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Is $2 Million Enough To Retire?

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Doug Carey

Key Points

  • If you don't watch your spending, $2 million might not be enough for retirement. In this blog piece we use the WealthTrace Financial & Retirement Planner, which is available to the public as well, to analyze a retirement plan.
  • It is important to make sure that your retirement income covers your expenses.
  • We look at a case study where we show you what can derail a retirement plan that has $2 million saved.
If you have the good fortune to have $2 million or more saved for retirement, perhaps you're asking the question: Is this enough money for me to retire with? Can one live a stress-free retirement with this much money? When I was younger, nobody could have thought that $2 million wouldn't be enough for retirement.

But oh has the world changed since I was young. Inflation has changed the meaning of $2 million, interest rates are historically low, and the social security trust fund is projected to run out of money by 2033.

What Does "Retirement" Mean Anyway?

Retirement means different things to different people. A lot of baby boomers are retiring from their full time jobs, but taking part-time jobs to either keep themselves busy or for extra money. Either way, the line has become a bit blurred between working full time and "retirement".

To keep things simple, in this article I will assume retirement means that the person stops working altogether.

Defining "Enough Money" To Retire

We need to lay out exactly what we mean by having enough money to retire. I've written about this before here. One way to look at this is, does the person outlive their money in retirement. But this is the minimum they need. Nobody wants to be in the situation where their money will run out when they're 80, so they're hoping they don't live that long.

We could define "enough money" as always being able to cover retirement expenses with income. This is a comfortable spot for people to be in since their investment balances will not be touched, in theory, and will be there as a backup in case of emergency expenses.

Lastly, I like to look at the first two ideas in any retirement analysis and combine it with Monte Carlo analysis, which I discuss in more detail here. Basically Monte Carlo analysis runs hundreds or even thousands of scenarios on your investment portfolio and gives you the probability that you never run out of money. It does this by taking the number of scenarios where your money never runs out and divides it by the total number of scenarios.

Case Study: A Couple With $2 Million

Let's take a look at a 62 year old couple that has managed to save $2 million for retirement. Here are some other assumptions we used: 







Social Security (Combined)


Investment Mix

60% Stocks 40% Bonds

Account Types

75% IRAs, 25% Taxable

Annual Retirement Expenses

$80,000 pre-tax


Return Assumption Stocks

Return Assumption Bonds






We ran this couple's retirement plan in the WealthTrace Financial & Retirement Planner. You can run an analysis on your own situation as well using a free trial of the software. Here is what we found: 

1) They never run out of money in retirement 

2) Their income always covers retirement expenses as can be seen in the chart below:

Income Vs. Expenses

3) Their probability of never running out of money using Monte Carlo analysis is 99%.

This couple is in great shape. We can definitively say that $2 million is indeed enough for them if they spend $85,000 per year. 

Different Spending Habits

So what would it take to break their plan? How much would they need to spend before their income does not cover expenses each year? I ran some scenarios and found the point at which income no longer covers expenses for them is if they spend $115,00 per year in retirement. 

I also ran Monte Carlo scenarios and came up with the table below: 

Annual Spending

Probability Of Success

















It's interesting to see how their chances of never running out of money declines at an accelerated rate once they start spending more than $105,000 per year. This is the power of compounding at work. As they spend more money, that leaves less and less to grow the compounded rate of return over time. 

What If Social Security Is Cut?

It's an important question to ask. How does a reduction in social security payments impact this couple? The social security trust fund is projected to be depleted by 2033, at which point payments across the board will need to be reduced by 25% unless Congress funds social security from other sources.

I ran a couple of scenarios, and in this couple's case a 25% reduction in social security doesn't hurt them very much if they only spend $85,000 per year. They still don't even come close to running out of money and their probability of plan success is 98%. Even if their social security is cut by 50%, they're still in good shape with their chances of plan success at 96%. 

So, What's The Answer?

The answer is: It depends. It mostly depends on spending in retirement. In our case study, we can say that this couple will indeed be completely fine with $2 million if they spend $85,000 per year in retirement. I would take it a step further and say that even at $115,000 per year, they're doing pretty well with an 86% chance of never running out of money. Income would not fully cover expenses every year, but they can dip into principal in this case and still very likely be fine.

Want to know if you will outlive your money in retirement? WealthTrace can help you find out. See how making small changes to savings and spending can have a big effect on the probability of your plan succeeding. Use a free trial of WealthTrace to find out more.


Do you want free tips on how to retire early? How about retiring stress-free? Learn how to make sure you do not outlive your money by signing up for our free articles.

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Pic of me 2
Doug Carey