While $10 million is a lot of money, retiring at 50 means you can plan on approximately 40 years of retirement if you expect to live to around the average age. Even if nothing catastrophic happens to you or the economy in the meantime, inflation alone can make a dent in what you can expect from your savings.
By taking more risk, your 10 million dollars could conceivably generate $400,000 – $500,000 in retirement income. If so, you should be able to live well for the rest of your life. The one thing I must caution is having a retirement withdrawal rate much higher than 2X the risk-free rate of return.
Someone who has $1 million in liquid assets, for instance, is usually considered to be a high net worth (HNW) individual. You might need $5 million to $10 million to qualify as having a very high net worth while it may take $30 million or more to be considered ultra-high net worth.
Amount of income.
Based on recent returns, a $10 million portfolio could generate from a fraction of 1% to as much as 10%, equal to a few thousand dollars to $1 million per year, depending on your selection of investments. Of course, past returns are not necessarily indicative of future returns.
Imagine you're retiring at 50 years old with $20 million in the bank. Even if the money generated little interest or even none at all, you could afford to withdraw $500,000 per year for the next 40 decades. That means you could spend nearly $42,000 each month for 40 years if you live to 90.
If you're looking to understand if you have enough to retire by a certain time, consider speaking to a financial advisor who can also help you make a retirement plan. Simply put, most people should have no problem retiring at 30 with $10 million.
In fact, statistically, around 10% of retirees have $1 million or more in savings. The majority of retirees, however, have far less saved.
Even under very dire circumstances, there's almost no way that $10 million isn't enough for you to retire at 50. Even if you parked the money in a checking account and didn't use it to generate further returns, you could live on $200,000 a year for 50 years before you ran out.
It's entirely possible to live off the interest earned by a $10 million portfolio, depending on how much you need and what your investment choices are. You'll want to make sure that your lifestyle goals are in line with the income produced if you're going to make it through retirement without running out of funds.
Costs and Lifestyle
As we noted up top, with $10 million you can generate more than enough income to live a very comfortable life. After all, even if we disregard all investments and gains entirely, this portfolio is still enough money to take out $100,000 per year, every year for the next century.
The 95th percentile, with a net worth of $3.2 million, is considered wealthy, facilitating estate planning and possibly owning multiple homes. The top 1%, or the 99th percentile, has a net worth of $16.7 million and represents the very wealthy, who enjoy considerable financial freedom and luxury.
$2.6 million
That lofty sum represents the net worth of the median American family in the upper 10% of income, a range that most of us would deem wealthy.
In 2020, according to Pew Research Center analysis, the median for upper income households was around $220,000 and the median for middle income households was slightly above $90,000.
For example, a $10 million 30-year annuity with a 5% annual growth rate would produce a monthly income of $53,459. But a $10 million annuity with a 10-year term and the same annual growth rate could produce a monthly payment of $105,625.42 per month.
Around 2,132,856 households in America have $10 million or more in net worth. That's 1.62% of American households. So, no, $10 million in net worth is not the one percent.
As we have established, retiring on $500k is entirely feasible. With the addition of Social Security benefits, the possibility of retiring with $500k becomes even more possible. In retirement, Social Security benefits can provide an additional $1,800 per month, on average.
Cash equivalents are financial instruments that are almost as liquid as cash and are popular investments for millionaires. Examples of cash equivalents are money market mutual funds, certificates of deposit, commercial paper and Treasury bills. Some millionaires keep their cash in Treasury bills.
But with a high yield savings account, that interest rate might be around 0.80%. On a $10 million portfolio, you'd receive an annual income of $6,000 to $80,000 per year. 2.
Make a general plan.
Before you start forming specific financial plans with your advisors, step back and think big-picture about what you want from this money. Write down your personal, financial, lifestyle, family and charity goals, and return to that plan later to help keep things on the right track for the long run.
Here's a look at the net worth residents of each city say you need to be considered financially comfortable in 2023, ranked by net worth thresholds: San Francisco: $1.7 million. Southern California (includes Los Angeles and San Diego): $1.5 million. New York City: $1.2 million.
It really depends on how the wealth is derived. $15 million is very wealthy and considered Very High Net Worth Individual. However, here's the catch. If you have most of your net worth tied up in non-liquid assets — like a very expensive home — then you have much less liquid net worth.
The national average for retirement savings varies depending on age, but according to the Economic Policy Institute, the median retirement savings for all working age households in the US is around $95,776. This figure includes both employer-sponsored retirement accounts and individual retirement accounts (IRAs).
When it comes to saving for retirement, the common advice is to aim for $1 million. This number has been cited so often that investors may feel as if they're failing if they don't reach it. But that shouldn't be the case. In fact, statistically, just 10% of Americans have saved $1 million or more for retirement.