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Last Updated November 4, 2021

You’re probably asking yourself “can you retire at 60 with 1.5 million dollars and still live comfortably?” You always hear that you should save for retirement. But, how much should you be saving? In this blog post, we will discuss if it is possible to retire at 60 with $1.5 million dollars and live comfortably on your investments alone. We will also discuss some strategies that have helped other retirees reach their financial goals faster!

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How Much Money Do You Need To Retire?

The amount of money you need to retire is difficult to answer. There are so many variables that will affect how much you’ll need when it comes time for retirement such as: your age, current income level, if you have any debts or a mortgage, and the lifestyle you want to have in retirement.   

However, a general rule of thumb according to Fidelity is you should aim for the following benchmarks:

  • Age 30 – aim to save at least 1x your income
  • Age 40 – aim to save at least 3x your income
  • Age 50 – aim to save at least 6x times your income 
  • By age 60 – aim to retire with at least 8x times your income

Your personal retirement savings goal may be different based on the various factors I described above. However, these guidelines might be a good place to start when developing your savings plan and evaluating your progress.

How Much Do People Typically Retire With?

According to the most recent survey conducted by the U.S. Federal Reserve, people between the age of 55 and 74 had between $408K-$426K in their retirement savings accounts. Keep in mind that your personal savings goal may be different based on the lifestyle you want to have in retirement.

How Much Does The Average Person Spend A Year In Retirement

According to the Bureau of Labor Statistics (BLS) Consumer Expenditure Survey, people over the age of 55 spend roughly $47K-$66K a year on expenses. That works out to be about $4,000 – $5,500/month.

In my opinion, if the average person spends about $4,000/month in retirement but only has $408,000 in their retirement savings account that’s a problem. Just doing some rough simple math, you will spend your money in about 8.5 years (not taking into account taxes, return on investment, and inflation).

So to make sure you live comfortably, and don’t end up like the average person, you have to do one of two things (or both):

  1. Reduce your expenses in retirement, and/or
  2. Have a bigger retirement nest egg.
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5 Tips for Saving Money In Retirement

If you want to retire and still live comfortably, then take the following five tips into consideration:

1. Have A Budget

The first and most important tip is you need to understand how much you’re spending. To do that, you need to have a budget. A budget will show you where your money is going and if you’re living within your means. Spending less than what you earn is a good habit to establish now and in retirement.

If you’re just getting started, download this FREE Budget Binder to help you. Once you set up your budget, you will see where you’re spending your money and determine ways to save more.

Saving money is always important, even after you retire. So make having a budget a priority and a habit you establish now.

2. Pay Off Any High Interest Debt

Once you have your budget set up, your next priority should be to pay off any high-interest debt that you have. I consider any debt with an interest rate higher than 8% to be “high-interest debt”. This is because the stock market has given a historic return of about 8% on average. So paying off any debt with an interest rate of 8% or more is a better way to spend your money than investing.

Having high-interest debt is not a good idea because it will make your expenses uneccesariIy high, which is something you can’t afford to have in retirement. You should try to pay off all of your debt as quickly as possible. If you have credit card balances, try putting a little extra towards those debts every month until they’re paid off.

If you’re looking for a great tool to help you figure out your debt-free date, check out my Debt Payoff Spreadsheet. This spreadsheet will help you set up a plan to pay off your debt as quickly as possible, so you can retire early and spend more time doing the things that matter most.

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3. Pay Off Your Mortgage

According to BLS the highest expense the average retiree had was housing. Spending on housing was between approximately $1,500/mo – $1,900/mo. Once you pay off your mortgage, the only expenses left should be maintenance costs, property taxes, insurance, and utilities. Based on these numbers, it’s clear that the average retiree still has a mortgage to pay.

If the average retiree had no mortgage, their housing cost would be closer to $500 a month according to Census Bureau data. So definitely pay off your mortgage if you want to live comfortably in retirement.

4. Pay Off Your Car Note

After housing, the next most expensive expense retirees had is transportation. According to BLS, this expense was costing the average retiree about $520/mo. The bulk of that expense came from vehicle purchases—not gasoline, insurance, or maintenance. That means the average retiree is spending too much on their car and not buying them outright.

Just like with your mortgage and debt in general, pay off your car so you don’t spend more than necessary when you retire.

5. Take Care Of Yourself

The last tip is to take care of your health. One of the easiest ways to save money in retirement is taking care of your physical and mental health. According to BLS, the average retiree spends about $555/mo on health care expenses.

If you can keep yourself healthy, then that will cut down your medical bills significantly. The bottom line, take care of yourself now so you don’t have to pay for it later!


Can You Retire at 60 with $1.5 Million And Live Comfortably?

The short answer is YES. Depending on the lifestyle you want, you can certainly retire at 60 with $1.5 million and still live comfortably.

Let’s go over a good rule of thumb for retirement withdrawals so you can ensure you will have a comfortable retirement—it’s called the 4% rule.

What Is The 4% Rule For Retirement?

The 4% rule is a good way for many retirees to manage retirement withdrawals. The 4% rule of thumb says that withdrawing 4% of your retirement savings each year (you adjust for inflation after the second year) is the best way to ensure that your retirement funds last at least 30 years.

Keeping your portfolio invested during retirement allows you to earn a consistent return over time. In the long run, your investments will increase and continue to grow, ensuring that you do not exhaust your cash too quickly. 

In other words, it gives you a steady stream of retirement income while also providing enough money in the account to continue generating income throughout your retirement.

So let’s see how far $1.5 million will go in retirement using the 4% rule…

How Far Does $1.5 Million Go In Retirement?

Using the 4% rule as a guide, you can withdraw $60,000 each year ($5,000/month) for 30 years if you have $1.5 million in retirement savings. If your expenses in retirement are close to what the average person is spending, according to BLS, you should have enough money to last you through your retirement years.

This is not taking into account the amount you will get in Social Security income, pensions, and any other sources of income. If you ask me, $1.5 million in a retirement account (such as a Roth IRA, traditional IRA, or 401K) should provide plenty of money to live a comfortable life.

Although the 4% rule is a good rule of thumb, I think it’s important to take into consideration some of the drawbacks it has:

  • It assumes your investment portfolio is 60% stocks and 40% bonds. The problem with this is as you age your asset allocation should change. As you get older, you exposure to stocks should be less than 60% and you should have more than 40% bonds in your portfolio.

    As a general rule of thumb to determinne how much of your portfolio should be in stocks vs bonds you can use this easy formula:

    120 – your age = how much of your portfolio should be in stocks.

    For example, if you’re 80 years old only 40% percent of your portfolio should be stocks and 60% bonds (120 – 80 = 40)

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  • It assumes a 10.3% stock return and a 5.2% bond return. Some experts question whether we can expect the same investment returns from the stock market in the future. As we all know, there can be some bad years where your investment may not grow enough to cover your expenses. In other words, some years your investments may not have a good return and it is probably best to adjust your spending down if the markets are down.
  • It assumes your expenses are fixed and only adjusts for 3% inflation. In reality, spending could vary drastically from one year to the next. For example, you may have a big expense one year that you’re retired, such as medical expenses or helping your child pay for a wedding.
  • It assumes a 30 year timelinne. Depending on your initial retirement age and life expectancy, this timeline may or may not be reasonnable.

Despite the drawbacks of the 4% rule it is still a good starting point to quickly calculate a safe retirement withdrawal rate. However, it’s important to work with a financial advisor or financial planner to account for your own specific situation and needs.

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Is 60 A Good Age To Retire?

It really depends on your health, your financial situation, and what you enjoy doing. The normal full retirement age is typically 66 or 67 for most people in the U.S. because this is when you can begin drawing your full Social Security benefits.

It could make sense to retire earlier or later. There’s no magic formula for finding the right retirement age and the timing that works for you may not work for someone else.

Before you decide on when to retire, you should think about the benefits and drawbacks. The most important thing to consider of course is if you can even afford early retirement.

First, determine how much your retirement expenses will be. According to Fidelity, you can expect to spend 55%–80% of your current annual income in retirement. Do you think you will have enough money in your retirement account at the age of 60 to afford that?

If the answer is “yes” the next step is to consider if you enjoy working. If you don’t enjoy working, then it is a no-brainer that you should retire early. But if you do enjoy working, you might want to consider waiting to retire because you might be happier and more fulfilled working than not.

Assuming you can afford to retire at 60, consider whether or not you will be happier if you stopped working. Do you think you will have a better quality of life? Will it make you happier to spend more time with family, take more time to travel, or maybe spend more time doing your favorite hobbies? Or does working give you a sense of purpose and fulfillment?

Ultimately, you should choose the option that makes you happiest.

Money Saving Tips Before Retirement

The most important thing you can do to retire at 60 and live comfortably is make sure you establish a solid retirement nest egg. So let’s talk about some good money-saving tips to make sure you retire with a lot of money.

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1. Use tools to help you grow your wealth.

As you save for retirement, it’s important that track your wealth. So use tools to help you make growing your wealth easier. Sign up for Personal Capital, a FREE wealth management tool to get a better handle on your finances.

You can also run your investments through their award-winning Investment Checkup tool to see how much you’re paying in fees and whether you have the appropriate level of risk exposure.

Finally, when you’ve linked all of your accounts, use their Retirement Planning calculator to get an idea of your financial future based on algorithms. The great thing about the retirement calculator is it will show you if you’re on track to meet your retirement goals, and what you can do to improve your chances of retirement success.

If you sign up for Personal Capital today and link at least one of your investment accounts (with a balance of more than $1,000), you’ll get $50!

2. Start saving for retirement as early as possible.

You’ve probably heard this before, but you need to start saving for retirement as early as possible. The longer your money stays invested, the more it has an opportunity to grow—especially if you’re taking advantage of compound interest.

Compound interest is when your money earns interest on top of the original amount that you have invested.

For example, if two people save $100 each month for retirement, but one begins at age 25 and the other starts at age 35, the early saver will have nearly twice as much in their bank account by age 65. So it’s super important to save early and then keep on putting money away until the day that you retire.

3. If your employer offers a retirement plan, make sure to take advantage of it!

If you’re lucky enough to work for an employer that offers matching contributions to your retirement account you should definitely take advantage of this great gift.

For example, let’s say you earn $50,000 per year and your employer matches 401(k) contributions up to the first five percent of salary. If you save just five percent of your annual salary ($2500/year) for retirement, then they will match that amount on top of it. If this is an option for you, make sure you don’t miss out because that $2,500 match is basically FREE money!

So check with your employer to see what kind of retirement benefits they offer and the eligibility requirements.

4. Take advantage of tax sheltered accounts.

It’s also important to look into investing your money in tax-sheltered retirement accounts, like a Roth IRA or Roth 401(k), because they offer tax advantages for your retirement savings.

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For example, with a Roth IRA, you contribute after-tax dollars and your money grows tax-free. You can generally make tax and penalty-free withdrawals after age 59½.

Saving for retirement in tax-sheltered accounts means that your money will grow faster than if you invested the same amount of money outside of a tax-sheltered account, like a regular investment account.

If possible, take advantage of this!

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If you prioritize saving as much money as possible, you can definitely retire at 60 with $1.5 million and live comfortably! Remember that you’ll retire one day and the earlier you start saving, the more time your money has to grow. If you wait until later in life to save for retirement, it might be harder to catch up.

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