Retirement savings of less than $1 million—does it mean you can’t retire? Certainly not. However, if you want your savings to last throughout your retirement, careful planning is essential. Delaying retirement, cutting expenses, increasing income, and strategically managing investments and taxes can all contribute to enhancing your financial security during retirement.
For those with six-figure retirement savings (ranging from $100,000 to just under $1 million), valuable financial advice can be found in the ten recommendations proposed by certified public accountant Sheryl Rowling. These tips might help individuals stretch their savings further as they transition into retirement.
When planning for retirement, the focus shouldn’t solely be on how much money is saved, but rather on understanding the monthly income needed. For instance, if an individual has monthly living expenses of $6,000 and receives $4,000 from Social Security, an additional $2,000 must be supplemented from investments. Using the generally accepted withdrawal rate of 4%, a portfolio must consist of approximately $600,000.
Investments should not merely rely on interest and dividend payouts to cover living expenses. Instead, diversifying into both stocks and bonds while implementing a withdrawal strategy that accounts for investment returns and inflation is crucial.
If savings are insufficient, downsizing housing, applying for a reverse mortgage, or taking on part-time work to increase income are viable options. For those still in the workforce, the last few years prior to retirement should be utilized to boost contributions to retirement plans.
In 2026, the contribution limits for employee-funded retirement plans such as 401(k) (employer-sponsored retirement savings plan), 403(b) (retirement plan for public schools and certain non-profits), and 457(b) (tax-deferred retirement plan offered by state and local government employers) is set at $24,500 per year. Individuals aged 50 and above may contribute an additional $8,000, while those between the ages of 60 and 63 can make catch-up contributions of up to $11,250.
From 2026 onward, high-income employees earning over $150,000 from the previous year must make additional contributions using after-tax Roth contributions.
Prior to retirement, it is advisable to engage a qualified financial advisor to evaluate income, expenses, and investment assets, enabling a calculation of the likelihood of a successful retirement plan.
Rowling shared an experience involving her father, who initially intended to retire but discovered through financial analysis that he needed to work for an additional two years. Although he was hesitant because many of his friends had already retired, Rowling encouraged him: “You can continue enjoying a good job with six weeks of paid vacation, generous holidays, and various benefits for two more years before comfortably retiring; or you can retire now and end up working at a hamburger joint.” He took her advice, and some of his friends later indeed found themselves working in fast-food establishments.
Post-retirement, it is crucial to prepare for unexpected medical and living expenses. For individuals who have yet to qualify for Medicare, securing health insurance and considering long-term care insurance and umbrella liability insurance to bolster personal liability protection is advisable.
Simultaneously, individuals should work with an attorney to draft or update estate planning documents and reserve at least three to six months’ worth of living expenses in an emergency fund.
Some individuals may wish to begin collecting Social Security retirement benefits early, while others might plan to postpone until age 70 to maximize their monthly benefits. Ultimately, the timing of claims varies by individual and does not have a one-size-fits-all standard.
For those who continue to work after claiming retirement benefits, income can lead to a suspension of benefits. In 2026, those who have not reached the standard retirement age will face a reduction in benefits if they earn more than $24,480 annually, resulting in $1 deducted from benefits for every $2 earned over that threshold.
Delaying claims also presents advantages. For those born in 1960 or later (with a standard retirement age of 67), every year of delay results in an 8% increase in monthly benefits, potentially reaching 124% of the standard amount if benefits are claimed at age 70. However, postponing benefits may not suit everyone, and three critical questions should be considered before making such a decision.
The years directly following retirement but before the start of Required Minimum Distributions (RMD) can be an opportune time to execute a Roth IRA conversion.
An IRA is an individual retirement account, while a Roth IRA is funded with after-tax dollars, allowing qualified withdrawals to be tax-free. Transferring funds from a traditional IRA to a Roth IRA typically incurs tax obligations on the conversion amount and should be approached carefully to avoid moving too much at once.
Conversion amounts should be calculated precisely to keep individuals from inadvertently pushing themselves into higher tax brackets, and care should be taken to monitor how increased income could affect Medicare premiums.
Moreover, if charitable donations are planned through an IRA, there is little reason to rush the entire conversion to a Roth IRA. Qualified direct charitable contributions from IRAs count toward the annual RMD requirement and do not affect taxable income; thus, converting beforehand can potentially lead to taxation on funds that could otherwise have been donated tax-free.
Rising income not only elevates taxable income but can also prompt an increase in Medicare premiums. These premiums are typically calculated based on income from two years prior.
For example, in 2026, a single individual with a Modified Adjusted Gross Income (MAGI) of $109,000 or less will experience a standard monthly Medicare Part B premium of $202.90; however, a MAGI of $109,001 may cause the monthly premium to jump to $284.10, adding up to an extra $974.40 annually.
High-interest credit card debt should be avoided as a priority, given that it generally cannot be deducted from taxes. While earning airline miles through credit card spending is acceptable, it’s crucial to pay off balances in full each month.
When contemplating auto loans, mortgages, and home equity loans, comparing interest rates with potential investment returns is necessary. For instance, if a mortgage has a rate of 2.5% while investment returns hover around 7%, it may not be urgent to pay off the mortgage early.
When purchasing a vehicle, comparing costs between buying new, maintaining an older car, or choosing a certified pre-owned one is essential in order to minimize financial loss from new car depreciation. Post-retirement, home equity can serve as a financial resource, but taking on higher interest rates through refinancing should be avoided.
With limited retirement savings, providing financial assistance to children or relatives should be approached with caution. Open dialogues with family about one’s financial capacity are essential in preventing depleting retirement savings.
If financial assistance for family is necessary, it can be prudent to establish a budget for assistance, favoring one-time gifts over ongoing support; or to frame assistance as loans with clear repayment terms. It’s crucial to learn to say no when necessary.
Retirement planning cannot be a static process; regular evaluations are vital to assess the plan’s viability across various unexpected scenarios, including a 30% market decline, enduring high inflation, the premature death of a spouse, the need for long-term care, necessary home repairs, or a retirement extending into the 90s.
Significant life changes due to market volatility, relocation, spousal loss, tax law adjustments, or receiving an inheritance warrant revisiting financial arrangements.
For different individuals, having six-digit retirement savings may seem either quite sufficient or woefully inadequate for covering retirement living expenses. What truly matters is the actual purchasing power of the savings and the ability to sustain living expenses over the long term. Costs associated with medical care, food, entertainment, and rent may rise with inflation, meaning that even if lifestyle choices remain unchanged, required withdrawals from investments can increase annually.
Therefore, a well-organized investment and withdrawal strategy that optimizes tax efficiency while distinguishing between essential expenses and discretionary costs is vital. In periods of high inflation or poor market returns, reasonably reducing non-essential expenditures can alleviate pressure on retirement assets. Ultimately, the success of retirement is not determined by having $1 million in the bank, but by the establishment of a financial plan tailored to individual lifestyle needs that can adapt to changing economic environments.