Is 10 million enough to retire? The crux of retirement planning is figuring out what level of income your assets can safely support over your retirement lifetime and how that compares to your current living expenses. In another words, your ability to retire on [insert any amount of money] mostly depends on how much income you need from your investments and how long you need it to last for.
There are, of course, many other variables as well, which is why it’s important to speak with a financial advisor about your individual circumstances.
Retirement Lifestyle At Different Asset Levels
Americans often have a number in mind with the idea that once reached, they’ll have enough to retire. Unfortunately, few know what their current lifestyle costs, the impact of taxes, retiring early, longevity, market volatility, and how spending may change in retirement.
To help demystify what a comfortable retirement lifestyle might look like at $2 million, $5M, $10M or $15M, this simplified analysis will focus on three main factors:
- Starting portfolio size
- Retirement age or number of years in retirement
- Market volatility
The goal is to illustrate how different time horizons and levels of wealth can impact your ability to retire comfortably and the importance of accounting for market moves.
Again, everyone has a unique situation, so it’s important to remember to speak with your personal wealth advisor about your options.
How Much Is Enough To Retire?
The table above shows four different Monte Carlo simulations for starting retirement assets between 2 million and 15 million dollars. A safe annual withdrawal rate (reflected in today’s dollars) was backed into for both a 25 and 45 year retirement time horizon. All simulations required a probability of success (odds of never running out of money) of at least 80%. See the key assumptions above and refer to the end for important information about the analysis.
So for example, in this hypothetical simulation, a retiree with a $10 million portfolio could have cash flow of $470,000/year (increasing 2.5% annually to keep pace with inflation) for 25 years with an 80% probability that he/she will not run out of money prematurely.¹ If we further assume a simple flat tax rate of 25%, after-tax income in year one would be roughly $353,000.
Social Security and other forms of additional income would further supplement this figure. So could you retire with 10 million and live a comfortable lifestyle? That’s for you to decide.
Impact Of Market Volatility
If the hypothetical retirement income illustrated above is less than expected, it’s probably because you’re using a straight-line calculator, not a Monte Carlo simulation.
The difference is significant.
With a straight-line projection, the assumption is the expected average annualized return is met every year without fail. In markets, especially the stock market, we know this is unrealistic. For example, the S&P 500’s long-term average annual return is about 10%, but the index seldom returns 10% in a given year.
So if you only assume the average return without any of the volatility, it will significantly inflate the results, thus greatly increasing the chances you run out of money during your lifetime.
Example:
If we use the same assumptions as the chart above but remove volatility from the simulation, a straight-line projection for a $10 million retirement portfolio would appear to support annual income (e.g. withdrawals) of $490,000 for 45 years.
Using that figure, but adding back market fluctuations, the probability of success falls to 36%. To further illustrate the risks, in the 25th and 50th percentile, the portfolio was depleted in 25 and 34 years, respectively.
What About Just Living Off Investment Income?
The concept of living off passive income from dividends gets a lot of attention. In theory, it sounds nice: never touch the principal (leave it to heirs) and instead of reinvesting dividends and investment income, use the cash to comfortably retire. But it doesn’t work as well in practice.
How Much Passive Income Could A 60/40 Portfolio Provide Today?
In early January 2025, the dividend yield on the S&P 500 (SPY) is 1.2% and 4.07% for US Aggregate Bonds (AGG). As the chart above illustrates, if you invested 10 million dollars today in a 60/40 mix of stocks and bonds, holding all else equal, it would impute approximately $235,000 in pre-tax passive income over one year using these figures. By no means a small amount, but half as much money as the same portfolio in the earlier example.
So if you only want to live off investment income, you will typically need a much larger portfolio to get to the same level of retirement income a principal plus income withdrawal strategy could achieve. It’s also important to note that the variability of dividend income and the timing of payments can significantly reduce your financial flexibility.
How Much Is Enough To Retire? Other Factors To Consider
Income Taxes
Taxes change outcomes. To simplify, all taxes in this analysis were reflected as a flat 25%. But in reality, whether you can retire on $10 million or any other amount will depend on factors such as state of residency, account mix (e.g. tax-deferred retirement accounts versus tax-free Roth versus taxable accounts), cost basis, future changes in tax law, etc.
Fortunately, there’s usually ways to reduce tax as part of your retirement strategy. Considering, for example, Roth conversions during low income years (or at the beginning of retirement).
Risk Tolerance And Asset Allocation
For simplicity, this article referenced a 60/40 and 50/50 portfolio consisting of only the S&P 500 and US Aggregate Bonds as many investors are familiar. However, a diversified portfolio typically includes multiple asset classes, geographies, sectors, and many other characteristics.
Many factors go into determining the right asset mix and risk profile. For example, if you have a sizable income stream outside of your portfolio (e.g. deferred compensation payouts, rental income, installment sale), that may affect how you approach investment risk and how much income you require from the portfolio.
This is critical to keep in mind as the safe withdrawal rate and expected investment income for your unique portfolio will depend on your specific asset mix.
So How Long Will $10 Million Last In Retirement?
By now hopefully it’s clear that the answer depends on many factors! Of particular importance are your spending habits, age, and financial goals. But truthfully, the considerations covered in this article are just the tip of the iceberg. So whether you’re looking for an early retirement or just wondering how long your current retirement savings may last, speak with a financial advisor about your retirement plans and goals.
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