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How long $1 million in retirement savings will last as a 70-year-old depends on a number of factors, including where you live, what type of lifestyle you lead, how healthy you are and how much insurance coverage you have. Here’s a look at how these factors affect how long your savings will last, using Bureau of Labor Statistics data regarding average expenses in that age group.
BLS Statistics
The U.S. Bureau of Labor Statistics conducts an annual survey of the average annual expenditures of Americans across various age groups. The most recent data, for the year 2023, shows that Americans 65 and older — of which 70-year-olds are obviously a part — spent an average of $60,087 for the year.
Using a straight mathematical average, this would suggest that for the average 70-year-old, $1 million would last approximately 16.64 years, or until they are nearly 87.
How Health and Insurance Play a Role
Generally speaking, healthcare costs increase after you retire. Even if you consider yourself relatively healthy, there’s no telling how many injuries, illnesses or chronic conditions you may have to deal with as you get older. While genetics and personal lifestyle choices can prolong your life, there are no guarantees when it comes to health. Obviously, frequent trips to doctors and hospitals can quickly add to your expenses, shortening the duration of your $1 million.
This is one of the reasons why good health insurance is essential in terms of the survival of your $1 million nest egg. If you have to pay out of pocket for your healthcare as you age, you could quickly increase that “average” $60,087 annual spend to $100,000 or more, rapidly depleting your savings.
Another factor to consider is that if you actually remain healthy and live a long life, you’ll need to stretch that $1 million in retirement savings even further. A nest egg that only lasts for 17 years after average spending won’t do you much good if you’re going to live 30 years or more in retirement. In that scenario, you’ll either need to boost your savings or learn how to live off less.
Budgeting and Lifestyle Factors
The way you live your life can have a huge effect on how long your money will last in retirement. Assuming an “average” lifestyle, a pot of $1 million would last you about 17 years. But few retirees living in Manhattan, for example, could get by on $5,000 per month, even if they consider themselves frugal. In that scenario, $1 million may only last 10 years or less. But if you live a simple life in a rural community in Mississippi, for example, your money might last 30 years or more.
The key to making your retirement savings last is to create a realistic budget. It’s this simple — if you can live well beneath your means, then your $1 million will last longer. If you live a rockstar lifestyle, it will last less.
The Importance of Investment Returns
Very few people with $1 million simply keep it “under a mattress,” or in an account that doesn’t earn any interest. At the very least, most people with seven-figure account values keep that money in a low-risk, low-return investment like a high-yield savings account or a U.S. Treasury bill. Those with a bit more risk tolerance may keep some or even all of that amount potentially higher-yielding investments like intermediate-term bonds or dividend-paying stocks.
Either way, it’s highly likely that by taking on even a little bit of risk you can earn much more than 0% on your $1 million nest egg in retirement — and with higher returns, you can greatly extend the life of your nest egg.
As shown above, it would take roughly 17 years for the average 70-year-old American to spend $1 million. But if you could earn even a 3% return on the $1 million, it could instead last for about 21 years. Boosting that return to 6% would nearly double the time that your money would last, to over 33 years. This simple example shows the immense power of investment returns when it comes to the longevity of your nest egg.