Thinking about retirement? Wondering what your target retirement amount should be? If you're like many that aren't going to reach millionaire status, you're likely asking yourself a question like, "Can I retire on 750k dollars?"
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Can I Retire on 750k Dollars?
It's a great question. For some, it's absolutely possible. For others, it's not enough. So what's the difference? Why might $750k be enough for some, but not for others? There are two big factors:
How early you retire
What your withdrawal amount is each year
If you retire early and you want to live on $100k a year, then I can tell you already...$750,000 isn't going to cut it. But, if you retire at age 65 and you only need $50k a year to live on, then you might just get by on $750k in your nest egg.
Want to know if you can retire on 750k dollars? Read on, but also consider that the stock market is volatile and shouldn't be your sole investment strategy. Consider adding these top alternative investments to your portfolio:
NAME | DESCRIPTION | MIN INVESTMENT | TARGET RETURNS | LEARN MORE |
Vinovest | Buy and sell investment grade wines---from Burgundy, Bordeaux, and beyond | $1,000 | 12%-16% | |
Fundrise | America's largest direct-to-investor real estate investment platform. Over 330,000 investors. | $10 | 9%-12% | |
Crowdstreet | The leading online real estate investing platform---470 deals and $1.65 billion in investments. | $25,000 | 9%-24% | |
MasterWorks | Where investors can buy shares of great masterpieces by artists like Banksy, Monet, and Warhol | $10,000 | 10%-25% | |
Yieldstreet | Private investment opportunities in art, real estate, legal finance, and more. | $2,500 | 3%-18% |
What is the Interest on 750k Dollars Annually?
What will $750,000 earn you in interest each year? Well...that all depends on what you choose to invest in. Based on my research and my personal experience, below are the expected interest rates for the respective investments.
Savings: 0.5%
Certificate of Deposit: 0.65%
Short term government bond: 1%
Short term corporate bond: 2-3%
Annuity: 3%
Real Estate: 7%
S&P 500 Index Fund: 10%
If you've never managed real estate before, then that's probably not your preferred investment. Instead, you'll likely want to focus on the S&P 500 Index fund, annuities, and perhaps some bond investments.
Interest Income on 750k Dollars Annually
What if you invested 100% of your nest egg into just one of the above options? At each of the percentage returns, this is how much you'd earn with your $750,000.
0.5% Savings Account: $3,750 per year
0.65% CD: $4,875 a year
1% Short term government bond: $7,500 a year
3% Annuity: $22,500 a year
7% Real Estate: $52,500 a year
10% S&P 500 Index Fund: $75,000 a year
Quite a big difference from a "high yield" savings account to investing in the stock market, right? The savings account is less risky, but you certainly can't live on $3,750 a year. So, as I stated earlier, you'll likely need to invest in something that yields more, especially if you want your money to last for a few decades!
How Much Interest Does 750k Dollars Earn Per Month?
Wondering how much money you could earn per month with $750k? Let's stick with the same investments and percentages as we outlined above, but just with the monthly income on $750,000 this time.
0.5% Savings Account: $312 per month
0.65% CD: $406 a month
1% Short term government bond: $625 a month
3% Annuity: $1,875 a month
7% Real Estate: $4,375 a month
10% S&P 500 Index Fund: $6,250 a month
Sooo...if you were thinking about just putting your money in a CD in your retirement, you might want to think again. $406 a month? I don't know of too many people that can live on that little!
Read more:
How Long Will $750k Last in Retirement?
Here's what you really came to find out. If you have $750k in your nest egg, how long will it actually last you? Here's a few scenarios, calculated with Bankrate's handy savings withdrawal calculator. Take a look and see which one works best for you!
$60k Withdrawal Rate Per Year
At 8% interest, your money lasts 40 years
6% interest, your money lasts 22 years
4% interest, your money lasts 17 years
2% interest, your money lasts 15 years
$80k Withdrawal Rate Per Year
At 8% interest, your money lasts 16 years
6% interest, your money lasts 14 years
4% interest, your money lasts 12 years
2% interest, your money lasts 11 years
It's pretty easy to make $750,000 last for 10 years in retirement. It's a little tougher to make it last 20 years. And, nearly impossible to live off of those dollars for 40+ years in retirement.
Don't Forget About Inflation
The withdraw amounts in the above example sound easy enough - living on $60k or $80k might seem pretty simple and carefree. Well...today it is....but probably not 20 years from now. And certainly not 40 years from now! The big factor here...inflation. The buying power of your dollar goes down every year -- by roughly 3.5% a year according to World Data.
What does inflation mean for you?
This means that roughly every 20 years, the cost of consumer goods double. Meaning, your money goes half as far. Put even more simply, $60,000 today will feel more like $30,000 in just 20 years. ...And 20 years after that? It will feel like just $15,000!
This is why old people still pay you with quarters and dimes. Back when they were kids, this was a lot of money!! If you're planning to retire on 750k dollars, be sure to consider the cost of inflation!
What Will It Cost to Live When You Retire? (Inflation is a Killer!)
Can You Retire on $750k at Your Age?
You might be ready to retire tomorrow, or maybe you're thinking about retiring in 40 years and making $750k your retirement savings goal. Whatever the case, is it possible to retire on 750k dollars? Take a look at the scenarios below:
If You Retire Today at Age 65
Let's assume you can retire on just $50,000 a year and that you can earn 6% on your money in retirement. How long will 750k dollars last if you retire soon at the age of 65? By living on $50k a year and earning 6% on your money, your retirement fund will last until you're 100 years old! That should be enough!
Keep in mind though, that by 85, that $50k will feel more like $25k, so you'll have to dial your lifestyle back a bit. Not a huge deal though - still a decent plan for retirement!
If You Retire at 65 in 20 years
Let's say you're 45 years old now, and you're trying to save 750k by the time you're 65. How long will that money last? Well...if you were hoping to live a $50k/year lifestyle, you'll need to withdraw $100k a year by the time you retire (Remember? Inflation doubles the cost of those consumer goods every 20 years).
If you withdrew $100,000 a year from your $750,000 nest egg, how long will that money last? I can tell you already...it won't last you till you're 100 years old! Per Bankrate's calculator, your $750k retirement fund will only last you for 10 years. ie. Until you're 75 years old. Not great...
If You Retire at 65 in 40 years
If you are 25 years old now, and you were hoping to live on 750k dollars when you retire at 65, it's just not going to work. Your $50k lifestyle today will need $200k per year by the time you're 65. Annnnd your $750k nest egg will only last you four years, until you're 69 years old. That's obviously not going to cut it!
How Much Money Do You Need to Retire at 60?
What If You Retire Early With 750k Dollars. Is It Enough?
Now, instead of retiring at the age of 65, let's say you want to retire early! Can you retire early on 750k dollars? I'd say that it is possible, but you'll have to live a life of frugality...forever.
Here's how you can retire early on $750k:
Get completely out of debt (so you have no payments)
Save up $750k in an investment account
Withdraw just $45,000 a year...for life
That's it! The above plan will support you for 58 years. So, if you retire at age 42, your money will last till you're 100 years old! But again...remember the effects of that pesky inflation.
The $45,000 income will feel like $22,500 in 20 years
It will feel like $11,250 a year in 40 years
And, when you approach 100 years old, it will feel more like $6,000...
If you don't want to cut it so close in the end, you could spend less up front and your money will last longer, allowing you to spend more in your later years of life.
Can You Retire on 750k Dollars in Another Country?
All of my figures and references so far have been centered in the United States. But...what if you retire in another country? Would your $750,000 stretch further? Could you retire more luxuriously somewhere else? If you could retire in another country for less money, what are the best countries to retire to? According to CNBC, there are 10 countries where you can retire on less than $2,500 a month!
Costa Rica
Panama
Mexico
Colombia
Portugal
Ecuador
Malaysia
France
Malta
Vietnam
Costa Rica grades out as the best place to retire because...
you can get by on just $2,000 a month for a couple,
medical costs are low,
there's available (and affordable) real estate,
and the temperature is tropical!
Sounds pretty good to me!
Check out pur retirement calculator and other personal finance tools.
How Long Will Your $750k Last in Another Country?
If you can live on $2,000 a month in retirement, how long would your $750k last? Even if you only earned 2% on your money for your entire retirement, your nest egg would still last for 48 years! Moving to another country for your retirement? It's certainly something to consider!
How to Build Up 750k Dollars In Your Retirement Fund
If your goal is to save up 750k dollars in retirement, how can you go about doing this? For me personally, I would invest in a few index funds that have proven to return between 8% and 12% for the past 20+ years of their existence. If you could earn 8% on your money, how much would you need to stash away each month to reach $750k in 40 years? 20 years? 10 years?
Save Up 750k Dollars in 40 Years
Want to save up $750k in 40 years? All you need to do is stash away $215 a month and earn 8% interest on those contributions!
Save Up 750k Dollars in 20 Years
Want to save up $750k in 20 years? You'll have to put substantially more away each month... Instead of saving $215 a month, you'll need to sock away $1,275 a month to get to $750k in 20 years. It's going to be quite a bit tougher, but still not impossible!
Save Up 750k Dollars in 10 Years
Do you have just 10 years before you'd like to retire? How much do you have to save each month to get $750k into your retirement? ...$4,100....a month. Yikes! What if you could earn 12% instead of 8%? Dave Ramsey keeps preaching that you could earn 12% in the stock market via mutual funds.
If you could pull this off, you could get by with investing less each month. Instead of $4,100 a month, you'd need to save $3,260. Still a hefty amount, but perhaps more doable!
Is 750k Enough to Retire On? What Do You Think?
You came into this post asking yourself the question, "Can I retire with 750k?" If you're retiring very soon and can live frugally, then yes, you'll probably be just fine with $750k. And, if you intend to live in another country in your retirement to survive on much less per month, then this option will likely work for you as well. Outside of that, living on 750k dollars is pretty tough, especially if you're trying to make it last for more than 30 years.
Inflation is just too much of a monster to battle for that long! Long story short, if you can only muster up $750k for your retirement account, you can probably make it work. But, if you can bump this number up, it is certainly recommended!
How about you? Are you targeting $750k for your retirement? Is it the right number for you?
SOURCES
Inflation rates in the United States of America. (n.d.). Worlddata.Info. Retrieved March 16, 2023, from https://www.worlddata.info/america/usa/inflation-rates.php
Scipioni, J. (2021, January 6). Top places around the world to retire on a $2,500-a-month budget or less. CNBC. https://www.cnbc.com/2021/01/06/best-budget-friendly-places-to-retire-in-2021-report.html
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