Personal Finance

I'm Retiring at Age 60. What's a Safe Withdrawal Rate for a $3 Million IRA?

Maurie Backman

Published: January 27, 2025 1:53 pm

A lot of people wait until age 62 to retire so they can collect Social Security. But if you have a lot of money saved up, you may not be as reliant on Social Security to bring your career to an end.

Such would be the case if you’ve managed to amass a $3 million nest egg. That’s clearly a very comfortable sum, and it gives you a lot of flexibility.

But it’s also important to manage your nest egg wisely, no matter how large it is. And if you’re retiring at age 60 with $3 million, a long-recommended rule of thumb may not be appropriate for you.

Don’t automatically fall back on the 4% rule

Financial experts tend to promote the 4% rule as a retirement withdrawal strategy. The rule says that if you remove 4% of your savings your first year of retirement and then adjust future withdrawals to account for inflation, your nest egg should last for 30 years.

Now as it is, the 4% rule has a few flaws that retirees need to know about. But also, for someone retiring at age 60, the 4% rule may not cut it simply because their savings might need to last more than 30 years.

This isn’t to say that the 4% rule is totally off-base in this situation. But given that some experts think it’s too aggressive to begin with, for someone retiring at 60, a 3.5% withdrawal rate may be safer. When applied to a $3 million IRA, that results in an annual income of $105,000 without adjustments for inflation.

That’s not too shabby. And also, once Social Security becomes available, that income can be nicely supplemented with whatever those monthly benefits amount to.

And chances are, they’ll be substantial. You typically don’t get to a $3 million nest egg on a minimum wage. So someone with that much money to their name by age 60 probably earned a decent income, which means they’re probably in line for a nice monthly paycheck from Social Security once they’re old enough to claim benefits.

It’s best to get customized advice

Any time you have a big financial decision to make — and managing your $3 million nest egg qualifies as one — it’s a good idea to consult a financial advisor for targeted advice. A financial advisor can look not just at your age and the amount of savings you have, but also, other factors. These may include:

• Your expenses
• Your investment mix
• Your financial and lifestyle goals for retirement
• Your estimated Social Security benefit, and the age you plan to claim it

You may be inclined to try to manage your savings alone in retirement. And if you got yourself to $3 million, it does mean you clearly know a thing or two about making smart financial decisions. But that doesn’t mean you won’t benefit from professional help in making sure that money lasts as long as you need it to.

Also, remember that because Social Security will be off the table during at least the first two years of your retirement, you may need to withdraw from your savings more aggressively during that stage and then scale back later. And you may want to adjust your investment mix to allow for that. So it’s really a good idea to work with an advisor for guidance on all of these things.