Traditionally, achieving millionaire status was considered the hallmark of wealth, and many people believed that a $1 million nest egg would be more than enough to retire on. Today, that figure no longer holds up. A million dollars isn’t really enough for most people to maintain genuine financial security in retirement.
At a safe 3.9% withdrawal rate, a $1 million nest egg yields only about $39,000 a year to live on. Even combined with Social Security, that number leaves little margin for comfort, let alone any real financial freedom in retirement.
So what is the new target? Is $10 million the threshold for a genuinely worry-free retirement? It’s the number many followers of the Financial Independence, Retire Early (FIRE) movement aim for, but whether it actually delivers a carefree retirement depends on several important factors.
Will $10 million provide a care-free retirement?
When assessing retirement security, the most important number is the income your investments can generate at a safe withdrawal rate. The withdrawal rate is the percentage of your portfolio you draw down each year. Pull out too much too fast, and you run the risk of depleting your investments before they have time to generate returns, sending your balance on a one-way trip toward zero.
Morningstar’s 2025 “State of Retirement Income” research sets the base-case safe withdrawal rate at 3.9% for a retiree targeting 30 years of inflation-adjusted income at a 90% probability of success. That figure is up slightly from the 3.7% the firm recommended in 2024, reflecting marginally improved expected returns across asset classes. Experts had long used a 4% rule as a starting point, but forward-looking return assumptions and longer life expectancies had pushed that figure lower for several years. The modest uptick to 3.9% reflects updated capital markets modeling, not a signal that retirees can afford to be careless.
Apply that 3.9% rate to a $10 million portfolio and the result is $390,000 in annual income. Taxes will reduce what you actually take home, but even after Uncle Sam’s cut, the remaining cash flow is substantial. Add Social Security on top of that, and the total income picture for a $10 million retiree looks genuinely comfortable by almost any standard.
The real question, then, is whether $390,000 a year is enough to make you feel financially secure throughout retirement. For most people in most places, the answer is probably yes. But there are real forces that can erode that cushion faster than you might expect.
Don’t forget about the impact of inflation
It’s tempting to look at $390,000 a year and conclude the problem is solved. Inflation makes that calculation more complicated. A dollar today buys less than it did five years ago, and it will buy less still twenty years from now. The $390,000 you draw in year one of retirement will have meaningfully less purchasing power by year twenty.
That matters most for people who are still years away from retirement. If you’re setting a $10 million goal for a retirement that’s two decades out, the real value of that income stream at the time you actually retire will depend heavily on how much prices have risen in the interim. You need to think not just about hitting the $10 million number, but about ensuring your invested assets grow at a rate that outpaces inflation rather than merely keeping pace with it.
The post-pandemic inflation surge was a sharp reminder of how quickly rising prices can upend a household budget. Healthcare, housing, food, and utilities all climbed steeply, and retirees living on fixed investment income felt that pressure directly. The right asset allocation for a $10 million portfolio isn’t just about generating returns. It’s about generating real returns, after inflation, that preserve purchasing power over decades.
Be prepared for health care and long-term care costs
Inflation is a broad threat. Healthcare inflation is a more targeted one, and it tends to hit retirees harder than almost any other expense category. According to Fidelity’s 2025 Retiree Health Care Cost Estimate, a 65-year-old retiring today can expect to spend an average of $172,500 on out-of-pocket healthcare costs throughout retirement. That’s expenses Medicare doesn’t cover, and it represents a more than 4% increase over the $165,000 figure Fidelity published just one year earlier. Healthcare costs have consistently risen 5% to 6% annually, outpacing general inflation by a wide margin, and the trajectory is not expected to reverse.
Long-term care is a separate and potentially larger financial exposure. According to the CareScout Cost of Care Survey, the national annual median cost of a private room in a nursing home reached $127,750 in 2024, a 9% jump from the prior year. That is a per-year expense. Given that 7 in 10 Americans who turn 65 will require some form of long-term care during their lifetime, this is not a remote risk to be dismissed. Long-term care insurance can help offset these costs, but policies must be purchased well in advance, and they rarely cover every scenario, so a meaningful cash reserve for out-of-pocket care expenses remains essential even for well-insured retirees.
Consider your local cost of living and lifestyle
Where you live has an outsized effect on how far $390,000 a year actually goes. In lower-cost states and rural areas, that income can fund a genuinely generous lifestyle. In high-cost metros such as New York, San Francisco, or Boston, the picture is very different. Housing, state income taxes, property taxes, and basic utilities can consume a much larger share of income than most people anticipate, particularly if you carry a mortgage into retirement rather than entering it with your home paid off.
That scenario is increasingly common. More retirees today carry mortgage debt into their later years, either because they moved late in their careers or refinanced repeatedly, resetting the clock on their loans. For those retirees, a significant portion of what looks like comfortable income on paper gets absorbed by housing costs before anything else is paid.
Lifestyle spending matters too. Frequent international travel, expensive hobbies, or a second home can all erode a seemingly ample income stream faster than projected. If your retirement vision includes regular spending on experiences and luxuries, $390,000 may not stretch as far as the raw number suggests.
What legacy do you want to leave?
Beyond your own spending needs, there’s the question of what you want to leave behind. A $10 million portfolio, drawn down at 3.9% per year, can fund a comfortable or even lavish retirement while still leaving a meaningful balance for heirs, provided market returns cooperate. But if your goals include funding college for grandchildren, making large charitable gifts, or leaving a substantial inheritance, those ambitions require a larger margin of safety than the baseline income math suggests.
Ultimately, $10 million is a strong foundation for retirement, but it isn’t a universal answer. Retirement security is personal. Factors including where you live, what you spend, how long you live, and what you hope to leave behind all shape whether any given number is truly enough. Working with a financial advisor to build a plan around your specific goals is the only reliable way to determine the right target for you.
Editor’s note: This article has been updated to reflect Morningstar’s 2025 base-case safe withdrawal rate of 3.9% (revised upward from 3.7% in 2024), which raises the annual income projection from a $10 million portfolio to approximately $390,000. The Fidelity healthcare cost estimate has also been updated to $172,500 for a 65-year-old retiring in 2025, up from the prior $165,000 figure.
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