Is $1 Million Really Enough to Retire?

How much money you will need to retire has many factors. Many people aspire to be 401(k) millionaires. It’s a great aspiration. Saving $1 million by the time you retire is a tangible and achievable financial goal, (we’re looking at you H.E.N.R.Y.s™ and future H.E.N.R.Y.s™) . And a million bucks is a lot, right? But is $1 million really enough to retire?


Sort of. It depends. But honestly, not really. No. Especially if you’re a H.E.N.R.Y.™ The lifestyle you are working towards just isn’t going to be sustainable if you only have $1M in the bank when you retire.


One rule of thumb is having 10x your income when you’re ready to retire. So say you’re making $100k/year, that means having $1 million. We’re back to that number again. And it may seem like a lot. But if you don’t expect your expenses to significantly decrease in retirement, that might be only 10-15 years of savings.


We want to start out by saying it would be completely ridiculous for us to assume you have your entire life (and retirement goals) figured out right now. You have so much other sh*t to take care of. We also realize that our generation is redefining many cultural norms, including retirement! You might prefer a few sabbaticals throughout your career rather than saving up to have a conventional retirement. We get it, retirement is way, WAY down the road. But we also want you to have a realistic idea of what you might want to set as a savings goal if retirement is something you see yourself wanting someday. So here’s what we suggest when trying to figure out your retirement target.



An important factor when planning for retirement is considering what your expenses are now. How much do you spend at your current stage of life? Do you expect your expenses to be higher or lower when you retire? A lot of that depends on what kind of retirement you are envisioning, and when you expect to retire.

It would be completely ridiculous for us to assume you have your entire life (and retirement goals) figured out right now.

Do you expect to own your home and only be paying upkeep? Maybe your expenses will be lower since rent and mortgage won’t be factors anymore. Your students loans will (hopefully) be paid off. (Insert laugh/cry here about the current state of student loans in this country.) Do you expect to travel more or less than you do now? Medicaid and Social Security may be factors, however, experts suggest that these funds may be depleted by as early as 2034. We’re not saying factor them out, but we almost never use Social Security when creating Stash Plans®. As far as we’re concerned, if you’re a smart, high-earning millennial, you should have a strong foundation without it and if it’s there, it’s icing on the cake!


If you plan to own a single home, live in a rural or suburban area, and live fairly modestly, $1M might be plenty! However, if you’re picturing being jetsetting retirees that eat out several nights a week and go to the theater or opera regularly, $1M might be aiming much too low.



Where and how you want to retire are huge factors. Urban areas are much more expensive than their suburban or rural counterparts. Picturing yourself living in a swanky retirement community surrounded by all the shuffleboard and Pina Coladas you can imagine? Well, turns out those places don’t come cheap. It can cost anywhere between $1,500 and $10,000 a month to spend your sunset years in an independent living community.


If you’re currently paying off a mortgage on a home you plan to stay in through your sunset years, that’s a very different financial picture. On the flip side, if you’re that H.E.N.R.Y.™ saving for a vacation home in Bali, and you plan to keep that home into your retirement, you’ll need to factor in upkeep costs on two homes into your expected retirement expenses. As well as travel between your homes.


Many retirees hope to live off dividend income from their investment portfolios, however, some experts say this strategy may be a thing of the past. How you withdraw money from your investment accounts during your retirement can get super complicated, and there are many strategies, a few of which are broken down by CNN money in their article Total return: Does your investment strategy in retirement need rethinking? However, without getting too into the weeds, it’s important for you to know that the dollar amount that you set as your retirement target isn’t as simple as setting a big number like $1M and hoping it’s enough.



Getting old can be scary. Everyone dies, that’s obvious enough. But many of us like to stay blissfully ignorant to the health concerns that crop up when we get old. Arthritis, heart conditions, Type 2 diabetes are just the tip of the iceberg. Someday all our boozy brunches are going to catch up with us. And rather than being caught off guard by medical expenses, it’s important that you consider that you or your partner will probably have a significant health event in your retirement. Medicaid and private insurance can definitely help, but it’s worth considering.


In contrast, some people end up living way longer than they expect! Great news right? Well, it can get tricky if your retirement money runs out and you still have a lot of life left to live. Do you go back to work? Do you ask your kids to help out? Which brings us to another factor: your kids.


Do you have kids or plan to have kids? Do you expect them to chip in at some point to help you out financially? Around 30% of H.E.N.R.Y.s™ have added caring for your parents to your Stash Plans®. This means that your parents haven’t planned enough to support themselves, and you’re expecting to help them out, to the tune of $5-10K/year for 20+ years.


Do you expect your kids to also help out eventually? Remember when we talked about how to have tough financial conversations with your parents about end of life care and estate planning? Well, someday you will need to have them with your kids. This is cash you may expect, but may not actually be able to count on due to your children’s desires and financial circumstances.



We recommend taking some time to really picture what you would like your retirement to be. We know you won’t be able to perfectly plan your retirement in your 20s or 30s. Instead, we’re just suggesting that you think about all the factors we’ve discussed above and really envision what your ideal retirement would look like. Get specific. Dream big, but stay realistic to what plans you currently have in terms of saving and spending. If you already have a Stash Plan® you know that in our first meeting we talk about when you can expect to hit your ‘Millionaire Status.’ Fun fact, the average H.E.N.R.Y.™ will be on track for between $4M and $9M by the time they hit retirement age if they get their financial sh*t together today.


It’s also important to stress that we’re not saying you can’t retire on $1M. Plenty of people have successful, comfortable, happy retirements with $1M and less. However, planning for retirement isn’t about hitting a certain number in the bank and in your investment accounts. It’s about considering how you want to retire, and making plans now to ensure that you are able to have the money to support that lifestyle. It’s about balancing aspiration with realism. And it’s about keeping that dream alive now so you stay motivated to contribute to your retirement account regularly.


SHOWHIDE Comments (2)

Leave a Reply

Your email address will not be published.

The F Word