$2 Million in Retirement Savings: Here’s How Much You Could Withdraw Per Year

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Alex Potemkin / iStock.com
Alex Potemkin / iStock.com

You’ve done it, you reached millionaire status and saved $2 million in your retirement savings. No matter your cumulative retirement plans or other investment decisions, you’ve successfully reached this goal.

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While you’ve probably figured out your retirement withdrawal strategies by this point, you should examine how $2 million compares to the average retiree before you get started. With a nest egg this large, you likely won’t have to rely heavily on social security benefits, so long as you can make your money last.

The next step is figuring out how much you can really afford to withdraw each year in retirement, and whether that will be enough for you to live comfortably well into your golden years.

The Federal Reserve estimates that the average American retiree has about $255,200 in retirement savings by retirement age, but age plays a huge variable. Retirement savings includes employer-sponsored retirement plans, like 401(k)s, and individual retirement accounts, such as traditional IRAs, Roth IRAs or SEP IRAs.

So, if you have $2 million in retirement savings, you are well ahead of the average American retiree. However, here are a few takeaways according to the Survey of Consumer Finances:

  • The average retirement savings for all families is $333,940, whereas the median retirement savings for all families is $87,000.

  • The median retirement savings for those in the age group 55 to 64 is roughly $185,000.

  • If you reach age 65, the median savings is around $200,000, and if you are 75 or older, the median retirement savings is about $130,000.

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There are several ways to determine how much money to withdraw each year during retirement. The amount you should withdraw depends on your spending habits, required minimum distributions, income tax rates, savings and life expectancy.

You can calculate your withdrawal amount based on the average expenses of other retirees, the 80% rule, the 4% retirement rule or with help from a financial advisor.

“Calculating the optimal withdrawal involves a thorough assessment of your financial needs, long-term goals and risk tolerance,” said Nathan Jacobs, a senior researcher at The Money Mongers.

According to the Bureau of Labor Statistics, people 65 and older spend an average of $49,279 in total annual expenditures, which is about $4,107 each month. However, expenditures declined from $56,267 for the 55-to-64 age group to $36,673 for the 75-and-older group. Older households spent $6,066 on food, ranging from a high of $6,800 for the 55 to 64 age group to a low of $4,349 for the 75 and older group.



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Alexandra Williams
Alexandra Williams
Alexandra Williams is a writer and editor. Angeles. She writes about politics, art, and culture for LinkDaddy News.

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