"But still, if you're retiring with $3 million, you're clearly well ahead of your peers. A $3 million nest egg gives you the leeway to spend money on the things you've always wanted to do - especially if you're also getting a generous monthly Social Security check. Still, a $3 million nest egg needs to be managed carefully. You don't want to blow that money or risk running out of savings in your lifetime."
"If you've got a fairly even mix of stocks and bonds, you may be safe to use the popular 4% rule, which has you withdrawing 4% of your balance your first year of retirement and adjusting future withdrawals for inflation. If we apply a 4% withdrawal rate to $3 million, we get $120,000 a year. That doesn't include inflation adjustments, but it also doesn't include taxes."
"Of course, your $3 million nest egg may not be your only retirement income source. Chances are, you've got a decent Social Security check coming your way if you managed to accumulate $3 million in savings. The average monthly benefit today for retirees is about $2,000. You may be looking at more like $3,000 a month if you're a higher earner."
In 2022 the average retirement savings balance for 65- to 74-year-olds was about $609,000, and recent stock market gains likely increased that average. A $3 million nest egg places retirees well ahead of peers and allows discretionary spending, especially with a generous Social Security check. A balanced stock-and-bond portfolio can support a 4% withdrawal rate, producing $120,000 annually from $3 million, before inflation adjustments and taxes. Withdrawals outside Roth accounts are taxable, so tax planning is necessary. Typical Social Security benefits can add roughly $30,000 a year, yielding about $150,000 combined income.
Read at 24/7 Wall St.
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