Can You Retire Comfortably with $2 Million?

Whether or not $2 million in savings is enough to retire on depends on multiple factors like how much you withdraw each year, how long you live, and what your expenses are.
Updated April 25, 2023
Older woman looking at documents

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Wondering if you’ve saved enough money to retire, or maybe even to retire early? While there isn’t an exact amount of cash every American needs to retire comfortably, a figure as high as $2 million might seem like a large enough sum to see anyone through a comfortable retirement.

However, the amount of money you really need for retirement depends on how well you budget, what type of lifestyle you’ll pursue in retirement, and what other sources of income you plan to have.

As a result, while $2 million should be enough for most Americans to live on comfortably for up to 35 years, it might not be a large enough nest egg for others. Let’s walk through common factors that will impact how long a hypothetical $2 million could last for budget-conscious retirees.

Do you dream of retiring early? Take this quiz to see if it's possible.

Following the 4% rule retirement savings

The 4% rule is a common piece of financial advice for retirees. According to this guideline, you shouldn’t take more than 4% of your total savings out of your account during the first year of your retirement. The following year, you can withdraw another 4% with the value adjusted to account for inflation.

From there, you can plan on withdrawing the same amount each year as you did the year before with an additional amount that accounts for inflation. The 4% rule isn’t necessarily foolproof, but it’s a useful guideline to stick to if you want to ensure your $2 million will last a decade and beyond.

Supplementing with Social Security

JohnKwan/Adobe social security and fund cards on stock market papers with data

The amount of money you saved individually won’t be your only source of funding in retirement. You’ll also have a Social Security payment, though the exact amount you’ll receive each month depends on how early you choose to claim benefits.

For instance, claiming benefits at exactly 62 could mean you get a monthly check around $2,500. In contrast, if you wait to take benefits until age 70, your income will be nearly $5,000 a month based on Social Security alone. This may dramatically affect the amount of money you need to withdraw from your own savings to stay afloat.

Pro tip: If you think you'll need more cash in retirement, then start investigating ways to keep more money in your bank account today.

Continuing to invest

WavebreakmediaMicro/Adobe senior couple planning their investments with financial advisor

You don’t want to make any risky investments with your retirement funds, especially not after you stop working. However, keeping much of your savings invested in an IRA, mutual funds, or stocks and bonds may keep your retirement investments growing in value.

A trustworthy financial planner can help you allocate your investments to give you a better shot at making your $2 million in savings last longer.

Picking up a side gig

Prostock-studio/Adobe mature male freelancer using laptop

Depending on what career or skills you have, finding a way to make extra money through a part-time or freelance job after you retire may help cover your monthly expenses in tandem with a Social Security benefit. This may allow you to leave your $2 million retirement savings untouched even longer.

Of course, working after retirement can impact your tax obligations, so you’ll want to make sure the money you earn and taxes you’ll pay is ultimately worth doing the work.

Planning for health care costs

Andrey Popov/Adobe doctor measuring blood pressure of patient

Even with Medicare, health care is far from cheap for retirees. According to some estimates, a healthy 65-year-old retiree should anticipate paying a total of more than $400,000 for health care over the course of the rest of their lives. That’s nearly a quarter of your $2 million savings — and that figure doesn’t account for long-term care costs. That estimate applies only to adults who start retirement while relatively healthy.

Living an expensive retirement lifestyle

Alessandro Biascioli/Adobe senior travelling on a yacht holding hands

Have you been waiting until retirement to start traveling the world or checking expensive items off your bucket list? Make sure to consider your dream lifestyle as you calculate how much you need to save for the best possible retirement.

Someone whose picture of a perfect retirement involves a lot of travel or a second home in a warmer climate will probably need a lot more in savings than a retiree who enjoys the simple life.

Minimizing expenses

Mirko Vitali/Adobe happy senior friends having fun toasting red wine at dinner party

When you have a steady income, it can be easy (though not necessarily wise) to justify making non-essential purchases. You may treat yourself regularly to a high-priced meal, or buy lavish gifts at the holidays.

Once you’re retired and living on a fixed income, though, frivolous expenses can have a massive impact on how long your savings last. This makes it all the more important to stop throwing away money.

If you’re used to spending without thinking about it, you may be wasting money once you retire, which could mean you would burn through $2 million much too early in your retirement.

Having the right tax expectations

ARMMY PICCA/Adobe bookkeeper using calculator counting taxes fees

Unless you have a Roth IRA, you’ll be paying taxes on the money you withdraw from your investments to fund your retirement. And when you reach age 72, the IRS’s required minimum distribution (RMD) kicks in and you must begin withdrawing your retirement funds.

Understanding your tax obligations now can help you better understand how much money you need to save before leaving the workforce. You’ll need to account for taxes as you calculate post-retirement lifestyle costs and ensure your $2 million goes as far as you need it to.

Deciding if you want to downsize housing

Andy Dean/Adobe senior couple sitting at front house after retirement

Some retirees choose to sell their homes once they retire and move to a smaller home in a more affordable city. Depending on the state of the market, the income you get from selling a house could be enough to support your retirement for years without dipping into your retirement savings. And if you meet the requirements, you could exclude up to $500,000 in capital gains for a couple when you sell your house.

Calculating cost of living

zinkevych/Adobe happy senior couple choosing shirts while shopping at store

No matter where in the country you live, you should expect to deal with inflation on a yearly basis, although last year’s inflation was much steeper than the norm. Still, some areas of the country cost quite a bit more than others, and the city or state you retire in can have a huge impact on how far your savings stretch. After all, $2 million will go much further in Kansas City than in Seattle.

Bottom line

Nina Lawrenson/ happy senior couple sitting on couch reviewing retirement documents

Savings of $2 million could provide a comfortable retirement, or it could be far too little for you to maintain your current quality of life in your golden years.

If you’re serious about planning for your retirement and you want to eliminate some money stress, then you should consider consulting a financial advisor. A financial advisor can take a good look at your finances and offer individualized advice on exactly how much you need to retire comfortably, whether that’s higher or lower than $2 million.

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Author Details

Michelle Smith Michelle Smith has spent a decade writing for and about small businesses. She specializes in all things finance and has written for publications like G2 and SmallBizDaily. When she's not writing for work at her desk, you can usually find her writing for pleasure near large bodies of water.

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