$1.5 Million Enough To Retire Off? (Breakdown & Inflation)

After years and years of working nonstop, you think about retiring with at least $1.5 million in savings so it could bring ease to your life and lift the stresses of daily work life. But you’re often worried to think that can you retire $1.5 million comfortably?

Yes, $1.5 million can last you a good 25 years if you decide to retire at 60 and continue to spend wisely. If you go by the 4% rule, that’s $5000 a month, which is a pretty good amount to live in the United States comfortably.

What is the 4% rule in retirement?

The 4% rule is an annual withdrawal method where a retiree should withdraw only 4% of their total savings annually. For example, according to the 4% rule, if one has $1 million in their savings at the time of retiring, they can withdraw $40,000 in their first year. 

Now that I have addressed the elephant in the room, let’s discuss this in more detail and see how a person in the United States can retire with $1.5 million in savings.

Is $1.5 Million a Good Retirement Income? 

$1.5 million is a pretty good retirement income. Undoubtedly, most can even retire comfortably with a million dollars in their savings. If you put $1.5 million in a savings account with an annual return rate of 4%, you’d be getting at least $60,000 per year, which is great.

According to the Bureau of Labor Statistics, most people around the age of 65 have average expenses that amount to $50,000 annually.

However, these are just facts and figures; every person’s situation depends on their demographics. 

Whether or not you can have a comfortable life after retiring with $1.5 million in your savings wholly depends upon your lifestyle and the state’s costs of living where you reside. 

Such as $1.5 million could last you around 15-22 years in New York, while it can last more than 30 years in Texas. 

» Read more about this in my post: 13 Reasons to Start Saving: The Importance of Saving Money

Adopt a Smart Spending Behavior With $1.5 Million Retirement Income

One important decision a retiree needs to make is to adopt a smart spending behavior.

Some people have had 10 million dollars in their savings and still couldn’t last even 25 years with this whopping amount because of their crazy spending habits. 

Keep in mind to spend in a way that will support your retirement goal and give you a comfortable life.

Make a little list of your monthly spending and cut out the unnecessary expenses which can weigh down on your savings.

Have Healthcare Insurance Along With Savings

Healthcare is another factor that can weigh down on your savings. According to studies, an average retiring couple is expected to spend around $300,000 on health care after retirement. 

This expense increases with age, and one falls prey to diseases or accidents. However, one can easily dodge this expense with healthcare insurance. 

On the other hand, many people can also depend upon their pension, retirement super, or social security income, besides the $1.5 million in their savings. 

Is 1.5 Million Enough to Retire at 55?

Assuming one resides in the most affordable states of the USA with an average lifestyle, $1.5 million is enough to retire at 55. You can live a comfortable life with this money in savings.

To further confirm this, I calculated your annual withdrawal in a run-out calculator. According to the 4% rule, if you withdraw exactly 4% of the $1.5 million each year, the yearly amount would be $60,000 with $5000 monthly.

Assuming the tax rate is 22%, the yearly increase of 2% in withdrawals (because of inflation) and the saving return rate of 4%. 

The result stated, ‘Your money will last approximately 29 years with systematic withdrawals totaling $2,397,788.’

Retirement Savings$1,500,000
Rate of Retirement Withdrawals4%
Inflation Rate2%
Return Rate4%
Tax Rate22%
Ending balance after 29 years$41,944

Is $1.5 Million Enough to Retire at 60?

Yes, 1.5 million dollars are indeed more than enough to retire at 60. Most Americans can easily live out the rest of their life in a comfortable lifestyle with $1.5 million after retiring at 60. 

If we calculate the run out of $1.5 million with the 4% rule, the money will last you till you are 85 years of age or above. 

This means you can easily manage to live comfortably for 25 years after retiring at 60 with $1.5 million in savings.

» Read my blog post: Is $100,000 a Good Salary in America

Is $1.5 Million In Super Enough for Retiring?

Yes, $1.5 million in superannuation (super) is enough for retiring comfortably. Still, it also depends if you’re a single person or a couple and the kind of lifestyle you choose to pursue.

Assuming your super (a pension offered by a company’s employer to the working class) has reached its peak at $1.5 million at the time you retire.

Putting this sum into a super pension account will help you collect it slowly over the years, all while it’s generating returns over time.

Take it as if you are receiving your normal income, but instead of getting paid from your employer, you are getting paid from your super while it continues to generate more money in the account.

For your better understanding, I calculated how much income a $1.5 million super will generate in different scenarios. 

The following table is for a 60-year-old person with a super retirement amount of $1.5 million that was put into a super pension account.


Desired Age/Life Expectancy 
2% Interest Rate Annual Income3% Interest Rate Annual Income4% Interest Rate Annual Income
85$55,639$60,203$65,322
90$47,672$51,456$56,057
95$42,778$45,896$49,797

These calculations are according to the assumption that you have your own home, and personal assets of at most $25,000 or less. The assumed inflation costs are at a 2.5% rise per year in the cost of living and a 1.5% additional rise per year in living standards. 

This table shows that $1.5 million is more than enough to last a person more than 30 years after retiring at 60.

» Maybe this also could be of interest to you: How to Learn How to Save Money

Does $1.5 Million Annuity Help To Retire Comfortably?

Yes, it does. One of the most trusted options to never run out of money after retirement is to put your savings into an annuity account. An annuity is a lifetime pension that offers a guaranteed income for your desired number of years.

This way, a retiree would not have to worry about money after retiring with the increasing inflation because annuities come with the ability to increase regularly to keep up with inflation.  

According to the table below, one can retire easily at age 60 with $1.5 million, and the annuity will provide an income of $78,750 yearly.

The table below estimates how much income a $1.5 million annuity will generate immediate and year by year. 

AgeImmediately5 years10 years20 years
40$158,070
45$177,870
50$133,078$195,072
55$101,250$150,000$216,495
60$78,750$114,717$162,000
65$86,250$120,285$177,000
70$93,750$133,299$210,652
75$101,250$158,523

How Long $1.5 Million Will Last You In US States?

There are 50 states in the United States of America, in which many states’ cost of living is higher than the national average, so $1.5 million will last more than 12 years per se but not more than a solid 25 years after retirement.

On the other hand, if one chooses to reside in the northeastern states, one might live comfortably and stress-free for the rest of one’s life.

Let’s see how much $1.5 million would last in America’s top 5 most affordable and top 5 most expensive states.  

The table below shows the calculation of the average annual expenditures in each state for people 65 years of age or older, reduced by the average annual social security benefit and further divided by the 1,500,000 dollars to determine how long this amount will last.  

» You can also read my post: Is $100,000 a Good Salary in America — State By State Compare

Top 5 USA States that would have $1.5 million last the longest after retirement:

StatesCost-of-living indexAnnual expendituresAnnual expenditures  after Deducting annual Social Security incomeYears
Tennessee76.0$38,653.60$22,043.3268 years
Texas81.4$41,400.04$24,789.7660 years
Kansas82.1$41,756.06$25,145.7859 years
Oklahoma83.2$42,315.52$25,705.2458 years
Indianapolis83.5$42,468.10$25,857.8258 years

States like Tennessee and Texas can make $1.5 million in the last 45 years after a person’s retirement. 

If a person wants to retire and live their best life without the burdensome anxiety of financial security, these states are their little haven.

These states usually don’t have a state tax, and their expenses like grocery, healthcare, and utilities are also much lower in cost compared to other states. 

Top 5 USA states that would blow $1.5 million quickly after retirement

StatesCost-of-living indexAnnual expendituresAnnual expenditures after Deducting annual Social Security incomeYears
California269.3$136,965.98$120,355.7012 years
New York187.2$95,209.92$78,599.6419 years
Washington172.3$87,631.78$71,021.5021 years
Massachusetts162.4$82,596.64$65,986.3622 years
Washington DC152.1$77,358.06$60,747.7824 years

Much to no surprise that California remains on the top of the most expensive states in this list. 

$1.5 million would swoosh by in a matter of 12 years, meaning a person who retires at 60 with a life expectancy of 80 won’t be left with enough savings or any funds to live in these states.

California and New York by far have the highest cost of living because of their housing price and high rent.

» You can also read my post: How Much Money Should I Have Saved by 21?

FAQs

What is the Amount Needed to Retire Comfortably?

You should have at least $1 million in your savings to retire comfortably. A $1 million can allow you to spend about $40,000 to $50,000annually without running out for 20-25 years. To have $1 million by 60 in savings, you need to save 10% to 15% of your salary.

What if $1.5 Million Isn’t Enough to Retire?

If you deem $1.5 million insufficient for your lifestyle after retirement, you can create new income streams for passive income or count on investment returns from your savings account. You can also invest in bonds, stocks, or real estate. 

The Bottom Line

We now know that $1.5 million is more than enough to last more than 25 years after retiring. Irrespective of where you live and how old you are, you should start planning for your retirement early. Your future self would thank you for that. 

The sooner you prioritize saving money, the more you will end up with in your savings by the time you want to retire. 

About topworklife.com

Hi’ my name is Simon. I am the owner of Top Work Life.

Together with a my team, I write content about income generating ideas, entreprenurship and growth as a person

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