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  • Writer's pictureMark Fonville, CFP®

Can I Retire at 60 With $5 Million?

Updated: May 29

Can I retire at 60 with $5 Million?

As you approach the age of 60, the question of whether you can retire with $5 million might loom large.

In this article, you’ll gain insight into retirement income planning and the feasibility of retiring at 60 on a $5 million nest egg. 

We'll walk you through three hypothetical case studies that incorporate common expenses and different lifestyles to help answer the question: Can I retire at 60 with $5 million?

Be sure to download our free retirement cheat sheets designed for savvy investors like yourself.

From investment strategies to lifestyle choices, let’s unravel the possibilities and challenges of achieving a comfortable retirement.

What Is Retirement Planning?

Retirement planning involves laying out the financial goals that you have for your golden years and setting a concrete strategy to achieve them. Mainly, this requires creating a plan that helps you transition from the “accumulation” phase to the “distribution” phase so that your portfolio can turn into a source of income during your retirement. 

Retirement planning involves a deep assessment of your current lifestyle goals, finances, and future expenses to create a roadmap that ensures a comfortable retirement. This helps ensure that you’ll have financial stability and peace of mind during the later stages of life.

A common belief is that you need to save up a specific sum of money in order to be “prepared” for retirement. 

However, this is not always the case. Instead, your main goal for retirement planning should be to align your financial resources with your long-term goals to help maintain your desired standard of living during retirement. 

For example, retiring on $2 million could be more than adequate for some pre-retirees based on our in depth case study. Other individuals may require $5 million or more to maintain their pre-retirement lifestyle. 

Retirement planning is a personalized process that evolves over time as you – and the world around you – continue to change. And, what might be good for your neighbor, may not be appropriate for you. 

Let’s dive into to find out if you can retire at 60 with $5 million.


Can I Retire at 60 With $5 Million?

Whether you’re planning to retire soon or still have a few more years left, it’s natural to ask how much you need. This retirement question can come up often, even if you have a hefty nest egg. 

A common retirement goal is to plan to live on 70-80% of your pre-retirement income. But, this is not a one-size-fits-all strategy. As you might expect, the answer to this question depends significantly on the lifestyle that you lead.

To start, your location and its respective cost of living play a crucial role in your retirement planning. If you plan to move to an exotic vacation destination then you’ll need to generate more income to account for higher prices and rent prices. 

For example, if you plan to move to Hawaii then you can expect to need an income of $121,228 annually or more. On the other hand, cheaper states such as Florida only require about $68,109 to live comfortably.

Where you live impacts your retirement

Your retirement location is just one aspect to consider. There are plenty of other factors that come into play like healthcare, debt, lifestyle, travel, charitable giving goals, and leisure. 

Additionally, you’ll also want to take into account the longevity of your retirement, potential inflation, and unexpected costs. The number of factors to consider is why finding a financial advisor who specializes in retirement can also be a prudent choice, as they can ensure that your retirement funds align with your goals. This can help provide the foundation for a comfortable and fulfilling post-work life.

To best answer the question “Can I retire at 60 with $5 million?” we’ve put together three scenarios for “John and Mary” – a hypothetical couple with $5 million in savings:

Each scenario is stress tested 1,000 times using Monte Carlo analysis and includes three primary spending categories:

  1. Fixed living expenses - These are necessary expenses that include day-to-day expenses such as home, food, utilities, clothing, etc…

  2. Healthcare expenses - These are total out of pocket expenses for the cost of healthcare premiums both before and after going on Medicare. This also includes out of pocket expenses.

  3. Variable Expenses - These expenses typically enhance lifestyle and include travel, new car purchases, charitable donations or family gifts, and nursing care at the end of life. 

Important: For purposes of the three case studies, we have adjusted the fixed living expenses in each case study to account for different lifestyles. Healthcare and variable expenses remain the same for all three case studies.

Each of the following scenarios assumes the following healthcare and variable expenses in addition to fixed living expenses:

  • Pre-Medicare Health Care Expense: $23,473 for healthcare costs until going on Medicare at age 65.

  • Post-Medicare Health Care Expense: $10,259 for healthcare costs after going on Medicare at 65.

  • Travel Expense: $20,000 per year for 15 years.

  • Car Expense: $50,000 every five years for a new car after trade-in value.

  • Donations: $5,000 in annual gifts or donations through life expectancy.

  • Nursing Care: $120,000 per year for nursing care for the last three years of life.

The following social security income is assumed:

  • Estimated Social Security for John: $43,524 in today's dollars starting at FRA (Full Retirement Age) 

  • Estimated Social Security for Mary: $21,762 in today's dollars starting at FRA (Full Retirement Age)

The following return and inflation rates are assumed:

  • Annualized Rate of Return: 4.00%

  • Inflation Rate: 2.50%

Let’s dive in to see if our hypothetical couple is able to retire at 60 with $5 million. 

3 Case studiesJohn and Mary have $5 Million in Savings

Scenario 1: John and Mary spend $96,000 per year in fixed living expenses

If this couple spends $96,000 per year on basic living expenses in addition to healthcare, travel, automobile purchases and charitable giving, then their probability of not running out of money is 94% (based on 1,000 Monte Carlo simulations).

Scenario 1: Retirement living expenses for case study

Scenario 2: John and Mary spend $120,000 per year in fixed living expenses

If this couple spends $120,000 per year on basic living expenses in addition to healthcare, travel, automobile purchases and charitable giving, then their probability of not running out of money is 83% (based on 1,000 Monte Carlo simulations).

Scenario 2: Retirement living expenses for case study

Scenario 3: John and Mary $144,000 per year in fixed living expenses

If this couple spends $144,000 per year on basic living expenses in addition to healthcare, travel, automobile purchases and charitable giving, then their probability of not running out of money is 65% (based on 1,000 Monte Carlo simulations).

Scenario 3: Retirement living expenses for case study

So, can I retire at 60 with $5 million? Based on our study, we find that $5 million should be enough for couples who spend $120,000 per year after-taxes on fixed living expenses, plus the cost of healthcare, travel, a periodic vehicle purchase, charitable giving, and affording nursing care later in life. 

However, $5 million may not be enough for individuals or couples who have a more extravagant lifestyle.

But, everyone is different and there are many variables and assumptions that need to be evaluated to get the best answer for you. We do not recommend that you base your retirement planning on this one article alone. Contact us for a free retirement assessment and more personalized road map to find out if your $5 million portfolio is enough to retire.

With these case studies in mind, let’s examine how retiring at 60 with $5 million could play out by taking a closer look at the different factors to consider when planning for retirement.

Factors to Consider When Planning for Retirement

Even if you have plenty of cash, it’s still important to have a detailed plan for retirement. Retirees face many decisions when planning for their post-work life. Here are a few common factors retirees should consider when planning for retirement:

  • Living Expenses: Evaluate and budget for essential living costs, including housing, utilities, and other expenses.

  • Healthcare Costs: Anticipate and plan for healthcare expenses, factoring in insurance, potential medical needs, and long-term care.

  • Income Sources: Assess retirement income from sources such as Social Security, pension plans, and investments.

  • Investment Strategy: Develop investment strategies that align with your risk tolerance, time horizon, and financial goals.

  • Inflation: Consider the impact of inflation on your purchasing power over the course of retirement.

  • Lifestyle Choices: Align your retirement lifestyle, including travel and leisure activities, with your finances.

  • Debt Management: Address and manage your debts to reduce financial stress during retirement.

  • Emergency Fund: Maintain an emergency fund for unexpected expenses, providing a financial safety net.

  • Tax Strategy: Be sure to have a detailed tax strategy to help avoid tax bracket creep, medicare surtaxes, and other “hidden” taxes traps. 

Factors to Consider When Planning for Retirement

Strategies to Turn Your $5 Million Into an Income Stream in Retirement

Now that you know the major factors influencing your golden years, you can begin looking at investment strategies for your $5 million portfolio. 

The art of retirement planning involves turning your hard-earned dollars into a comfortable income stream for your future self. Here are some of the most common strategies to keep in mind as you get closer to leaving the workforce:

  • Roth Conversions: A Roth conversion is a financial maneuver where you take money from a traditional IRA (Individual Retirement Account) or 401(k) and transfer it into a Roth IRA. In simple terms, a Roth conversion is like paying the tax bill now on your retirement savings to avoid a potentially larger tax bill later, allowing you to enjoy tax-free withdrawals in your golden years.

  • Diversification: Diversification is important no matter what age you are. But, as you get closer to retiring, it’s important to reevaluate your holdings with an investment portfolio review. Most commonly, you may want to transition your portfolio from higher-risk assets to lower-risk ones. 

  • Emergency Fund: In addition to your nest egg, it’s usually a good idea to have an emergency fund on hand. This way, you won't need to dip into your nest egg early and can avoid any early withdrawal penalties. 

  • Income-Generating Investments: In the same vein as diversifying your holdings, you’ll also want to shift to income-producing assets. This typically includes dividend-paying stocks, bonds, and real estate. This can help replace your income as you prepare to quit the workforce.

  • Order of Withdrawals: The order in which you withdraw funds from your retirement accounts can significantly impact how long your savings last and how much tax you pay. It’s like a game of financial chess: with thoughtful moves, you can make the most of your savings and enjoy a more comfortable and secure retirement.

  • Asset Location: Asset location for retirement is a bit like organizing a toolbox. Just as you'd put different tools in different drawers depending on their use, you put your investments in different "accounts" based on how they are taxed. This strategy is all about increasing your wealth after-tax and making your money work harder for you. Many individuals forget about this important strategy.

  • Social Security Timing: Social Security timing strategies in retirement are like playing a strategic game with your retirement income. The goal is to maximize the amount of money you get from Social Security over your lifetime. It’s possible to save hundreds of thousands of dollars over time with the right strategy 

  • Cash Flow Management: Tracking your cash flows in retirement is paramount and should be automated to make it easy. If done correctly, correctly managing your spending can have make the difference between maintaining financial security and losing your home. 

Again, these are just general financial tips for those who are nearing retirement age with approximately $5 million in savings and investments. 

If you have specific questions or want a more tailored strategy to your specific situation, take our retirement quiz to request a free retirement assessment

The 4% Rule: Is it Still Relevant?

The 4% rule is a common retirement rule that suggests that retirees can withdraw 4% of their retirement savings each year. By sticking to the 4% rule, you should be able to avoid outliving your savings. 

However, in recent years retirees have questioned the 4% rule, mainly due to lower expected returns from stocks and bonds.

Here are some aspects to consider in regards to the 4% rule:

  • Market Conditions: The 4% rule is based on historical market conditions. But, in reality, it should fluctuate based on market conditions. For example, if economic conditions favor one asset class over the other then it can be prudent to adjust your retirement strategy as opposed to rigidly adopting the 4% rule.

  • Longer Lifespans: With increasing life expectancies, retirees might need to plan for a longer retirement than they have in decades past. The 4% rule is a good rule of thumb. But, it might not account for longer lifespans. 

  • Flexibility: Some financial planners advocate for flexible withdrawals. During years of strong market returns, retirees can withdraw more, and during downturns, they can tighten their belts.

Given these considerations, some retirees and financial planners now plan for a more personal approach to withdrawals. It's essential to stay informed about economic conditions, regularly review your financial plan, and adjust your strategy as needed.

Monte Carlo Stress Test for Income

In retirement planning, it’s important to assess and adjust your investment strategy. One way to go about this is the Monte Carlo Stress Test

The Monte Carlo Stress Test is a financial planning method to assess risk. It allows you to predict retirement income in the face of potential market scenarios. Monte Carlo Stress Testing can provide a better analysis of retirement income strategies.

Here's how a Monte Carlo Simulation works:

  • Run different scenarios using samples of historical market returns: This accounts for the uncertainty of investment returns over time and gives a range of possible future returns based on historical data.

  • Run this test with different portfolio allocations: Running different portfolio tests can give you an idea of what allocation might be best for you.

With retirement income planning, stress testing projects a financial plan with adverse conditions to see how resilient it is. This could include scenarios like a prolonged bear market, high inflation, or unexpected healthcare expenses.

The goal of a Monte Carlo Stress Test is to evaluate the probability that a retirement income plan will succeed (i.e. not run out of money) under different market conditions. It provides an approach to better predict and manage financial risk in retirement.

Achieving a Comfortable Retirement With $5 Million at Age 60

Achieving a comfortable retirement with $5 million requires a strategic approach to financial planning. While the nest egg provides a solid foundation, considering various factors is essential. Begin by assessing your expected living expenses, factoring in housing, healthcare, and lifestyle choices. Develop an investment strategy that balances risk and return. This can increase the growth potential of your savings.

Find a financial advisor to build your retirement plan, ensuring it aligns with your goals and circumstances. Beyond money, embracing a purpose-driven retirement can also help with the satisfaction of your post-work years.

Still not sure what steps to take next? Get a retirement assessment from Covenant Wealth Advisors with one of our trusted advisors today. 

We specialize in advising individuals with over $2 million in savings and investments plan, invest, and enjoy retirement with confidence. 


Mark Fonville, CFP

Author: Mark Fonville, CFP®

Mark is a fiduciary, fee-only financial advisor at Covenant Wealth Advisors specializing in helping individuals aged 50 plus plan, invest, and enjoy retirement without the stress of money.

Forbes nominated Mark as a Best-In-State Wealth Advisor* and he has been featured in the New York Times, Barron's, Forbes, and Kiplinger Magazine.


Disclosure: Covenant Wealth Advisors is a registered investment advisor with offices in Richmond and Williamsburg, VA. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. No advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place. Hypothetical examples are fictitious and are only used to illustrate a specific point of view. Diversification does not guarantee against risk of loss. While this guide attempts to be as comprehensive as possible but no article can cover all aspects of retirement planning. Be sure to consult an advisor for comprehensive advice.

Registration of an investment advisor does not imply a certain level of skill or training.


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