How Long Will $2 Million Last in Retirement?

How long $2 million will last in retirement depends largely on your expenses, investment returns, lifestyle and how long you expect retirement to last. With careful planning, moderate withdrawals and continued portfolio growth, $2 million could support several decades of retirement. However, higher spending levels, early retirement or limited investment returns could shorten that timeline and require additional income sources.

Evaluating your expected expenses and income can help determine whether $2 million is sufficient, and a financial advisor can help you build a strategy tailored to your needs.

How Much Will You Withdraw Each Year?

Annual withdrawals play a central role in how long $2 million will last. Your expenses and spending habits likely dictate how much you withdraw each year. from your savings each year in retirement. While your spending needs may be different, let’s consider how much the typical retiree may need.

The median household income in the United States was just over $80,600, according to the most recent U.S. Census Bureau data. Many experts suggest replacing 70% to 90% of pre-retirement income using savings, Social Security and other income sources.

Using an 80% replacement rate, the median household would need $64,480 to maintain their standard of living in retirement.

If you withdrew $64,480 from a $2 million nest egg in your first year of retirement—and adjusted subsequent withdrawals for inflation—your savings could last approximately 24 years. This assumes your money isn’t generating any interest. Even a modest growth rate could extend the life of your portfolio considerably.

What Is Your Annual Return?

Investors manage their retirement accounts differently over time. In your working life, your retirement account will often hold a significant measure of equity funds and even, perhaps, some individual stocks. As you near and enter retirement most people shift this balance away from a higher risk/higher reward assets and into safer investments.

Either way, your portfolio will still generate some money over time. The question of how much, though, depends on how you invest. If you put your entire portfolio into the S&P 500 you can expect average growth of 10% per year over time, but with bigger dips in the off years. If you put your entire portfolio into bonds you can expect a significantly lower rate of return.

A $2 million retirement account invested entirely in an S&P 500 index fund that averages 10% per year would return an average of $200,000 per year. Most households could live on that without dipping into the principal. Still, some years would bring significant losses. So you would need to feel comfortable sometimes coasting on past withdrawals to let that account regain its value after losses.

If you invested entirely in bonds, your account would generate an additional $32,000 per year. This probably isn’t enough to live on, but depending on your lifestyle and Social Security benefits it can probably help stretch your retirement savings considerably.

What Is Your Lifestyle?

How long your retirement account will last depends on how much you take out of it and that depends significantly on how and where you live.

For example, take someone who needs nothing more than the $64,480 from the example above. Say they collect the average Social Security benefit of $23,770 per year and have all of their money invested in bonds, earning an average annual yield of 4%. ¹

This setup could generate around $80,000 in perpetual income without drawing from the portfolio. At that rate, a $2 million retirement fund would last, for all intents and purposes, indefinitely. Those numbers change for someone who needs more money and for someone who makes more or less from Social Security.

This is a key question for planning out a retirement then. Where do you want to live? What does it cost, and how might that change over time? How do you want to live? What kind of lifestyle do you want to enjoy and how will those costs change over time?

Calculate your retirement needs based on what kind of income you’ll need to meet those goals because how long a retirement account lasts depends on what you take out of it just as much as what you put in.

Factoring in Social Security

How much you collect from Social Security matters.

In general, your personal benefits from Social Security depend on how much you earned during your working life and when you start collecting it. The program pays benefits based on how much you paid in Social Security taxes, so wealthier households receive more and poorer households receive less. It also pays more based on the age you begin collecting benefits.

You receive full benefits if you begin collecting Social Security at full retirement age, currently set at 67. You get fewer benefits if you collect it early, up to a minimum payment at age 62. You receive the most benefits if you wait until the maximum retirement age, currently set at age 70.

Regardless, understand how much you will receive in Social Security. It will make a huge difference in how long your retirement savings will stretch.

How Long $2 Million Will Last at Different Withdrawal Rates

One of the most reliable ways to estimate how long $2 million will last in retirement is by looking at your withdrawal rate. Your withdrawal rate refers to the percentage of your savings you take out each year to cover expenses. Even small differences in withdrawal rates can significantly affect how long your retirement savings last.

Financial planners often reference the “4% rule,” which suggests withdrawing 4% of your retirement savings in the first year and adjusting for inflation in later years. This approach is designed to help retirement savings last approximately 30 years, though individual results vary depending on investment returns, inflation and spending patterns.

Here’s how different withdrawal rates could affect a $2 million retirement portfolio, assuming no investment growth:

If your portfolio continues to generate investment returns during retirement, your savings could last longer. For example, a balanced portfolio earning an average annual return of 5% could potentially sustain a 4% withdrawal rate indefinitely under certain market conditions. However, market volatility, inflation and sequence-of-returns risk can affect these outcomes.

Choosing the right withdrawal rate depends on several factors, including your retirement age, life expectancy, spending needs and investment strategy. A more conservative withdrawal rate may help your savings last longer, while a higher withdrawal rate could increase the risk of depleting your funds sooner.

Bottom Line

A retirement account with $2 million should be enough to make most people comfortable. With an average income, you can expect it to last 35 years or more. However, everyone’s retirement expectations and needs are different. Evaluate whether your savings can support your lifestyle and for how long.

Retirement Tips

• How much you need to retire is a deeply personal question, so make sure you get equally personal advice. A financial advisor can help you properly make a tax plan that can save you money and improve your situation. 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.
• When it comes to Social Security, there’s one more wrinkle people often don’t think about, taxes.

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