The sum of $1 million has often been tossed around as the ideal figure for a retirement nest egg. Of course, this is due in part to the fact that it’s a nice round number. In reality, many Americans will need more than $1 million to happily retire, while others could get by on $500,000 or even much less.
As a baseline, here’s a look at how long $1 million in retirement savings will last you after age 65 using a number of different variables. Once you see how the base model is formulated, you can play with the numbers to tailor them to your personal financial situation.
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Computing How Long Retirement Savings Will Last
The main variables when it comes to the duration of your nest egg are your lifestyle, your investment return and your longevity. As you only have real control over one of these variables, your lifestyle and spending habits, retirement projections are simply that — projections. However, by plugging in different numbers for your monthly retirement withdrawals and your annual investment return, simple mathematics can offer a range of how long your money will last.
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Average Cost of Living
According to the Bureau of Labor Statistics, the average American household spent $77,280 in 2023, the most recent year for which data is available. That amounts to $6,440 per month.
If you were to simply stick your $1 million under your mattress and withdraw $6,440 per month, your money would only last about 13 years, until age 78. However, this doesn’t take into account the effects of inflation. Assuming a 3% inflation rate, your money will only last 11.1 years, to about age 76 — a much more realistic calculation.
Of course, if you invest your money, it will last a lot longer. If you invest your $1 million with a 5% average annual return — including the effects of inflation — your nest egg will last 15.2 years, until age 80. A 7% average annual return would boost that to 18.4 years.
Here’s a look at how long $1 million will last using various assumptions for both inflation and your investment return, using the national average $6,440 monthly spending rate.
| Invested amount | Inflation rate | Investment return | Duration of funds |
| $1 million | 2% | 4% | 15.2 years |
| $1 million | 2% | 5% | 16.6 years |
| $1 million | 2% | 6% | 18.4 years |
| $1 million | 2% | 7% | 21.0 years |
| $1 million | 3% | 4% | 14.0 years |
| $1 million | 3% | 5% | 15.2 years |
| $1 million | 3% | 6% | 16.6 years |
| $1 million | 3% | 7% | 18.4 years |
| $1 million | 4% | 4% | 13.1 years |
| $1 million | 4% | 5% | 14.0 years |
| $1 million | 4% | 6% | 15.2 years |
| $1 million | 4% | 7% | 16.6 years |
Higher Cost of Living
Of course, if you spend more or less than the average American household, your money will last shorter or longer, respectively. Here’s a look at how long your money will last if you spend $9,000 per month instead.
| Invested amount | Inflation rate | Investment return | Duration of funds |
| $1 million | 2% | 4% | 10.4 years |
| $1 million | 2% | 5% | 11.0 years |
| $1 million | 2% | 6% | 11.8 years |
| $1 million | 2% | 7% | 12.6 years |
| $1 million | 3% | 4% | 9.8 years |
| $1 million | 3% | 5% | 10.4 years |
| $1 million | 3% | 6% | 11.0 years |
| $1 million | 3% | 7% | 11.8 years |
| $1 million | 4% | 4% | 9.4 years |
| $1 million | 4% | 5% | 9.8 years |
| $1 million | 4% | 6% | 10.4 years |
| $1 million | 4% | 7% | 11.0 years |
Lower Cost of Living
Lowering your expenses can dramatically increase the duration of your retirement funds. Here’s a look at how long $1 million will last if you only spend $5,000 per month.
| Invested amount | Inflation rate | Investment return | Duration of funds |
| $1 million | 2% | 4% | 20.4 years |
| $1 million | 2% | 5% | 23.3 years |
| $1 million | 2% | 6% | 27.7 years |
| $1 million | 2% | 7% | 30+ years |
| $1 million | 3% | 4% | 18.4 years |
| $1 million | 3% | 5% | 20.4 years |
| $1 million | 3% | 6% | 23.3 years |
| $1 million | 3% | 7% | 27.7 years |
| $1 million | 4% | 4% | 16.8 years |
| $1 million | 4% | 5% | 18.4 years |
| $1 million | 4% | 6% | 20.4 years |
| $1 million | 4% | 7% | 23.3 years |
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This article originally appeared on GOBankingRates.com: Here’s How Long $1 Million in Retirement Savings Will Last You After Age 65
