Is $5 Million Enough to Retire at 60?

If you’ve built a $5 million nest egg by age 60, you’re already ahead of most retirees—but the real question is whether it’s enough to fund the lifestyle you want for the next 25 to 35 years. Retirement today can span decades, and even large portfolios must withstand inflation, market volatility and rising healthcare costs. The difference between “enough” and “not quite” often comes down to planning, not just portfolio size.

For more accurate estimations of your own situation, consider working directly with a financial advisor. 

Plan For How Long $5 Million Will Last

Retiring at 60 with $5 million puts you in a strong financial position, but the key question isn’t just how much you have, it’s how long it needs to last. At 60, you could easily plan for a 25- to 35-year retirement. That extended time horizon means your portfolio must support decades of withdrawals while still growing enough to keep pace with inflation.

The all-important question with retirement accounts is, how long will my money last? Figuring this out basically requires balancing three separate, but related, issues:

Growth Rate

Your growth rate is the rate of return on your portfolio. Basically, how much do your investments grow while you’re in retirement? After all, don’t forget, portfolio growth isn’t just an issue while you’re saving up. You can collect market returns in retirement as well. Growth is key because it balances out everything else. Every dollar that your account grows extends the life of your retirement account. In a perfect world, if you never withdraw more than your account’s growth, you can live off this money indefinitely.

Drawdown Rate

Your drawdown rate is the rate at which you withdraw the principal on your retirement account. While ideally, you would live off only the returns of your retirement portfolio, this is usually unrealistic. Instead, most investors have to balance a combination of growth and withdrawing the portfolio’s principal.

Withdrawal Rate

Your withdrawal rate is how much money you need to take out of your retirement account each year. It obviously informs your drawdown rate, as well as how much growth you need. How long your money lasts, ultimately, is based on the balance of these factors:

How much money is in your retirement account? How much will that grow each year? And how will you balance that with your annual withdrawals? So, start here. Look at your finances and figure out clearly, how much will you need to spend each month or year? And how much growth will you plan for?

Finding the answers to these questions and understanding how each of these rates will work for you in retirement will help you determine what your investment strategy should be in order to retire when you would like.

Figure Out Your Investment Strategy

The rate of return, of course, is a big issue. For retirees, the standard advice is to shift their investments in a more conservative direction. Many people focus on equities during their earning lives, then shift toward more secure assets like bonds, annuities and index funds. With $5 million to invest, just about any strategy can generate very comfortable returns.

For example, say that you put this money into a single-life annuity. This means that you buy a contract from an insurance company to issue regular payments from the start of your retirement for the rest of your life.

Many people view these as among the safest retirement investments you can buy. A $5 million annuity could pay around $27,000 a month, or $332,000 annually. That income is insulated from the stock market and guaranteed for the rest of your life.

By contrast, say you keep your money in a simple S&P 500 index fund. Historically, the index has returned around 10% per year. With $5 million to invest, a retiree willing to invest in the stock market average around $500,000 in annual returns before even touching the principal of their portfolio. Of course, the stock market is volatile, and returns can vary significantly from year to year. However, over the long-term it can deliver substantial gains.

Even if you keep your money in nothing more sophisticated than a high-interest savings account, a 4% interest rate would return $200,000 per year, far more than most people earn even before they retire.

This doesn’t factor in Social Security. You can’t claim benefits at 60, with early benefits starting at 62 and maximum benefits available at 70. However, according to the Census Bureau, the median household income for people 65 and older was $54,710 in 2023 (the most recent year for which this data is available). No matter how you choose to invest this money, $5 million can generate returns far more than what most retirees live on.

Make A Budget

The most recent median income for households 65 and older was $54,710, but that doesn’t mean your budget will be based on it. The most important thing you can do is figure out exactly what standard of living you will want.

This is the drawdown calculation and it’s important. If you have saved up $5 million, the odds are good that you have a fairly high-earning household. So you may have more expenses than the median retiree.

Avoid budgeting based on average households. Instead, work with a financial advisor to determine your preferred lifestyle and the costs tied to it. Whether you can retire at age 60 will depend entirely on this budget. You will have a significant amount of money, but how much of that you need per year will define how long it lasts.

Plan For Healthcare

On the issue of spending, plan in advance for healthcare. If you retire at age 60, you will likely lose your employer-based health insurance. At the same time, Medicare will not kick in for another five years. This means that you need to anticipate healthcare needs for that gap. Whether you use COBRA or buy a marketplace plan, plan for this added cost.

For example, Fidelity estimates that a 65-year-old can expect to spend $165,000 ¹ on healthcare throughout retirement. That figure could rise significantly if you retire at 60 instead of 65.

In addition, you should make sure to plan for long-term care. As a high net-worth household you will not qualify for Medicaid or many other programs. So you should build plans such as long-term care insurance and Medigap premiums into your retirement budget. Expect to spend a significant amount here, and plan for it in advance.

Tips for Extending Your Retirement Savings

Even with $5 million saved, smart planning can help ensure your money lasts throughout retirement. Extending your retirement savings isn’t just about spending less, it’s about making thoughtful decisions around withdrawals, investments and taxes. The following strategies can help improve sustainability and financial confidence over the long term.

• Adopt a Flexible Withdrawal Strategy: Rather than sticking to a fixed dollar amount each year, consider adjusting withdrawals based on market performance. Reducing spending slightly during downturns can help preserve principal and improve portfolio longevity. Flexibility can significantly reduce sequence-of-returns risk early in retirement.
• Diversify Your Investment Portfolio: Maintaining a diversified mix of stocks, bonds and other assets can help balance growth and stability. Stocks can provide long-term appreciation to combat inflation, while bonds and cash equivalents offer income and downside protection. Periodic rebalancing keeps your allocation aligned with your risk tolerance.
• Manage Taxes Strategically: Thoughtful tax planning can stretch retirement savings further. Coordinating withdrawals from taxable, tax-deferred and Roth accounts may help reduce your overall tax burden. Lower taxes mean more net income without increasing withdrawals.
• Delay Social Security if Possible: Waiting to claim Social Security benefits can increase your monthly payment significantly. Higher guaranteed income later in life can reduce pressure on your investment portfolio. This strategy can be especially helpful for covering expenses in your 70s and beyond.
• Control Healthcare Costs: Healthcare can be one of the largest retirement expenses. Comparing Medicare plans carefully and considering supplemental coverage can help manage out-of-pocket costs. Planning for long-term care needs in advance can also protect your portfolio from large unexpected expenses.

Ultimately, extending your retirement savings is about balancing income needs with long-term sustainability. Small adjustments in spending, investing and tax strategy can make a meaningful difference over decades. A comprehensive retirement plan can help ensure your savings continue supporting your lifestyle for years to come.

Bottom Line

Retiring at 60 with $5 million offers substantial flexibility, but long-term success depends on how carefully you plan and manage those assets. Factors like withdrawal rates, investment strategy, taxes, inflation and healthcare costs all influence how long your money will last. With a disciplined approach and a willingness to adjust over time, $5 million can support a comfortable retirement for decades.

Tips for Retirement

• The very best way to plan for retirement is to get a professional guide who can help you take the right action for your situation and long-term goals. A financial advisor specializes in that work and they can even manage your investments for you. 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.
• How much you will spend in retirement is an essential issue. Fortunately, there are plenty of ways to start figuring that out. Here is how you can start to estimate your retirement expenses.

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