Simply put, probably not. Why is that? $1 million is a lot of money and pretty hard to accrue. It should be enough to retire on.

Well, the answer in part depends on your budget and when you plan on retiring. For example, if you are retiring today and your budget shortfall outside of your social security and pension income mandates an amount between $30K and $40K a year from your $1M portfolio, then you are probably OK with a $1M nest egg.

However, if you were to retire say 20 or 25 years from now, the Rule of 72 tells us that our $1M nest egg would need to be around $2 million (because at a 3% inflation rate, the purchasing power of our money is cut in half every 24 years). And, additionally, our retirement years will hopefully last another 20 to 25 years, thereby, further requiring even more money if we are to live 50 years from today (nearly 4x’s the $1M needed today).

Moreover, with healthcare costs rising faster than the rate of inflation, healthcare should be a serious concern of every retiree. Fidelity estimates that a couple retiring today would need to budget about $280,000 for lifetime healthcare costs. One can easily see that in 20 to 25 years from now the Rule of 72 again tells us that healthcare costs could be well over a half million dollars.

Is all lost? No. It is never too late to start preparing for one’s retirement. Even saving a modest $6,500 per year at a 7% rate of return for the next 25 years can yield nearly $440,000 per the linked article’s calculation. It may not be a million, but its better than a goose egg! Click on the link above for more information.

For a quick post about how much you need to save by age group to reach $1M, click here.