I'm 62 Years Old And Have $1.2 Million Saved. Is This Enough to Retire Stress-Free?

Retirement is a huge milestoneand one of the biggest questions people face is whether they have enough saved up to live comfortably.

If you've managed to save $1.2 million by 62, you're probably wondering if that's enough to carry you through your retirement years. But even more importantly, will this nest egg allow you to live a stress-free life financially? The answer depends on your spending habits, healthand how long you expect to live.

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A Hypothetical Scenario

Suppose you're 62, still workingand plan to retire soon with $1.2 million in the bank. According to the Bureau of Labor Statistics, the average household led by someone 65 or older spends about $52,141 per year. This works out to a little over $4,345 monthly in living expenses. With that as a baseline, the question becomes: will your $1.2 million last?

How the 4% Rule Fits In

One common strategy retirees use is the 4% rule, which suggests withdrawing 4% of your retirement savings each year. Based on this rule, $1.2 million would give you about $48,000 per year or $4,000 per month. That's close to the average retirement spending but doesn't leave much wiggle room for extras.

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Adding in Social Security

Don't forget about Social Security. The average monthly benefit for retired workers in 2024 is $1,919.40. Combining that with the $4,000 from your 4% withdrawals, your total income could be around $71,033 per year – putting you above the average retiree spending. Of course, your actual Social Security benefits will depend on factors like when you start claiming them and your work history. If you delay taking Social Security until age 70, you could even boost those benefits.

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Health Care Costs to Consider

Health care is one of the biggest wild cards in retirement. Fidelity estimates that a 65-year-old couple retiring in 2024 will spend around $165,000 on medical expenses over their retirement years. That's about $3,300 a year per person, a cost you must factor in. If you're healthy, this might not be a big concern, but if you have health issues, it could become a larger part of your budget.