“If I Had a Million Dollars…” Would I Still Be Rich Today?
In 1988, the Barenaked Ladies released their hit song “If I Had $1,000,000”. They sang about spending it on a house, exotic pets, and quirky luxuries and finished the chorus with, “I’d be rich.”
Back then, that may have been true. But in today’s economy, $1 million in retirement savings doesn’t buy as much peace of mind as it used to. Between longer lifespans, taxes, inflation, and market uncertainty, many retirees are surprised by how fast that money can go.
So let’s answer the question that’s on a lot of people’s minds:
Is $1 million really enough to retire on?
Can You Retire on $1 Million in 2025?
Yes, but it depends on how it’s saved, how it’s spent, and how long you’ll need it to last.
Let’s take a realistic example of a married couple, both age 66, who just sold their small business for $870,000. After taxes and fees, they’re left with $700,000 in a taxable investment account. They also have $300,000 saved in a traditional IRA. Combined, they have a $1 million portfolio.
They start drawing $36,000 per year from Social Security and follow the 4% withdrawal rule*, which gives them another $40,000/year from their investments. In total, their retirement income is about $76,000 per year.
*I am using the 4% rule for the simplicity of this example. This is not how I manage cash flow for my clients.
Annual Retirement Expenses (2025 estimate):
Housing/property taxes: $18,000
Medicare + supplemental: $5,500
Groceries, dining, and entertainment: $20,000
Travel: $8,000
Home maintenance/misc: $10,000
Contingency fund: $10,000
Total: $71,500
They’re just about breaking even, which may work but it leaves little margin for error. And here’s where things get more complex:
taxes, where you save, why you save there, when to take from that location, and the IRMAA trap.
Will My Social Security Be Taxed?
Yes—up to 85% of it can be taxable.
For married couples filing jointly, if your provisional income (which includes half of your Social Security plus all other income) is above $44,000, then 85% of your Social Security becomes taxable.
In this example, their combined withdrawals plus Social Security exceed $44,000*, pushing them well past that threshold. That means $30,600 of their Social Security income ($36,000 × 85%) will be added to their taxable income.
*This assumes they took income from their retirement account which is taxed as ordinary income. If they only drew from their cost basis in their taxable account they could avoid this tax but at some point they will need to draw from capital gains or the retirement account.
Bottom line: Social Security is not tax-free once you’ve built a decent retirement income. And that added tax drag can reduce your net cash flow and potentially push you into a higher Medicare premium bracket (more on that shortly).
Does It Matter Which Accounts I Use to Save for Retirement?
Absolutely—and it affects both how much you keep and how you’re taxed.
Let’s look at the three major account types:
Tax-deferred accounts (Traditional IRA, 401(k), SEP IRA): Withdrawals are taxed as ordinary income. That means you’ll pay federal taxes based on your marginal income tax bracket.
Taxable accounts (brokerage accounts): Earnings are taxed as capital gains when assets are sold. Capital gains tax rates range from 0% to 20% depending on your income. Some Dividends may also qualify for this lower rate.
Tax-free accounts (Roth IRA, Roth 401(k)): Withdrawals are tax-free, as long as you meet certain requirements.
In retirement, this matters. Having access to different account types allows you to better manage your tax bracket each year. For higher-income retirees, pulling from a taxable account instead of a traditional IRA may reduce overall taxes.
Which Assets Are Considered Tax-Deferred?
Common tax-deferred assets include:
Traditional IRA
401(k) or 403(b)
SIMPLE or SEP IRAs
Deferred annuities
Some pension plans
These accounts grow tax-deferred, but every dollar withdrawn is taxed as regular income when you retire. And once you hit RMD age, you’ll be required to take Required Minimum Distributions (RMDs) whether you need the income or not.
What’s the Best Order to Draw from My Retirement Savings?
Here’s a common rule of thumb for a retirement spending strategy:
Start with taxable accounts. These accounts usually have the most favorable tax treatment. Selling investments with long-term capital gains can generate income at a lower tax rate than IRA withdrawals. Using this account can help keep your income lower so you have headroom to do Roth conversions if it is appropriate for your plan.
Then draw from tax-deferred accounts. As you approach RMD age, begin drawing from traditional IRAs and 401(k)s. This helps manage future RMD size and reduces potential tax spikes later.
Save tax-free accounts (like Roth IRAs) for last. Since Roth withdrawals are tax-free, these can be a powerful reserve for later years, rising healthcare costs, or legacy planning.
Should I Be Concerned About IRMAA?
If your income is high in retirement, yes.
What is IRMAA?
IRMAA stands for Income-Related Monthly Adjustment Amount. It’s a Medicare premium surcharge for high-income retirees. It affects Part B and Part D Medicare premiums.
In 2025, if a married couple’s Modified Adjusted Gross Income (MAGI) exceeds $212,000, they’ll pay higher Medicare premiums, ranging from $74 to $443.90/month per person for part B alone, depending on income level.
Even one-time income events, such as a Roth conversion or large capital gain, can trigger IRMAA, even if it’s just for a single year.
That’s why strategic withdrawal planning is critical. Coordinating distributions from various accounts and timing income carefully can keep you under key thresholds and avoid IRMAA.
So, Is $1 Million Enough?
Maybe—but not without a strategy.
If you manage taxes wisely, diversify your account types, and plan your withdrawals carefully, $1 million can support a modest, secure retirement. Especially if you’re debt-free and willing to spend thoughtfully.
But without that level of planning, taxes, healthcare costs, and market swings can drain your savings faster than you expect.
Bringing It Full Circle
The Barenaked Ladies once sang, “If I had a million dollars... I’d be rich.”
Today, that line needs an asterisk.
A million dollars doesn’t make you rich. But with the right strategy, it can help you live richly—on your terms.
Want to See What $1 Million Could Mean for You?
If you're wondering how this applies to your situation, I offer free consultations to help folks like you retire with clarity and confidence. Feel free to schedule a time to talk.
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The information contained herein is intended to be used for educational purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been drawn from sources believed to be reliable. The content is not intended to be legal, tax or financial advice. Please consult a legal, tax or financial professional for information specific to your individual situation.
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