Is $1 million enough for retirement?

By: Greg Maxwell

Is $1 million enough to retire on? I hear you saying… "I sure hope so!"

Today I'll give you some surprising news to this very question. And I'll also tell you how to get free stock picks from some of the world's best investors…

A million doesn't buy as many yachts as it used to!

The question of whether one million dollars was enough to retire on was unthinkable just a few years ago. For people of a certain age, $1 million represented that you had made it and you were among the wealthy people of the world.

You were a millionaire.

You may not feel like that anymore… And there's a good reason. 

Because $1 million in 1970 was the equivalent of nearly twelve million dollars today. And even if we look back as recently as 1990, a million dollars has lost more than half its buying power… 

Meaning you'd need two million today to have the same buying power as you did in 1990.

So… $1 million definitely won't offer you as comfortable a retirement as it did a few years ago.

Let me answer the million dollar question.

With the overall caveat of course you knew was coming — the question of whether, any amount of money is enough for retirement: 

It certainly depends on what you want your retirement to look like.

Of course $1 million can be enough for retirement, and maybe even a lot less… and I'll show you a 4% investing rule why.

First, I want you to know, no matter where you are on your retirement journey, I'm confident you can make it. 

No matter how little you have saved or how much time you have left until you want to retire, you can always improve your situation. 

Let's start with a baseline for your retirement and how much you may need. I'll give you a basic breakdown here..

4% is a big deal

Maybe you've heard about the so-called 4% rule, based on research from Bill Bengen, a literal rocket scientist who later became a financial planner.  His work shows that it's historically been pretty safe to withdraw 4% of your initial nest egg each year… and have your money last longer than you do. What's more, you can adjust your withdrawal for inflation each year.

(This is not guaranteed and assumes a certain mix of stocks and bonds in your portfolio.)

So let's look at an example. If you do have $1 million when you retire, that means you can withdraw 4%, or $40,000, in the first year. And for another baseline hypothetical, if you have, say, a couple of thousand dollars per month of a pension to go with that, then you get to a total of about $64,000 a year.

Again, this is just a very rough look at the figures and is probably not tailored to your situation, but at least you now have some idea of what we're talking about here. If you retire with $500,000, the 4% rule would have you withdrawing $20,000 for that first year. Add in your estimated pension and see where that gets you.

Now whether you're looking at these numbers and panicking or not probably depends a lot on your current situation.

Indeed, some of the research out there is pretty sobering concerning how much Australians have saved for retirement

How do you compare?

An Association of Superannuation Funds of Australia Limited (ASFA) study found that Australians aged between 60-64 are retiring with a median balance of $154,452 for men, and $122,848 for women.

If this describes you, it's not too late to enjoy the kind of life you've worked so hard for… and the retirement you deserve. 

Here's why I say that:

Did you know that billionaire Warren Buffett made 99% of his current wealth after his 50th birthday?

Yep, at an age when many are giving up hope, Buffett was just getting started on the vast fortune he controls today.

How did Buffett do it? Well, he achieved this incredible feat by continuing to buy stocks despite his older age.

Many people think older Australians should sell all of their shares, but at The Motley Fool, we think those people are being misled…

And to prove it, we have something for you today I hope you'll like… and that's the free report I mentioned earlier.

5 Stocks for Building Wealth After 50

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Share Advisor has been helping investors find great stocks since 2011. 

With some of our early picks really illustrating the awesome power of long-term investing (and great stock picking on the part of our team):

• Netflix recommended in July 2012 has grown 43% per year (total return of 7,433%)
• Corporate Travel Management has grown 17% per year since recommending in August 2012 (total return of 570%)
• ResMed recommended in May 2013 has grown 19% per year (total return 629%)
• Amazon has grown 27% per year since recommending in February 2012 (total return of 1,911%)

Granted, I'll be the first to admit that not all of our picks have been — or will be — such big winners…

As you may know in the world of investing – there are never any guarantees…

Even so, we couldn't be more proud of the fact that we've potentially helped some independent Aussie investors ride the wave of some of the biggest investing trends over the years.

That's why I think you'll want to grab a copy of "5 Stocks for Building Wealth After 50" while it's still available for FREE.

Don't risk missing out on an enjoyable retirement… or anything else you want!

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