You’ve done the hard part; You’ve saved $1 million for retirement, and now it’s time to enjoy your golden years. But the big question arises: How long will this money last once you reach 70?

While $1 million may seem like a lot, your lifestyle, spending habits, and income during retirement will ultimately determine how long it lasts. Let’s look at the factors that can expand or shrink your retirement nest egg and affect your budget.

The 4% rule: A starting point

The 4% rule is a popular guideline for retirement planning. It shows that you can withdraw 4% of your portfolio each year during retirement, and you’re unlikely to outlive your savings for 30 years.

So, if you have $1 million, the 4% rule says you can safely withdraw $40,000 in your first year of retirement and increase that amount each year to keep up with inflation.

This is a useful starting point, but the 4% rule is not perfect. It does not take into account factors such as portfolio composition, taxes or fees. Moreover, not everyone’s retirement will last 30 years.

A 2019 study published in the BMJ found that 16% of men and 34% of women live to be 90, but the average life expectancy in the U.S. is closer to 77.5 years. So, while 30 years of retirement planning is a good safety net, it’s important to remember that you may need less or more depending on your circumstances.

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Your location plays a role

Where you retire has a significant impact on how long it takes to have $1 million. While retiring in a lower-cost area can make your money grow even more, living in an expensive city can greatly reduce your savings. Retirees in low-cost states like Florida or Arizona spend about $50,220 per year; This fits well within the budget of the 4% rule.

But if you plan to retire in high-cost areas like New York or San Francisco, those annual expenses can easily double and the lifespan of your savings can be significantly shortened. If you want that $1 million to last longer, consider downsizing or moving to a more affordable location.

Health: The unpredictable factor

One of the biggest unknowns in retirement is healthcare costs. Healthcare expenses tend to increase as we age, and while Medicare helps, it doesn’t cover everything. Fidelity estimates that a 65-year-old couple retiring today will need about $315,000 for healthcare expenses in retirement; this amount can quickly deplete your savings.

Medicare covers most of the basics, but you’ll still face premiums, deductibles, co-pays, and other out-of-pocket expenses. If long-term care becomes necessary, costs can quickly increase; That’s why many retirees invest in long-term care insurance to protect their savings.

Diversification of income sources

The amount of income you earn during retirement will also affect how long your savings will last. Social Security is a reliable income stream for most retirees. The average Social Security benefit in 2024 is about $1,862 per month or $22,344 per year. This is a useful addition to your savings, but by no means enough to get by.

Other potential sources of income may include a part-time job that boosts your finances and improves your quality of life by keeping you active and social. Additionally, if you’re one of the lucky few retirees with a pension, that steady income can significantly impact how long your $1 million will last.

Inflation: The silent killer of savings

Inflation is a major factor that can erode the purchasing power of your retirement savings over time. Even at modest inflation rates of 2 percent to 3 percent, your $40,000 annual withdrawal from your $1 million nest egg won’t extend as far into 10 or 15 years as it did in your first year of retirement.

Investing some of your portfolio in growth-oriented assets such as stocks can help fight inflation. While stocks carry risk, they also offer the potential for returns that can outpace inflation, allowing your savings to grow and maintain purchasing power.

Managing your portfolio and sequence risk

When planning for retirement, it is crucial to balance risk and reward in your investment portfolio. Stocks offer the potential for higher returns but come with higher risks; bonds and annuities offer more stability with lower returns. Finding a balance that suits your comfort level is key to ensuring your savings last.

One of the biggest risks retirees face is sequence risk, which refers to the danger of a market downturn early in your retirement. If a large portion of your portfolio consists of stocks and the market crashes the moment you retire, this could significantly reduce your cash flow for the rest of your life.

To reduce this risk, it’s a good idea to shift some of your investments to safer, lower-risk options as retirement approaches. By diversifying your portfolio across different asset classes, you can create a mix that balances risk and return and further increase your $1 million return.

In conclusion

So how long does $1 million remain after turning 70? It depends. If you follow the 4% rule, plan for your healthcare costs, manage inflation, and diversify your investments, you have a good chance of this lasting 20 to 30 years.

But life doesn’t always follow a set formula. Unexpected expenses, spikes in inflation or declines in the market can affect the lifespan of your money.

The key is to create a flexible plan that adapts to changes, balances risk, and includes multiple sources of income, such as Social Security or part-time work. With thoughtful planning, that $1 million can go a long way toward securing a comfortable and enjoyable retirement.