Wondering how much money you need to retire comfortably? According to financial advice website The Balance, $5 million is enough to cover basic needs such as housing, food, and healthcare, with enough left over for travel and hobbies. However, individual circumstances such as family size and location should be taken into account. While $5 million can support many households indefinitely based on average market returns, it ultimately depends on your standard of living.
Is $5 Million Enough to Retire at 67?
As we approach retirement age, many of us start to wonder whether we have saved enough money to live comfortably for the rest of our lives. One question that often comes up is whether $5 million is enough to retire at 67. The answer, as with most financial questions, is that it depends on a variety of factors.
The Median Costs of Living in America
Based on the median costs of living in most parts of America, $5 million is more than enough for a very comfortable retirement. This amount of money can cover all of your basic needs, including housing, food, and healthcare, with plenty left over for travel, hobbies, and other luxuries. Of course, this assumes that you have no outstanding debts or major expenses, such as caring for a disabled family member or paying for a child’s college education.
Average Market Returns
Another factor to consider is average market returns. Historically, the stock market has returned an average of 7% per year. Assuming that you invest your $5 million in a diversified portfolio of stocks and bonds, you can expect to earn around $350,000 per year in passive income. This can support many households indefinitely, even if you choose to live a more lavish lifestyle.
Your Standard of Living
However, it’s important to note that every household is different. Your standard of living may be higher or lower than the median, depending on factors such as your location, family size, and personal preferences. If you live in a high-cost city like San Francisco or New York, for example, you may need more than $5 million to maintain your current lifestyle. On the other hand, if you’re willing to downsize your home and cut back on expenses, you may be able to live comfortably on less than $5 million.
So, is $5 million enough to retire at 67? The answer is yes, for most people. Based on the median costs of living in America and average market returns, $5 million can provide a very comfortable retirement for many households. However, it’s important to consider your own standard of living and financial situation before making any decisions about retirement. Consulting with a financial advisor can help you determine the best course of action for your specific needs and goals.
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