For decades, reaching a seven-figure portfolio meant you made it. Conventional wisdom suggested following the “4% rule” – withdraw 4% of your portfolio in the first year, adjust for inflation annually, and your money should last 30 years. For someone with $1 million, that’s $40,000 a year. Along with Social Security, many believed they would be elected.
But economic realities have now changed these calculations significantly.
According to Morningstar’s latest retirement-income research, the safe withdrawal rate for new retirees has fallen to 3.9% by 2026—meaning a $1 million portfolio now generates $39,000 in the first year. While the difference between $40,000 and $39,000 may seem small, the underlying reasons for this adjustment reveal why the million-dollar mile isn’t the finish line it once was.
The real shock comes when you examine what retirement actually costs.
Healthcare alone can destroy even carefully planned budgets. According to Fidelity Investments’ 2025 Retiree Health Care Cost Estimate, the average 65-year-old couple will need about $345,000 saved specifically for health care expenses throughout retirement. This number is up nearly 5% from last year.
Let’s put this into perspective: If you have $1 million saved, health care costs alone can consume more than a third of your total savings. And that $345,000 does not include dental care, vision costs, over-the-counter drugs or long-term care. An individual retiree can expect to spend about $172,500 on health care.
A safe exit rate of 3.9% means taking $39,000 from a $1 million portfolio in the first year. But here is where social security becomes very important. The average Social Security benefit in 2025 was about $2,000 a month, or about $24,000 a year per person. For a married couple receiving both benefits, that’s about $48,000 a year.
That combination — $39,000 from the portfolio and $48,000 from Social Security — provides about $87,000 in annual retirement income, which can support a comfortable lifestyle for many couples, especially those without mortgage payments. But only if you have modest spending needs and manageable healthcare costs.
Where you retire is as important as how much you save.
A million dollars can provide a comfortable life in cities and towns where the cost of living is low. You can own a house properly, enjoy local restaurants and occasionally travel without financial stress. But try living in San Francisco, Miami, or New York City on $39,000 a year from your portfolio and Social Security—you’ll burn through savings quickly.
