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Is $1 Million Enough to Retire?
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Hundred dollar bills
Many people underestimate how much they'll need to retire. Use our calculator and these tips to help you prepare.
From the Merrill Edge Minute e-newsletter.
Key Points
  • Your retirement is more than just a number; it reflects your goals and aspirations and your plans for pursuing them.
  • A Merrill Edge™ calculator lets you compare your expected retirement income (based on your nest egg) with the amount you may need.
  • If you have a gap in your retirement savings, making adjustments to your plans today could help close it.
  • 10 Tips to Help You Boost Your Retirement Savings — Whatever Your Age
In the Spring 2014 Merrill Edge Report, more than half of investors surveyed said their biggest financial fear was that they would run out of money during retirement. Much of that worry stems from not being sure what it takes to fund a comfortable retirement. You might think, "If I only had $1 million, I'd be all set." But the reality is that even a big number like that could fall short during a retirement that may last 30 years — especially when you factor in inflation.
Even modest inflation can shrink the value of your retirement savings
Still, planning your retirement goes beyond aiming for a particular dollar amount; it's also about your individual goals and aspirations, both now and after you retire. Everyone's financial life is different, and your plans for retirement are only one part of the equation.
What you'll need in retirement is a highly personal question. Some people can live like royalty on $1 million, but for others, it might not be enough.
—Debra Greenberg,
Director, IRA Product Management, Merrill Lynch
Understanding how much annual retirement income you can expect from your nest egg is key. Because while a large nest egg might feel impressive, the income it generates may not be enough to actually last through decades of retirement. For example, consider the following chart, which shows how much lifetime retirement income three different nest eggs might provide.
How much monthly income $1 million dollars might provide in retirement
Calculate what you'll need in retirement

Estimating your retirement income needs is not an exact science or a once-and-done process. Your needs — as well as your vision for retirement — will evolve, and your portfolio performance will affect how much money you have to work with.
How the Retirement Evaluator helped this investor
Peter, age 45, wants to know if he'll have enough to retire when he turns 65. To check, he uses the Retirement Evaluator. Peter enters some of his personal information such as:
  • Retirement savings and investments: $200,000
  • Annual salary: $100,000
  • Investment style: moderately aggressive
  • Retirement contributions: $500 per month
  • Planned retirement age: 65
Step 1. According to the Retirement Evaluator, Peter is projected to accumulate a nest egg that could generate $1,883 per month in income by the time he's 65. However, he'll need $4,994 per month.
Step 2. To help close the gap, Peter adjusts some variables in the calculator. He adds Social Security benefits and cuts back on his retirement lifestyle (choosing 75%, rather than 85%, for the percentage of pre-retirement income he'll need). When he recalculates, he finds a gap of $1,152 per month.
Step 3. Peter increases his retirement age to 68 and bumps up his monthly retirement plan contributions to $700. Now he finds he's on target to potentially reach his goal.
To get a good idea of how your projected retirement income stacks up against what you may need, start with a calculator such as the Merrill Edge Retirement Evaluator™.
The Merrill Edge Retirement Evaluator™ automatically includes your Merrill Edge accounts and balances. Plus, you can input amounts for accounts not at Merrill Edge for use in your total calculation. The Retirement Evaluator also asks for some personal information, including:
  • Planned retirement age
  • If and when you will draw on Social Security
  • Retirement lifestyle
  • Current retirement savings "nest egg" amount
  • Investment style and comfort with risk
Once you have entered your personal data, the Merrill Edge Retirement Evaluator will show:
  • What your nest egg may potentially provide in monthly and annual retirement income
  • Your projected expenses in retirement
  • Whether you may fall short of your income needs
The first time you use the calculator the results may show a sizeable gap between the income amount you are projected to have and what you may need. That's extremely common. Fortunately, there are ways to help reduce that gap. For example, you may be able to use other income sources (such as pensions or part-time work) or increase your retirement savings contributions before you retire.
Look for opportunities to help close the gap

If you need to close a retirement savings gap, there are several steps you might take. Many of these variables are included in the Retirement Evaluator, and you can adjust the input information and rework the calculations to gauge the impact of potential changes.
  • Account for all assets you've earmarked for retirement:
    • Review brokerage funds from outside your IRAs and 401(k)s.
    • If you will receive a retirement pension from an employer, check your files to see how much you expect to receive in monthly income.
    • If you plan to work part-time, as an increasing number of retirees do, that anticipated income can also help you close the gap.
  • Consider investment changes:
    • Save and invest more now, perhaps by tracking your current expenses and adjusting your spending. Doing this can help you identify current spending that could be diverted to retirement saving and investing.
    • Think about your investment style and comfort with risk. If you are comfortable with a more aggressive approach, adjust your investment style in the calculator. That could potentially grow your nest egg to help close the gap.
  • Evaluate your retirement plan:
    • Defer taking Social Security during your first few years of eligibility. Each year you delay, your monthly benefits grow by about 8%, until age 70, when you earn the maximum.
    • Reconsider the retirement lifestyle you expect to have and adjust your plans to be more in line with the potential size of your retirement nest egg. You might need to compromise on luxuries to help ensure you have enough to fund things that aren't optional.
    • Look at the impact of working a year or two longer. Adjusting your expected retirement date gives you the opportunity to earn and invest more and potentially delay drawing down your assets.
After you use the Retirement Evaluator to assess your situation, it's a good idea to review and update your plans periodically. Because the information you input is saved, that will be easy to do. The Retirement Evaluator will automatically update the value of your Merrill Edge accounts and you can update information about your outside accounts.
Getting a sense of your retirement numbers can reduce your uncertainty about the future. But planning your retirement is about more than numbers. "No matter what your current retirement savings and life stage, there are things you can do to be better prepared for retirement," says Debra Greenberg, director, IRA Product Management, Merrill Lynch. The most important thing is to put time on your side by acting now to help assure you will have the lifestyle you want.
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1 This chart is a hypothetical example meant for illustrative purposes only. It does not reflect an actual investment, nor does it account for the effects of taxes. Spending is assumed to rise each year with inflation. The analysis assumes an expected portfolio return, net of fees, of 5% and expected inflation of 2.5%. Investment returns cannot be predicted and will fluctuate. Investor results may be more or less.

The projections or other information generated by the Merrill Edge Retirement Evaluator™ regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. Results may vary with each use and over time.

The examples presented are hypothetical and do not reflect specific strategies we may have developed for actual clients. They are for illustrative purposes only and intended to demonstrate the capabilities of Merrill Lynch and/or Bank of America. They are not intended to serve as investment advice since the availability and effectiveness of any strategy is dependent upon your individual facts and circumstances. Results will vary, and no suggestion is made about how any specific solution or strategy performed in reality.

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