1 million will last in your retirement. 

How the Meaning of $1 Million Has Changed 

Thirty years ago, when the book The Millionaire Next Door was published, many saw $1 million as a badge of financial security. For a majority of people, $1 million meant a comfortable retirement. 

For example, in 1996, following the 4% withdrawal rule meant you could withdraw $40,000 a year from a $1 million portfolio. At the time:

• The median household income was approximately $35,492, according to the U.S. Census Bureau.
• Average household expenditures were in the mid-to-low $30,000 range, based on the Bureau of Labor and Statistics data.
• Pensions were common, helping supplement retirement income.
• Housing costs were lower than they are today.
• Healthcare expenses were generally more manageable.  

What Changed — Economically and Structurally

Today, withdrawing $40,000 won’t cover annual living expenses. It falls short of the average annual cost of living, which is a little over $60,000.

Also, healthcare costs in the U.S. have risen considerably.

• For a 65-year-old, the average healthcare cost is $172,500 in retirement.
• For a couple, healthcare costs increase to $345,000, which is almost a third of your $1 million nest egg.

Pensions are also not the norm in 2026. A retirement fund of $1 million, now, has to cover it all – housing, food, healthcare, travel and entertainment. Thirty years ago, retirees had the benefit of using their $1 million retirement to supplement their pension benefit. 

Is $1 Million Still Enough? An Expert’s Take

Whether $1 million is enough today depends on factors that didn’t matter as much decades ago.

Why $1 Million Looks Dramatically Different by State 

You cannot rely on $1 million to retire in every state. According to the latest GOBankingRates study, $1 million will last 19 years in both Oklahoma and Mississippi. In Alabama, $1 million will last 18.5 years. In those states, annual expenditures are a little over $50,000 since housing costs are a little lower.  

However, in states like New York, California and Massachusetts, you can expect $1 million to last roughly 10 to 12 years. In those states, annual expenditures range from $78,000 to $93,000. 

Retirement can run close to 20 to 30 years, given that people are living longer, so even in the states where $1 million can cover several years, the number still falls short. 

Fixed Costs That Retirees Can’t Easily Escape

Retirees can control spending that revolves around dining out, entertainment and travel, but certain fixed costs cannot typically be lowered.

The most recent statistic from the Federal Reserve Bank of St. Louis shows that on average, retirees spend $61,432 annually, or about $5,120 per month. 

Most of these costs are attributed to housing, transportation and healthcare.

• Housing averages $22,193 a year — and unless a retiree has the ability or means to downsize, that expense is often locked in.
• Healthcare averages $7,799 per person, which accounts for 12% to 13% of your expenses during your retirement years. 

If you were to use the common withdrawal rule of 4% with a $1 million nest egg, you could withdraw $40,000 annually. However, you’d have to come up with an additional $21,432 per year. This likely means you’d have to dip into savings or have another form of income.

Bottom Line

It’s clear that $1 million may have meant financial security in the past, but given today’s metrics, this “golden” number falls short. It may be “enough” to get basic needs met, but it won’t mean a comfortable retirement.  

Why Longevity Risk Matters More Than Lifestyle Inflation

Recent data shows that the U.S. population is older than in previous decades. A 2025 study by Allianz Life found that 64% of retirees are more worried about outliving their savings than dying. As life expectancy rises, more and more Americans are facing longer retirements.

Folks are living past 70 into their eighties and in some cases into their nineties. If you’re retiring at age 65 and you live until 95, you’re expecting $1 million to last 30 years. Given average costs, it’s unrealistic to think $1 million can keep up with these longer lifespans.

How Long $1 Million Actually Lasts in Retirement

Geography plays a major role in determining how long $1 million lasts in retirement. GOBankingRates analyzed all 50 states to estimate how far that amount would reach.

Extreme Differences Across States

• In states like Kansas, Missouri and Arkansas, $1 million can stretch for close to two decades of retirement. The dollars last longer primarily because housing costs are roughly $10,000 annually in each state.
• In contrast, $1 million in California, New York and Massachusetts lasts less time — only about 10 to 12 years.

These are not insignificant gaps. You could have two very different financial trajectories in retirement based on where you live.  

What Does That Difference Actually Mean for Someone’s Life?

In a state that has a lower cost of living, your retirement funds may last until your mid-eighties. If you’re in a higher cost of living state, however, those funds may be depleted by your mid-seventies. This may mean you’ll have to cut into your savings or rely more heavily on Social Security benefits.

When retirement funds last longer, you have greater flexibility in your choices — including healthcare, essential expenses, travel and entertainment.

If your savings horizon is shorter, you may need to move to a more affordable area, work longer or reduce discretionary expenses.

What a Financial Expert Says About the $1 Million Benchmark

One of the biggest misconceptions about a $1 million retirement fund is that people see it as a lump sum they’ll receive all at once. In reality, it functions more like an income stream — and one that will likely be taxed.

Keep In Mind

Your 401(k) or individual retirement account (IRA) may have large amounts of money, but not all of it is yours to spend. Depending on your tax bracket, a portion will go to taxes. For example, in the 22% tax bracket, a $1 million could be reduced to $780,000.

While entering retirement with a million dollars is an achievement, it should be seen as a starting point rather than a finish line. Instead of saying, “I’m done saving for retirement,” it’s wiser to look at your spending habits and build a retirement plan around your expected expenses. 

Don’t default to a number that has no real meaning to how you spend or save. It may feel comfortable to say you have $1 million in retirement funds, but it doesn’t guarantee an easy retirement — especially if you’re living in a high-cost location or expect significant expenses for healthcare, housing and transportation. 

Final Take: How Can You Be Proactive?

Where you are in your retirement journey will impact how you move forward, no matter your magic retirement number.

Near-Retirees

• If you’re 55 or older, make sure you pay off any large debt. Eliminating your mortgage can make $1 million feel far more manageable and stretch your savings further.
• Practice budgeting with the 4% rule. Review your expenses and determine how far $5,000 will realistically go in a month. 
• Understand when to claim Social Security benefits. If you delay benefits beyond your full retirement age (FRA), your monthly payment could increase by roughly 24%. 
• If housing is unaffordable given your retirement income, consider downsizing. 
• Plan for healthcare costs as they can significantly impact your saved funds.  

Mid-Career Workers

• Don’t worry about the $1 million benchmark. Start focusing on having 10 to 12 times your salary in retirement. This number is likely closer to what you’ll need.  
• Be mindful of debt. Pay off outstanding credit card debt and student loans. You don’t want debt to linger when it is finally time for retirement. 
• Don’t buy a house that’s more than 28% of your income. It’s tempting to overextend yourself in your working years, but buying a house you can’t completely afford on your salary will become even more of a liability in retirement. 

Younger Workers

• Focus on all the “extras” you can get through employment. Make sure you max out your 401(k) and take advantage of employer matches. Also, consider contributing to a health savings account (HSA). 
• Diversify your investments. You’re in the age range where you can focus on growth. Make sure your portfolios are diverse with stocks, exchange-traded funds (ETFs), precious metals and bonds. 
• Open up a high-yield savings account and automate withdrawals from your paycheck to build a solid base.

Share This Article: