Retiring at 55 with $5 million is possible, but careful planning and saving are crucial. A retirement plan should be created, taking into account lifestyle, expenses, and inflation. Investing in a mix of assets, annuities, or using the 4% rule are options. Healthcare costs and taxes should also be factored in. Mississippi, Arkansas, and West Virginia are among the top 10 states where $5m will last the longest. With this nest egg, you can live comfortably almost anywhere and generate over $100,000 per year of income.
The Bottom Line: Is $5 Million Enough to Retire at 55?
Retiring early is a dream for many of us, but it takes careful planning and saving to make it a reality. One question that often comes up is whether $5 million is enough to retire at 55. The answer is yes, in most cases. With this size nest egg, you can plan on retiring early almost anywhere and generate more than $100,000 per year of income. Let’s dive into the details.
How to Make $5 Million Last
Retiring at 55 with $5 million may seem like a lot of money, but it’s important to make it last for the rest of your life. The first step is to create a retirement plan that takes into account your lifestyle and expenses. You’ll need to estimate how much you’ll need to live on each year and factor in inflation.
One way to make your money last is to invest in a mix of stocks, bonds, and other assets that provide a steady stream of income. You can also consider annuities, which provide a guaranteed income for life. Another option is to use the 4% rule, which states that you can withdraw 4% of your portfolio each year and adjust for inflation.
Where to Retire with $5 Million
While $5 million may seem like a lot of money, it may not be enough to retire comfortably in some areas. If you live in a high-cost city like New York or San Francisco, you’ll need to be more careful with your money. On the other hand, if you’re willing to move to a more affordable area, you can stretch your money further.
According to a recent study, the top 10 states where $5 million will last the longest are:
- West Virginia
- South Dakota
In these states, $5 million can generate more than $150,000 per year of income, which should be more than enough to live comfortably on starting at age 55.
Other Factors to Consider
While $5 million is a substantial amount of money, it’s important to consider other factors that can affect your retirement. For example, healthcare costs can be a significant expense, especially as you age. You’ll also need to factor in taxes, which can eat into your income.
Another factor to consider is your lifestyle. If you plan on traveling extensively or pursuing expensive hobbies, you may need more than $5 million to support your lifestyle. On the other hand, if you’re willing to live a more modest lifestyle, $5 million may be more than enough.
Retiring at 55 with $5 million is possible, but it takes careful planning and saving to make it a reality. By creating a retirement plan, investing wisely, and choosing a low-cost area to live in, you can make your money last and enjoy a comfortable retirement. Keep in mind that other factors like healthcare costs and taxes can affect your income, so it’s important to plan for these expenses as well. With the right strategy, you can achieve your dream of retiring early and living the life you’ve always wanted.
References for « Is $5 million enough to retire at 55? »
- Investopedia: How Much Money Do I Need to Retire?
- CNBC: Here’s how much money you need to save per month to retire with $5 million at age 55
- Forbes: How Much Do I Need To Retire Early?
- NerdWallet: Retirement Savings Guide: How Much to Save and What to Do With It
- AARP: How Much Money Do You Need to Retire?
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