Is $2 Million Enough to Retire at 70?

Planning for retirement can be complex, even if you have a $2-million nest egg. Questions concerning how to draw down your savings, maximize income and manage healthcare costs don’t just disappear because you’ve saved well. Retiring at 70 brings its own unique set of considerations, from required minimum distributions (RMDs) to optimizing Social Security benefits. Here’s what to consider when trying to determine if $2 million is enough to retire at 70.

As you chart a course to a retirement nest egg of $2 million — or any amount, for that matter — you could consider working with a financial advisor for more personalized planning advice.

The 4% Rule

The 4% rule offers a simple way to estimate how much you can safely withdraw from your $2-million nest egg each year without running out of money. According to this guideline, you can withdraw 4% of your portfolio in the first year of retirement, typically from a balanced mix of 50% stocks and 50% bonds. You would then adjust that amount annually to account for inflation.

While it’s a general rule of thumb and not a personalized strategy, it provides a helpful starting point. Applied to a $2-million portfolio at age 70, the 4% rule suggests you could withdraw $80,000 in your first year of retirement.

That said, the rule has its limitations. It doesn’t account for changing market conditions, shifting expenses or variations in investment returns. It also assumes a specific asset allocation and is based on historical averages that may not hold in the future. Still, it serves as a useful benchmark to gauge how much income your savings might reasonably generate each year in retirement. A financial advisor can help you determine the right withdrawal strategy for your retirement.

Social Security and Medicare

A couple deciding that $2 million is enough to retire at 70.

If you retire at 70, you’ll likely have two key benefits working in your favor: Social Security and Medicare. Both can significantly ease the financial burden of retirement.

Social Security provides a steady source of income. Plus, the longer you wait to claim, up to age 70, the higher your monthly benefit. Delaying benefits until 70 increases your payments to 132% of what you’d receive at full retirement age, offering a meaningful boost to your income.

You can estimate your future Social Security payments using our Social Security calculator, which can help you plan more precisely for your income needs.

You’ll also be eligible for Medicare, which begins at age 65 and can substantially reduce your healthcare costs. However, Medicare doesn’t cover everything. You’ll still be responsible for some out-of-pocket expenses, including certain procedures, medications and long-term care. According to recent data from Fidelity, a 65-year-old couple retiring can expect to spend an average of $330,000 on healthcare throughout retirement. While retiring at 70 may reduce that total slightly, it remains a significant expense that should be factored into your financial plan.

Lifestyle and Cost of Living in Retirement

While some aspects of retirement costs are beyond your control, such as your lifespan, it’s important to account for them as best you can. Your current health, along with the longevity and medical histories of your family members, can offer some insight. But since the future is always uncertain, it’s wise to plan conservatively to avoid outliving your savings.

On the other hand, many retirement expenses are within your control. Decisions about where you live and how you spend your time will have a major impact on your overall costs. For example, retiring in New York City with annual trips to Europe will require a significantly larger budget than settling in a lower-cost area like Asheville, North Carolina, and focusing on local family visits and hobbies.

There’s no one-size-fits-all approach. The right plan depends on your individual health, life expectancy and the lifestyle you hope to maintain. This is why it’s important to take the time to evaluate these factors.

How Inflation Might Impact Your Retirement

Inflation surged in the aftermath of the COVID-19 pandemic, leading many to rethink how to account for rising costs in their retirement plans. Inflation is one of the most significant challenges retirees face, as it steadily erodes the purchasing power of your savings. According to the U.S. Bureau of Labor Statistics, $1 million in January 2000 would’ve required about $1.7 million in 2023 to maintain the same buying power.

While Social Security benefits do adjust for inflation through annual cost-of-living increases, other areas of your retirement budget may feel the strain, especially when you’re living on a fixed income.

One of the best ways to protect your retirement income from inflation is through diversification. Relying on multiple income sources can help you weather market shifts and cost increases. While fixed-income investments like CDs or certain bonds may lose value during inflationary periods, assets like stocks and real estate often have the potential to keep pace with or even outpace inflation.

What a $2 Million Retirement Might Look Like

Let’s take a look at what retiring at 70 with $2 million might look like for a hypothetical married couple. Using the 4% rule, you can assume that they’ll withdraw $80,000 from their investment portfolios in their first year of retirement and then adjust for inflation. In this example, they were both born in 1985 and have an annual income of $100,000.

Let’s say they both retired and claimed Social Security at the age of 70, and their annual payments were $66,362 in their first year of retirement. With their portfolio withdrawals, their total annual income would be $146,362.

When you’re running your own numbers, remember to deduct taxes and living expenses from this amount. Common living expenses include your mortgage or rent payments, property taxes, transportation costs, as well as food and medical expenses. If you still have a mortgage or pay high property taxes, downsizing or moving to a less expensive area may be worthwhile if those expenses are straining your budget.

Bottom Line

A woman enjoying her retirement, having retired at 70 with $2 million.

Retiring at 70 with $2 million in savings is not only possible, but $2 million can provide a secure and comfortable retirement with the right planning in place. The key is to take a detailed, realistic look at your expected expenses, including healthcare, housing, travel and day-to-day living costs. Careful budgeting, paired with a sustainable withdrawal strategy, can help ensure your money lasts through your retirement years.

Tips for Retirement Planning

Consider talking to a financial advisor about strategies you can use to save $2 million for retirement. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Diversification is key to retirement savings, but you might have questions about exactly how to divide your assets up. That’s where SmartAsset’s free asset allocation calculator can come in handy.