Is $5 Million Enough to Retire at 55?
- Mark Fonville, CFP®
- Oct 6
- 20 min read
Updated: Oct 7
Is $5 million enough to retire at 55? Yes, $5 million can work for retirement at 55 based on our own internal research outlined below—but only if you withdraw about $166,000-$184,000 starting in year one and stay flexible when markets dip.
The real challenge isn't the math; it's managing healthcare costs before Medicare kicks in and making smart tax moves.
Media often takes a simple approach (“$5M = $100k for 50 years”) and stops there.
That’s directionally useful but incomplete because it ignores sequence‑of‑returns risk, pre‑Medicare health costs, and taxes, which matter a lot to early retirees.
We wrote this piece to go deeper than the typical “rule of thumb” article and to be more rigorous than the popular coverage you’ve likely seen, including SmartAsset’s take on this topic.
Is $5 Million Enough to Retire …
We’ll use current research on safe withdrawal rates, show practical spending guardrails, and map the health‑care and tax decisions that make $5M feel either abundant or tight.
Key Takeaways
$5 Million can fund retirement at 55—if you manage it right. A safe withdrawal range is $166,000–$184,000 in year one (about 3.1%–3.5%), with adjustments for inflation and flexibility in down markets.
The “4% rule” doesn’t fit a 40-year retirement. Research from Morningstar shows 30-year plans support ~3.7%, but stretching to 40 years lowers the safe starting rate to ~3.32% based on our own research at Covenant Wealth Advisors.
Healthcare is the wild card. Retiring at 55 means 10 years of private insurance before Medicare. Expect to budget around $592,000 for lifetime healthcare costs (excluding long-term care), and watch for ACA subsidy changes after 2025.
Taxes are your silent portfolio killer. The years between 55 and 70 are your “golden window” for Roth conversions, harvesting gains, and managing MAGI for subsidies and IRMAA. Miss it, and you could pay hundreds of thousands more in lifetime taxes.
Sequence of returns risk can sink you early. Protect yourself by keeping 7–10 years of essential expenses in bonds, T-bills, or TIPS, so you’re not forced to sell stocks in a downturn.
Dynamic withdrawal “guardrails” work better than static rules. They let you take raises when markets are strong and trim spending when markets fall—keeping you on track for 40 years.
Delaying Social Security is powerful. Waiting until 70 increases social security benefits by ~8% per year past full retirement age and strengthens survivor benefits. Yet only 8% of retirees do it.
Long-term care and lifestyle spending matter. Assisted living averages ~$70,800/year, and nursing homes exceed $127,000. Combine this with variable lifestyle goals (like travel) and your plan needs flexibility.
The difference between success and failure isn’t $5M—it’s planning. Most retirees who run into trouble don’t start with too little. They withdraw too much, too early, without adjusting for markets, taxes, and healthcare.
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RETIREMENT INCOME PLANNING - Estimate when you might retire and what lifestyle your current savings could support.
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INVESTMENT MANAGEMENT - See how a tailored portfolio can align with your retirement goals and risk tolerance.
Table of Contents
Here's What Most People Get Wrong
You've probably heard the "4% rule"—withdraw 4% of your portfolio each year and you'll never run out of money. We even wrote an article about it here. But that rule was designed for 30-year retirements, not the 40+ years you might need if you retire at 55.
The latest research from Morningstar shows that for a 40-year retirement, you should start with just 3.1% withdrawals. On $5 million, that's $155,000 in year one. Then you adjust for inflation each year.
Think that sounds low? You're not alone. But here's why it matters.
For context, Morningstar's research reveals an important distinction: while 30-year retirements can support a 3.7% starting withdrawal rate, extending your timeline by just 10 years drops that "safe" rate significantly.
For example, we ran our own projections, outlined below, which reveals that a 40-year retirement with a $5 million starting portfolio may support a 3.3% starting withdrawal rate with a 90% probability of success. (Source: Download full projections with disclosures)
Some retirees may consider a TIPS ladder approach, which could support 4.4% withdrawals for 30 years—but that strategy completely depletes your capital by year 30, leaving nothing for emergencies, legacy goals, or living past 85.
However, we’ve never encountered anyone who uses a pure TIPS ladder strategy in practice.
“Many people think a $5 million portfolio automatically guarantees financial freedom at 55, but the reality is more nuanced. The real key is matching withdrawals to your lifestyle while planning carefully for taxes and healthcare. The number itself matters less than how you manage it.” — Brennan CFP, CFP®
Your Three Biggest Expenses (That Can Derail Everything)
It seems simple enough to identify your starting withdrawal rate and start your spending based on that. But, retirement cash flow needs are rarely constant.
Healthcare costs, navigating different tax brackets, and lifestyle desires can drastically change how long your money lasts in retirement.
Here’s a deeper dive on how these three obstacles may impact your plan.
1. Healthcare: The $592,000 Question
From age 55 to 65, you're on your own for health insurance. No Medicare yet. A couple can easily spend $20,000 or more per year on premiums and out of pocket expenses through the healthcare marketplace prior to Medicare.
Critical deadline alert: The current Medicare enhanced premium tax credits expire after 2025. If Congress doesn't extend them, your costs could double overnight. The ACA currently caps benchmark premiums at about 8.5% of income for subsidy-eligible households through 2025. Without these subsidies, premiums for a couple in their late 50s can easily exceed $20,000 annually, depending on your state and plan choice.
After 65?
Your cost of healthcare will decline when you transition from private insurance to Medicare. But, plan on budgeting another $5,000 to $6,000 person for Medicare premiums and out-of-pocket costs through retirement.
This figure covers Medicare Parts B and D premiums, Medigap or Advantage plan costs, and typical out-of-pocket expenses—but many retirees are shocked to learn Medicare only covers about 60% of healthcare costs.
Based on our own research, a couple retiring at 55 needs to budget $592,000 just for healthcare—that covers insurance premiums for the decade before Medicare, plus Medicare premiums and out-of-pocket costs for the rest of retirement.
Oh, and don't forget about Medicare's enrollment rules. You can and should sign up for Medicare at 65 even if you're delaying Social Security. Missing your initial enrollment period triggers permanent premium penalties that compound over time.
And here's the kicker: this doesn't include a single dollar for potential assisted living or nursing home care.
“Healthcare is the one expense that catches early retirees off guard. Between 55 and 65, premiums and out-of-pocket costs can run into the hundreds of thousands of dollars. Building a dedicated healthcare budget up front gives families confidence their retirement plan will actually work.” — Megan Waters, CFP®
2. Taxes: The Silent Portfolio Killer
Here's what your CPA might not tell you: The fifteen years from 55 to 70 is golden for tax planning.
Why?
You're not collecting Social Security yet, and Required Minimum Distributions don't start until 73 (moving to 75 by 2033).
This gives you a rare window to:
Convert traditional IRA money to Roth accounts at lower tax rates
Harvest capital gains while staying in lower brackets
Avoid future Medicare premium surcharges (IRMAA)
Manage your Modified Adjusted Gross Income (MAGI) for ACA subsidies
Establish a tax-efficient giving strategy for charitable intents
Miss this window, and you could pay hundreds of thousands or more in lifetime taxes.
The SECURE 2.0 Act extended this opportunity even further. With RMDs now starting later, you have more years to execute strategic conversions. But don't convert blindly—watch for trigger points.
Converting too much in one year can push you into higher brackets, trigger the Net Investment Income Tax (NIIT), or cause you to lose valuable ACA subsidies.
Virginia residents face additional considerations. While Virginia doesn't tax Social Security benefits, it does tax most other retirement income. Strategic planning around state taxes may save thousands annually.
3. The First 10 Years Make or Break You
If the market crashes in your first decade of retirement, you may be in trouble without the right portfolio. Why? You're selling investments at low prices to fund your lifestyle, leaving less money to recover when markets bounce back.
This "sequence of returns risk" is the a huge killer of early retirement plans.
The solution: Keep 7-10 years of essential expenses in bonds, Treasury bills, or TIPS. Yes, that's conservative. But it lets you avoid selling stocks during the next 2008 or 2020.
Consider this practical approach: divide your portfolio into three buckets. Your "immediate" bucket holds 1-2 years of expenses in cash or money market funds. Your "intermediate" bucket contains 5-8 years of expenses in high-quality bonds or a TIPS ladder. Your "growth" bucket holds the remainder in diversified stocks for long-term growth.
While this is a good rule of thumb, how much of your $5 million portfolio you allocated to each bucket will depend on your own spending needs and comfort level with how much your portfolio moves up and down over time.
Is $5 Million Enough to Retire at 55? (4 Case Studies)
To determine if $5 million is enough to retire at 55, we stress-tested four different withdrawal strategies using Monte Carlo analysis—running 1,000 market scenarios for each approach.
Our hypothetical case studies account for many variables including market crashes, inflation, extended bull runs, and the critical decision to delay Social Security until age 70.
The four case studies below reveal a clear line between sustainable retirement spending and dangerous territory. Here's what each withdrawal rate actually means for your lifestyle over a 40-year retirement:
Annual Withdrawal Before Taxes | Starting Rate | Probability Analysis for 40 Years |
$166,000 | 3.32% | High Confidence - 90% Success Rate |
$176,000 | 3.52% | Moderately High Confidence - 85% Success Rate |
$184,000 | 3.68% | Moderate Confidence - 80% Success Rate |
$200,000+ | 4.0%+ | Low Confidence - 70% Success Rate & Requires backup plan |
All figures are pre-tax and adjust annually for inflation. Source and full disclosures for case study.
Pro Tip: Remember, these are starting points. Your actual sustainable withdrawal depends on several factors:
Expected returns & portfolio mix
Sequence-of-returns risk
Time horizon & longevity
Inflation & spending growth
Withdrawal policy and spending flexibility
Tax planning strategies
For example, your long-run return drives how much you can safely pull without depleting principal. Both starting bond yields and stock valuations set the forward return bar.
Your stock/bond split and the quality of diversification in your portfolio matters greatly. Too little in stocks throttles returns; whereas too much in stocks raises failure risk.
In our experience here at Covenant Wealth Advisors, many robust plans live in a ~40–70% stock range with truly diversified bond exposure to help smooth out the ups and downs.
A Dynamic Spending Strategy That May Help Your $5 Million Portfolio Last
Static rules (like “always take 4% plus inflation”) can leave money unspent when markets do well—and force cuts too late when they don’t.
A better approach to optimizing your $5 million portfolio could be a dynamic “guardrails” plan that tells you when to give yourself a raise and when to trim, based on what your portfolio is doing.
Here’s the simple idea: start with a reasonable withdrawal, then watch your withdrawal rate (this year’s spending ÷ your current portfolio).
If markets are strong and your withdrawal rate drops below a lower guardrail, give yourself about a 10% raise.
If markets fall and your rate climbs above an upper guardrail, cut about 10% to protect the plan.
These pre-set rules take emotion out of decisions and help you adjust early, when small changes matter most.
What does research say?
Studies on the Guyton-Klinger guardrails—widely discussed in financial planning—show that retirees who follow rules like these can often start a bit higher than a fixed rule and still keep strong success rates, because they agree to make small, timely adjustments after bad markets. In plain English: you may be able to start higher, but you must be willing to trim for a year or two after big declines to stay on track.
Bottom line: guardrails trade a little year-to-year flexibility for a safer, smarter spending path over a long retirement.
The Social Security Power Move That Only 8.3% of Retirees Use
Delaying Social Security from 67 to 70 increases your benefit by 24%—that's a guaranteed, inflation-adjusted return of 8% for each year you wait.
Yet only 8.3% of retirees take advantage of this opportunity. Why?
In our experience, most retirees simply haven't created a plan to bridge the income gap between retirement and when they claim Social Security. Without an alternative income source for those crucial years, they feel forced to claim early.
The good news? With proper planning, you can join the successful minority who maximize their benefits.
Here's the strategy: Draw from your portfolio between ages 55 and 70, then reduce those withdrawals once your enhanced Social Security payments begin. This single move can add years to your portfolio's longevity.
For married couples, the strategy becomes more nuanced. Consider having the higher earner delay until 70 while the lower earner claims earlier. This approach maximizes the survivor benefit—a critical consideration since one spouse typically outlives the other by several years.
Every situation is unique, so it's essential to develop a personalized retirement strategy. If you'd like guidance determining your optimal approach, request a free retirement assessment from our firm here.
How to Retire at 55 with Your $5 Million Portfolio: Your Action Plan
Step 1: Build Your Spending Floor
Start by calculating your absolute minimum expenses—what we call your "Needs." These include housing, food, insurance, and basic lifestyle costs. Add in property taxes, maintenance, utilities, and replacement reserves for cars and home systems.
Your Annual Spending Breakdown:
Needs (Must-Haves):
Fixed expenses: $100,000
Healthcare expenses: $20,000
Total Needs: $120,000
Wants (Flexible Spending):
Travel expenses: $25,000
Charitable giving: $10,000
Total Wants: $35,000
Total After-Tax Spending: $155,000
Important Tax Consideration: The $155,000 represents what you'll actually spend (after-tax dollars). However, you'll need to withdraw more than this from your retirement accounts to cover taxes.
In this example, if you need $176,000 in pre-tax income to net $155,000 after taxes, you'll pay approximately $21,000 in state and federal income taxes.
The Safety Rule: Keep your total pre-tax withdrawal needs below $176,000 to maintain a comfortable margin of safety in your retirement plan.
Step 2: Create Flexibility Rules
When markets drop 20%, cut discretionary spending (your “wants”) by 10%. When markets rise 20%, give yourself a 5% raise. These "guardrails" can boost the likelihood of your money lasting in retirement. Write these rules down now, while markets are calm and emotions aren't running high.
Step 3: Lock In Healthcare Coverage
Before retiring:
Research ACA marketplace premiums in your state
Calculate your Modified Adjusted Gross Income to maximize subsidies
Budget for the worst-case scenario (no subsidies after 2025)
Consider COBRA for 18 months if it's cheaper than marketplace options
Explore health sharing ministries as alternatives (though these aren't insurance)
Step 4: Optimize Your Investment Mix
Forget the "age in bonds" rule which says you should keep a percentage of bonds in your portfolio that is equal to your age.
Personally, I’ve never seen this used in practice and there are so many more factors to consider. Kick this “rule of thumb” to the curb.
Conversely, research shows 20-50% of a $5 million portfolio invested in stocks actually provides the most reliable income for long retirements. The key is having enough safe assets to weather any storm.
An evidence supported allocation:
Years 1-3: Cash and money markets (immediate bucket)
Years 4-10: High-quality bonds and TIPS (intermediate bucket)
Years 11+: Globally diversified stocks (growth bucket)
Don't overlook international bonds and stocks. Geographic diversification reduces risk and can boost returns. Consider holding 30-40% of your stock allocation in international markets.
Step 5: Plan for the Expensive Surprises
Long-term care costs average $70,800 yearly for assisted living and $127,750 for nursing homes nationally. But costs vary dramatically by location—urban Northeast facilities can cost twice the national average. Either buy insurance, earmark an additional $500,000, or accept the risk.
Other overlooked expenses that derail retirements:
Adult children needing financial support (increasingly common)
Major home repairs or modifications for aging in place
Divorce or separation (gray divorce rates have doubled since 1990)
Extended family caregiving responsibilities
Are You Concerned About Retirement? Schedule Your Free Retirement Assessment Today!
RETIREMENT INCOME PLANNING - Estimate when you might retire and what lifestyle your current savings could support.
TAX PLANNING FOR RETIREMENT - Identify ways to reduce taxes in retirement, including Roth conversions and RMD strategies.
INVESTMENT MANAGEMENT - See how a tailored portfolio can align with your retirement goals and risk tolerance.
Advanced Strategies for Retirees with $5 Million+
Partial Annuitization
While not for everyone, consider using 10-20% of your portfolio to purchase an immediate or deferred income annuity after age 65. This creates a pension-like income floor, reducing pressure on your remaining portfolio. While you sacrifice liquidity and upside, you gain peace of mind and can invest the remainder more aggressively.
Tax Loss Harvesting Continues
Just because you've retired doesn't mean tax loss harvesting stops. In fact, it becomes more valuable when you're managing MAGI for ACA subsidies or avoiding IRMAA surcharges. Systematic harvesting can save $3,000-$5,000 annually.
Order of Withdrawals
Which account you tap first can make or break your retirement. Many retirees drain taxable accounts first, then IRAs, then Roth—triggering unnecessary taxes and Medicare surcharges. The smarter approach: strategically blend withdrawals from taxable accounts with Roth conversions during your low-income years (55-70), before Social Security and RMDs lock you into higher tax brackets.
Asset Location
Asset location is a tax optimization strategy that places different types of investments in the most tax-efficient account types to maximize your after-tax returns.
The basic principle is to hold tax-inefficient investments (like bonds that generate taxable interest, REITs, and actively managed funds that create frequent taxable events) in tax-sheltered accounts like IRAs and 401(k)s, while keeping tax-efficient investments (such as index funds, ETFs, and stocks you'll hold long-term for capital gains treatment) in taxable brokerage accounts.
For example, you might keep high-dividend stocks and corporate bonds in your IRA where they can grow tax-deferred, while holding tax-managed index funds in your taxable account where they generate minimal annual taxes and qualify for favorable capital gains rates when sold.
This strategy can add meaningful value over time—studies suggest proper asset location can boost after-tax returns by 0.20% to 0.50% annually—without changing your overall portfolio risk or allocation.
Important Limitations: What These Numbers Don't Tell You
Before you commit to early retirement based on the analysis above, you need to understand what our models can—and can't—predict. Even the most rigorous planning has blind spots.
Models Are Tools, Not Crystal Balls
The withdrawal rates and success probabilities we've outlined come from Monte Carlo simulations—sophisticated models that run 1,000 different market scenarios to estimate outcomes. They're excellent planning tools, but they're not guarantees.
What the models capture well: Historical patterns of market returns, inflation cycles, and typical volatility.
What they miss: Policy shocks, extreme tail events (think 2008 but worse), personal health crises, family emergencies, or the kind of "black swan" events we can't predict. The 2020 pandemic, for example, created healthcare and economic disruptions that no pre-2020 model anticipated.
Real life doesn't follow historical averages. You might face three bear markets in your first decade, or enjoy a 15-year bull run. Your actual experience will differ from the median scenario, sometimes dramatically.
Your "Safe" Rate Depends on Shaky Assumptions
Those withdrawal rates of 3.1%–3.5% rest on assumptions about future returns that may be too optimistic.
Consider: If stock returns over the next 40 years average 7% instead of 10%, or if bond yields stay structurally lower than historical norms, today's "safe" rates become tomorrow's portfolio-killers.
Current market valuations matter. When stocks trade at historically high price-to-earnings ratios (as they have in recent years), forward returns tend to be lower. The same applies to bonds—when you're locking in a 30-year Treasury at 4%, you're setting your fixed income return ceiling for decades.
What this means for you: Build in more cushion if you're retiring into elevated valuations. A 3.5% withdrawal rate based on historical returns might need to be 3.0% or lower when markets are expensive.
Healthcare Costs Are More Variable Than Our Estimates Suggest
We estimated $592,000 for lifetime healthcare costs, excluding long-term care. That's a reasonable middle-ground figure, but your actual costs could vary by hundreds of thousands of dollars.
Geographic lottery: Healthcare costs in Manhattan or San Francisco can run 40-50% higher than in smaller cities. The ACA marketplace premiums we discussed? They can swing wildly by state and even by county.
Health status: If you or your spouse develops a chronic condition in your 50s—diabetes, heart disease, autoimmune disorders—medication and treatment costs can explode. Some specialty drugs cost $5,000+ monthly even with insurance.
Legislative risk: Medicare and ACA subsidies exist at Congress's pleasure. Major reforms could increase your costs overnight or change eligibility rules. The enhanced ACA subsidies expire in 2025 unless extended—doubling premiums for some couples.
The long-term care wildcard: We mentioned that assisted living averages $70,800 annually and nursing homes exceed $127,000. But those are national averages. In high-cost areas, memory care facilities can exceed $200,000 per year. And if one spouse needs care for 5-7 years? You're looking at $350,000 to $1,000,000+ in additional costs that aren't built into our baseline models.
The prudent approach: Add a 20-30% buffer to healthcare estimates, or dedicate separate funds specifically for long-term care scenarios.
Life Doesn't Follow Your Spending Assumptions
Our models assume a relatively stable lifestyle with predictable "needs" and adjustable "wants." Real life is messier.
Major life transitions can shatter carefully laid plans:
Adult children who need financial support (job loss, divorce, medical issues)
Elderly parents requiring care or financial assistance
Divorce or separation in retirement (increasingly common—"gray divorce" rates have doubled since 1990)
Relocations for health, family, or lifestyle reasons
Career changes or unexpected business opportunities
You might plan to spend $155,000 annually, but then your daughter goes through a difficult divorce and moves back home with two kids. Or your aging mother needs to move in, requiring home modifications. Or you discover a passion for extended international travel that doubles your original budget.
The "wants" bucket that seems so flexible on paper? It's harder to cut than you think when those wants include seeing grandchildren, maintaining friendships, or pursuing passions you've deferred for decades.
Behavioral Risk Is the Silent Plan-Killer
The math is easy. The psychology is brutal.
Sticking to guardrails sounds simple: Take a 10% pay cut after your portfolio drops 20%. But when you're actually living through a bear market—watching CNBC report doom daily, seeing your friends panic, feeling your portfolio bleed—making rational decisions becomes exponentially harder.
Human psychology sabotages plans through:
Recency bias: After years of gains, you convince yourself higher withdrawals are safe
Loss aversion: You refuse to cut spending after market drops, hoping for a quick recovery
Lifestyle creep: Spending gradually increases beyond plan guardrails
Decision fatigue: After years of active management, you stop rebalancing, skip Roth conversions, and let the plan drift
Studies show that investors consistently underperform their own funds by 1-2% annually due to behavioral mistakes—buying high, selling low, abandoning strategy during volatility.
The solution: Automate as much as possible. Set up systematic rebalancing. Create trigger-based spending rules you commit to in advance. Better yet, work with an advisor who can be the rational voice when emotions run high.
Tax and Policy Assumptions Can Change Overnight
Much of our tax strategy—Roth conversions in low-income years, managing MAGI for subsidies, optimizing around IRMAA thresholds—assumes relatively stable tax law.
But tax policy is political: A new administration or Congress could:
Raise or lower tax brackets
Change Roth conversion rules or eliminate the "backdoor" Roth
Modify IRMAA thresholds, increasing Medicare costs for higher earners
Overhaul ACA subsidies (or eliminate them entirely)
Change Social Security taxation or benefits
Alter capital gains treatment or introduce wealth taxes
We plan using today's rules, but you'll be retired for 40 years. Expecting zero major tax reforms over four decades isn't realistic.
Social Security and Medicare face funding challenges: The Social Security trust fund faces depletion in the 2030s without congressional action. Potential "fixes" include raising the retirement age, reducing benefits for higher earners, increasing payroll taxes, or means-testing benefits. Any of these changes could reshape your retirement income.
Medicare faces similar pressures. Future reforms might increase premiums, raise eligibility ages, or expand means-testing beyond current IRMAA surcharges.
What You Should Do With These Limitations
Don't let these cautions paralyze you—they're meant to sharpen your planning, not discourage early retirement.
Build in buffers: If models suggest 3.3% is safe, start at 3.0%. If healthcare costs average $592,000, budget $750,000. Give yourself room for reality to deviate from assumptions.
Stay flexible: The greatest asset isn't your $5 million—it's your willingness to adjust. Keep skills sharp. Maintain relationships. Be ready to consult, work part-time, or defer expenses if needed.
Review annually: Meet with your financial advisor every year to stress-test assumptions against reality. Markets change. Your health changes. Tax law changes. Your plan must change too.
Diversify your risks: Don't let your entire retirement hinge on portfolio performance. Consider part-time work, rental income, annuities for a spending floor, or geographic arbitrage (moving to lower-cost areas).
Accept uncertainty: You'll never have perfect information. The goal isn't to eliminate all risk—it's to make smart decisions despite incomplete information and build a plan resilient enough to survive surprises.
The difference between successful and failed retirements often isn't the starting portfolio size—it's the ability to adapt when reality diverges from the plan.
FAQs
Q: How does the balance of my tax-deferred, tax-free, or taxable accounts impact my withdraw rate?
A: How your $5 million is split between tax-deferred (IRAs/401ks), tax-free (Roth), and taxable accounts directly affects your withdrawal rate because taxes change how much you actually keep. Two people with the same $5 million portfolio could have very different sustainable withdrawal rates depending on where the money is held.
Q: What if I want to spend $250,000 per year from my $5 million portfolio?
A: That's 5% of $5 million—risky for 40 years. You'll need part-time income, aggressive investing, or the flexibility to cut spending dramatically in bad markets. Consider working part-time for 5 years to let your portfolio grow untouched.
Q: Should I work part-time to make my $5 million last?
A: Even $30,000 in annual income lets you delay portfolio withdrawals and keep health insurance through an employer. Five years of part-time work could add years to your portfolio. Plus, staying professionally engaged provides purpose and social connection—both linked to longer, happier retirements.
Q: Should I implement Roth conversions in retirement?
A: Whether or not you implement Roth conversions depends on your personal tax rates in retirement. Generally speaking, we find that Roth conversions can work well up to the 24% ordinary income tax rate for married couples. Every situation is different so be sure to build a personalized tax plan before you convert.
Q: Should I pay off my mortgage?
A: If your mortgage rate is below 4%, keeping it might make sense—especially if you can earn more in bonds or stocks. But the psychological benefit of being debt-free in retirement is powerful. Run both scenarios and choose what helps you sleep better.
Conclusion
Is $5 million enough to retire at 55? Yes, your $5 million portfolio can be enough to retire at 55. But, the concept is easier than the actual implementation of actually making it happen in the first place.
Here’s what you need to do to make it happen:
Keep initial withdrawals near $155,000-$185,000
Stay flexible when markets struggle
Plan meticulously for pre-Medicare healthcare
Optimize taxes during your 55-70 window
Delay Social Security to maximize benefits
Build in buffers for healthcare inflation and long-term care
The difference between success and failure isn't the amount—it's the planning. Most retirees with $5 million who run out of money didn't start with too little—they withdrew too much, too early, without adjusting for market conditions, taxes and quality of life desires like travel, giving and unexpected purchases.
Don't have $5 million? Read our article: Is $2 Million Enough To Retire At 60? [5 Case Studies]
Do you want my team to just do your retirement planning for you? Request a free retirement assessment, today! It could be the best step you take this year.
About the author:
CEO and Senior Financial Advisor
Mark is the CEO of Covenant Wealth Advisors and a Senior Financial Advisor helping individuals age 50+ plan, invest, and enjoy retirement comfortably. 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.
Disclosures:
Covenant Wealth Advisors is a registered investment advisor with offices in Richmond, Reston, and Williamsburg, VA. Registration of an investment advisor does not imply a certain level of skill or training. 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. This article was written and edited by a CERTIFIED FINANCIAL PLANNER™ professional with the assistance of AI. 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.