Key takeaways
- $1,000,000 supports roughly $35,000 to $40,000 a year in today's dollars, depending on how long the retirement has to last.
- Retirement age matters more than markets: the same balance safely funds $35,000 at 55 and $40,000 at 70.
- A million dollars in a traditional 401(k) is not a million dollars of spending. At a 15% effective tax rate it is closer to $850,000.
- With a $30,000 Social Security benefit added, the same portfolio produces a household income near $68,000 at 65 — the level most retirees are actually asking about.
- Spend $80,000 a year from it with no other income and the balance is gone in about 16 years.
What a million dollars pays, by retirement age
The sustainable withdrawal rate falls as the horizon lengthens, because a long retirement gives a bad run of early returns more time to do damage. Planning to age 95 from each starting age:
| Retire at | Years to fund | Withdrawal rate | Income per year |
|---|---|---|---|
| 55 | 40 | 3.5% | $35,000 |
| 60 | 35 | 3.6% | $36,000 |
| 65 | 30 | 3.8% | $38,000 |
| 70 | 25 | 4.0% | $40,000 |
The spread is narrower than people expect — about $5,000 a year between retiring at 55 and at 70. What changes far more is everything around the portfolio: fifteen extra years of Social Security accrual, fifteen fewer years of self-funded health insurance, and fifteen more years of compounding if you keep saving.
Add Social Security and the picture changes
Almost nobody retires on a portfolio alone. Take a 65-year-old couple with $1,000,000 and a combined benefit of $30,000 a year:
- Portfolio at 3.8%: $38,000
- Social Security: $30,000
- Total before tax: $68,000 a year
For a couple with no mortgage, $68,000 of largely tax-favoured income is a comfortable retirement in most of the country. For a couple with a $2,000 monthly mortgage payment, $24,000 of that disappears before anything else does — which is why whether to pay off the mortgage is a bigger question at this balance than the choice of index fund.
The million that is not a million
Where the money lives changes what it is worth. Consider three portfolios, all showing $1,000,000 on the statement:
| Where it sits | What tax is owed on withdrawal | Rough spendable value |
|---|---|---|
| Roth IRA / Roth 401(k) | None on qualified withdrawals | $1,000,000 |
| Taxable brokerage | Capital gains on the gain only, often 0% or 15% | $950,000+ |
| Traditional 401(k) / IRA | Ordinary income on every dollar | ≈ $850,000 at a 15% effective rate |
Most people's million is mostly traditional, which means the honest planning number is nearer $850,000 — and it comes with required minimum distributions that eventually force withdrawals whether you want the income or not. The years between retiring and RMDs starting are the window to fix that, one bracket at a time, with a Roth conversion ladder.
Where a million dollars breaks
Suppose the portfolio has to carry $80,000 a year on its own — an early retiree, or someone whose benefit has not started. That is an 8% withdrawal rate. Even with a 3% real return, the balance runs out in roughly 16 years. At $60,000 a year with the same return it lasts about 23 years; at $40,000 it stretches to nearly 47.
Same portfolio, same markets — three completely different retirements, separated only by the spending line. The depletion arithmetic is worth understanding, because it is the most sensitive number in any plan.
Three ways to make a million work harder
- Delay Social Security to 70. It converts portfolio risk into guaranteed, inflation-indexed income at a rate no annuity matches — roughly 24% more benefit than claiming at full retirement age.
- Spend flexibly. Trimming withdrawals by 10% after a bad year (a guardrails approach) supports a higher starting rate than a fixed inflation-adjusted withdrawal does. See the safe withdrawal rate.
- Control the tax mix. Drawing from taxable, traditional and Roth in the right order can add years to a portfolio without changing a single investment — see which accounts to spend first.
Test it against your own plan
Use the retirement drawdown calculator to see how long $1,000,000 survives at your spending level, and the withdrawal order calculator to see how much of it the tax code takes back.
Frequently asked questions
How much interest or income does $1 million generate per year?
Sustainably, about $35,000 to $40,000 a year in inflation-adjusted terms, depending on how many years the money has to last. That is a total-return withdrawal, not an interest payment, and it assumes a diversified portfolio rather than cash.
Can a couple retire on $1 million?
Frequently yes. At 65, a $1,000,000 portfolio supporting $38,000 a year plus a $30,000 combined Social Security benefit produces about $68,000 before tax, and the tax owed on that mix is modest. The plan gets much tighter if a mortgage or self-funded health insurance is still in the budget.
Is $1 million enough to retire at 55?
It supports about $35,000 a year over a 40-year horizon, and you would be paying for your own health insurance for a decade with no Social Security until at least 62. It works for a genuinely low-spending household and does not work for a typical one.
Why is a million in a 401(k) worth less than a million in a Roth?
Because every dollar leaving a traditional 401(k) is taxed as ordinary income. At a 15% effective rate, a $1,000,000 traditional balance is closer to $850,000 of spending power, and required minimum distributions eventually force the withdrawals whether you need the money or not.
How long will $1 million last if I spend $80,000 a year?
About 16 years assuming a 3% real return and no other income — an 8% withdrawal rate is roughly double what a long retirement supports. At $60,000 a year the same portfolio lasts around 23 years, and at $40,000 it stretches to nearly 47.
See what your million actually funds
Planomy projects your portfolio, Social Security, taxes and required distributions year by year, so you can see the spending level a million dollars supports in your situation — not in a generic one. Free, private, and running in your browser.