Is $4 Million Enough to Retire at 60?

If you have $4 million saved for retirement, you have significantly more than the average American household. But is $4 million enough to retire at 60? The answer ultimately depends on your spending, life expectancy and the income your assets will generate. For many households, a portfolio of that size can support a comfortable retirement, particularly with moderate spending and diversified assets. However, factors like healthcare costs, inflation and potential market volatility can influence how long the money will last.

Work with a financial advisor to determine whether you have enough saved to support the type of retirement you want.

A $4 million portfolio can produce varying levels of income, depending on the withdrawal strategy, asset allocation and market performance.

Using the 4% rule, a retiree might withdraw $160,000 per year, adjusted for inflation. This approach aims to preserve purchasing power over a 30-year retirement. This method assumes an even mix of stocks and bonds and aims to reduce the risk of running out of money too soon.

More conservative approaches, such as a 3% withdrawal rate, would yield $120,000 annually but may better accommodate market downturns or longer lifespans. Alternatively, retirees focused on income generation might invest in dividend-paying stocks, municipal bonds or annuities to produce cash flow without relying entirely on asset drawdowns.

A $4 million retirement portfolio can include a range of asset classes, each contributing differently to growth, income and risk management.

• Stocks: Equities can provide long-term growth and help protect against inflation. Many retirees invest in U.S. and international stocks through mutual funds or ETFs.
• Bonds: Bonds offer income and stability. Portfolios often include U.S. Treasuries, municipal bonds or corporate bonds to reduce volatility.
• Cash and cash equivalents: This asset class can include money market funds and high-yield savings accounts. These are used to cover short-term expenses and provide liquidity.
• Real estate: Investors can access real estate directly or through real estate investment trusts (REITs), offering income and diversification.
• Annuities: Annuities provide guaranteed income and may appeal to retirees looking for consistent cash flow.
• Alternative investments: Commodities, private equity and hedge funds fall into the category of alternative investments. They can offer diversification but often come with higher risk and limited liquidity.

In addition to a fixed withdrawal rate, some retirees use dynamic strategies that adjust spending based on portfolio performance. For example, a guardrail approach might start with a $160,000 annual withdrawal (4% of $4 million) but reduce spending if the portfolio falls below $3.5 million or increase it if it grows beyond $4.5 million.

A floor-and-upside strategy could allocate $2 million to an annuity generating $100,000 per year for core expenses, while investing the remaining $2 million for potential growth. A bucket strategy might keep $300,000 in cash for near-term needs, with $1.7 million in bonds and $2 million in equities for later years.

These strategies vary in predictability, tax treatment and growth potential, so the income derived from $4 million can look different, depending on how the portfolio is structured.

Spending in retirement typically shifts over time and hinges on personal choices, location and healthcare needs. A commonly cited benchmark is that retirees spend 70% to 80% of their pre-retirement income, but this varies widely. Some expenses, such as commuting and payroll taxes, may disappear, while others—like travel or medical bills—could increase.

A couple in a low-cost area might spend under $100,000 per year. By contrast, someone with a more expensive lifestyle could exceed $200,000 annually. Additional expenses like long-term care, housing upgrades or support for adult children can also create spikes in spending.

Planning around both fixed and variable expenses offers a clearer picture of how long a $4 million portfolio might last.

Retiring at 60 offers more years of potential freedom but also creates a longer time horizon for financial planning. Several risks can complicate whether $4 million will be enough to last through decades of retirement.

Living longer than expected can strain even a well-funded retirement plan. According to the Social Security Administration’s Life Expectancy Calculator, a 60-year-old man today has a life expectancy of about 83. A woman of the same age can expect to live to 86. However, these are averages—many people live well beyond them.

Planning for a retirement that lasts 30 years or more may be necessary, particularly for those in good health or with a family history of longevity. Living longer increases exposure to inflation, market swings and medical expenses. Delaying Social Security or using annuities can provide income later in life.

Healthcare is a major consideration for those retiring before Medicare eligibility begins at age 65. Until then, retirees may need to purchase private insurance, which can be expensive—especially for comprehensive coverage. Premiums, out-of-pocket costs and the possibility of unexpected medical issues can add up quickly. Even after enrolling in Medicare, supplemental plans and long-term care often requires ongoing budgeting for healthcare well into retirement.

Inflation gradually erodes purchasing power, which means today’s comfortable budget might fall short in 15 or 20 years. A $100,000 annual budget today could require over $180,000 in future dollars after two decades at a 3% average inflation rate.

Fixed-income investments may struggle to keep pace with inflation, which can put pressure on a portfolio’s long-term sustainability. Allocating a portion of assets to growth-oriented investments, like equities or real assets, can help hedge against this risk.

Market downturns, especially early in retirement, can have an outsized impact on portfolio longevity. Investors often call this sequence-of-returns risk. If major losses happen early on and withdrawals continue, the portfolio might not recover—even if markets later rebound.

Diversification, flexible withdrawal strategies and cash reserves can help reduce the impact of volatility. Some retirees also shift to lower-volatility investments or consider annuitizing part of their assets for predictable income.

According to the Federal Reserve’s 2022 Survey of Consumer Finances (SCF), the median retirement account balance among American households was $87,000, while the average balance was higher at $334,000. These figures indicate that half of the households had less than $87,000 saved.

Retirement savings vary significantly across age groups. For instance, households headed by individuals aged 35 to 44 had a median retirement savings of $45,000, whereas those in the 55 to 64 age bracket had a median of $185,000.

As you can see, a $4 million nest egg puts you in a select group of retirement savers. In fact, only 0.8% of households have $3 million saved for retirement, and just 0.2% hold $5 million or more, according to an Employee Benefits Research Institute analysis of data from the SCF.

A $4 million retirement portfolio opens up a wide range of possibilities, but how it holds up over time depends on more than just the starting balance. Income strategy, lifestyle choices, healthcare needs and investment performance all influence the outcome. Starting retirement at 60 extends the planning window, which means flexibility and regular adjustments can matter just as much as the initial figure.

For those with substantial savings, the focus often shifts from whether retirement is possible to how to structure it in a way that aligns with long-term goals and personal preferences. A financial advisor can help you build your portfolio if you want to have enough to retire at 60.

• Look for advisors with recognized certifications, such as Certified Financial Planner™ (CFP®) or chartered retirement planning counselor (CRPC). These designations indicate specialized training in retirement planning and require adherence to professional standards.
• Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

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