Is $1,000,000 Enough For Retirement?

For years, the thought of $1,000,000 saved for our retirement has been considered the benchmark target to ensure dreamy golden years. While a substantial amount of money and certainly nothing to scoff at, it might not be enough for you to enjoy the kind of lifestyle you’re really hoping for.

Preparing For Retirement

First things first: the number you need for retirement is completely up to you and the lifestyle you wish to lead. On top of this, you are likely to be thinking about a legacy, so careful retirement planning must be taken into consideration when assessing a target figure. That said, making a plan of action and a benchmark to works towards is a sensible way to ensure you have enough saved up to live out the rest of your peaceful days!

Before we have a look at what kind of figure we should be aiming for, here are some important considerations to help you assess what’s right for you:

  • Current age and when you wish to retire — Try and be realistic about this! Yes, a lot of people want to retire “early”, but forget that you need to sustain yourself for all the years you’ll be living when you finish work. If you retire at 65, how many years are you expecting to live…? Remember, we are living longer than we used to and you may be spending 30 years or more in retirement! How will you fund this? 
  • Retirement goals This can cover a lot of areas. Where do you want to retire? What sort of lifestyle do you want to lead? Will you be travelling? Will you do some form of work, or not? You may not know the answers just yet, but having an idea of what you may want and how to facilitate that will help in your planning.
  • Sources of retirement income — How are you going to fund your retirement? This could cover many options: savings, investments, pensions, insurance, rent, inheritance etc. What plans have you got in place to cover these areas? Remember, savings and investments pay out greatest when started earlier.

Is $1,000,000 Enough?

To help us understand the figure better, we can look at something called the “Four Percent Rule“, which aims to last at least 30 years into your retirement.

Now, this is neither perfect nor suitable for everyone, but it can visualise how our money could work in retirement:

If you stick to the 4% rule, here’s how much you could withdraw annually from three different nest eggs:

  • $500,000—$20,000 a year
  • $1 million—$40,000 a year
  • $2 million—$80,000 a year

To figure out how much income you’ll need in retirement, take your estimated monthly expenses (be sure it’s realistic) and divide by 4%. So, for example, if you estimate you’ll need $50,000 a year to live comfortably, you’ll need $1.25 million ($50,000 ÷ 0.04) going into retirement [Investopedia]

This method provides an example of what you may need to facilitate a certain lifestyle in retirement, in terms of yearly income; it may offer a benchmark to aim for, although it is not an all-encompassing figure.

As you can see, we could generate $40,000 a year from $1,000,000 saved up, which may most certainly seem a favourable amount — but remember, that is dependant on the person and what they desire from retirement. 

Your dream retirement should be reflected in your target funding.

$1,000,000 may be adequate for some, but not for others — and some may not even need that much. 


So, once we have an idea of our target retirement figure, we need to make sure that we are adequately preparing to reach it. Realistically, if you’re in your 20s – 30s, I would argue your target figure would in fact be working toward the $2,000,000 mark. This is due largely due to anticipated inflation over the years and the subsequent value you will need to retire in the future.  

With more time to save, the easier growing your nest egg will be — the hardest part really is getting started, if you haven’t already. Having your emergency fund in place, focusing on your long-term savings is arguably your biggest savings priority; you may have a portion of this done for you automatically from state pensions, but it is definitely worth focusing on your own due to possible failures in these systems

How can you achieve this? You may think to simply stash an amount away in a traditional bank current or savings account, but the returns in these accounts are relatively low and largely do not beat inflation.

And that’s why we invest.

With your emergency fund safely tucked away in a liquid (easy to access) bank account, any excess can be utilised by investing and aiming to achieve both bank-beating and inflation-beating returns — otherwise, what’s the point?. 

There are many ways to go about this, but take a look at our simple retirement planning guide to get an overview of two strategies:

  • Regular Savings
  • Lump Sum Investments  

To implement these two styles, you are able to explore a plethora of investment products. Doing careful research yourself can help you make informed decisions, you may check out a Robo-advisor or perhaps seek the help of an adviser. 

Whatever you do, remember that your retirement figure should be about you — try to ensure whatever actions you take are with your best interests in mind, not that of anyone else.

Retirement planning is an integral — if not the dominant — part of a solid financial plan, and normally the main long-term savings goal. Be sure to create a well laid-out strategy towards the prosperity of your future and consider a professional planner to help you out along the way.

If you have any questions, are seeking advice, or would like to arrange a consultation, please email me at

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