3286: I Have $1 Million and I Still Can’t Afford to Retire! by Kathleen Coxwell of New Retirement

Summary

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Episode Overview

Title: I Have $1 Million and I Still Can’t Afford to Retire!
Host: Diania Merriam (Optimal Finance Daily)
Source: Article by Kathleen Coxwell, NewRetirement.com
Date: September 17, 2025
Main Theme:
The episode challenges the common belief that reaching $1 million in savings guarantees a comfortable retirement, exploring why even millionaires struggle with financial insecurity and what actionable steps everyone—regardless of net worth—can take to improve retirement readiness.

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Key Discussion Points & Insights

1. The Myth of the "Easy Street" Millionaire (01:00)

• Main Idea: Having $1 million does not ensure a secure or comfortable retirement.
  • Research cited: Over 35% of millionaires feel they’ll need a "miracle" to retire securely.
  • Millionaires worry about outliving their money just like everyone else.
• “I have a million dollars, but I’m worried that my money won’t last is a common refrain.” (Kathleen Coxwell, 01:13)
• Reason: Most millionaires spend more, but save at similar rates to average households, making them just as vulnerable to falling short in retirement.

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2. Savings Rate and Lifestyle Inflation (03:00)

• Millionaires’ savings rate is only “just under 3% higher than the overall average”—not enough to meaningfully change retirement outcomes.
• On average, high-net-worth individuals report $625,000 in retirement savings vs. $250,000 for the general population.
  • “While the numbers look good, the difference is not great enough to merit any substantial difference in sentiment about their retirement prospects.” (Kathleen Coxwell, 03:30)

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3. Impact of Inflation and Economic Volatility (04:00)

• Inflation is a major concern: "$1 million today is literally not what it used to be." (Kathleen Coxwell, 04:45)
• Market downturns hit harder—losses are experienced in five or six-figure amounts when account balances are larger.

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4. Actionable Solutions for Retirement Insecurity (05:10)

Kathleen Coxwell outlines five practical steps for those concerned about retirement readiness:

1. Work a Little Longer (05:15)

• The majority of millionaires consider retiring later than planned.
• “Your retirement date is a powerful lever to help you achieve a secure retirement, but your time is a big trade off…” (Kathleen Coxwell, 05:25)

2. Create a Budget and Cut Retirement Spending (05:45)

• Detailed budgets clarify where you can cut without reducing joy or essential lifestyle needs.
• "Creating detailed spending projections can help you prioritize... you can probably spend on what really matters to you." (Kathleen Coxwell, 06:00)
• Use financial planning tools to model various spending levels.

3. Utilize Home Equity (06:30)

• Home is often a millionaire’s largest asset.
• Strategies: Downsize, reverse mortgage, home equity loans, communal living—these can smooth cash flow during tough periods.
• "Retaining your home equity is a good backup plan in case you encounter a major unexpected financial need, a medical event, or require long-term care in the future." (Kathleen Coxwell, 07:00)

4. Turn Savings into Lifetime Income (07:20)

• Consider methods to convert savings to reliable income streams (annuities, laddered strategies, part-time work).
• No single approach fits all; combining different strategies may be optimal.

5. Work with an Advisor, But Keep Control (07:35)

• Get expert help—especially about income, insurance, and tax—but beware high “assets under management” (AUM) fees.
• “If they're managing a million dollars at a 1.5% AUM fee, that's $15,000 a year that could otherwise be used by you.” (Kathleen Coxwell, 07:50)
• Fee-only advisors typically offer advice for a set fee, reducing conflicts of interest.

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5. The Role of Risk and Flexibility in Retirement Planning (08:15)

• Even with a sizeable nest egg, uncertainty (longevity, health costs, inflation, market declines) demands proactive risk management.
• “No matter how much money you have saved, it’s important to anticipate potential risks to your finances…” (Kathleen Coxwell, 08:20)
• Focus on planning for stressors, not being paralyzed by them.

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Host’s Summary & Additional Commentary (09:31)

• Retirement = a mathematical equation, not an age:
  • “You’re able to retire at the point that your investments can cover your expenses for the rest of your life at a safe withdrawal rate.” (Diania Merriam, 09:32)
  • Key resource: “The Shockingly Simple Math Behind Early Retirement” by Mr. Money Mustache.
  • For a $1M nest egg to last, annual expenses should be around $40,000 (assuming a ~4% withdrawal rate).
• Importance of flexibility: “The key is to be flexible and to set yourself up with various tools and options to help you navigate your finances in light of an uncertain future.” (Diania Merriam, 10:10)

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Notable Quotes & Memorable Moments

• Kathleen Coxwell (NewRetirement.com):

  • "We hear it from new retirement users all the time. I have a million dollars but I'm worried that my money won't last is a common refrain.” (01:13)
  • “A million just isn't what it used to be, especially in this economy.” (04:45)
  • “It's not that millionaires can't retire, they can't maintain their quality of life...” (01:50)
  • “You may want to consider working with a fee-only advisor instead... There’s typically no conflict of interest between what’s in the advisor’s best interest and yours.” (08:00)

• Diania Merriam (Host):

  • "Retirement isn't an age, it's a mathematical equation." (09:31)
  • “It’s nearly impossible to know with 100% certainty that you will never run out of money because there’s too many variables that we can’t control.” (09:50)
  • “The key is to be flexible…” (10:10)

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Timestamps for Key Segments

• 01:00: Main theme introduction—Millionaires and retirement insecurity
• 03:00: Discussion of millionaire savings rates
• 04:00: Impact of inflation, market downturns
• 05:10: Five actionable solutions for financial insecurity
• 07:35: Managing advisor fees and finding the right financial help
• 09:31: Host’s summary—Retirement as a mathematical problem, flexibility, and key takeaways

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Episode Flow & Relevance

The episode expertly dispels the notion that a “magic number” like $1 million is a guarantee for retirement success, emphasizing that both mindset and strategic planning are vital for everyone—regardless of wealth. Diania Merriam’s energetic and encouraging delivery makes the content accessible and motivating, reinforcing the importance of budgeting, flexibility, and thoughtful risk management in retirement planning.

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Transcript

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This is optimal Finance Daily. I have a Million Dollars and I Still Can't Afford to Retire By Kathleen Coxwell of NewRetirement.com if you think that with a million dollars in the bank, you would be on easy street when it comes to retirement, think again. According to new research from Naxis Investment managers, more than 35% of millionaires say it will take a miracle to retire securely. In fact, millionaires are almost as likely to think that retirement is out of reach that investors overall. We hear it from new retirement users all the time. I have a million dollars, but I'm worried that my money won't last is a common refrain. And while it may seem far fetched and you may want to roll your eyes, it's a very real problem. It turns out the economic woes of millionaires are very similar to those experienced by more average savers, only the scale is different. It's not that millionaires can't retire, they can't maintain their quality of life. Many of the roughly 7 million millionaires in North America earn and spend more than the average household, and their savings as a percentage of their income and spending is roughly on par with everyone else. Which means that they, like most other people, simply aren't saving enough to maintain their quality of life for the 20 to 30 years they'll live in retirement. Almost anyone can retire at a reasonable age. The question is, how much do you need or want to spend? The problem? Millionaires save at roughly the same percentage of their income as less wealthy households. And that's not enough. In the survey, high net worth individuals report median retirement savings of 625,000, which, while good, comes out to just 2.5 times the 250,000 median retirement savings of the overall survey population. Similarly, while an average retirement savings rate of 19.4% is impressive, it's still just under 3% higher than the overall average of 16.6%. As a result, it appears that while the numbers look good, the difference is not great enough to merit any substantial difference in sentiment about their retirement prospects. Everyone, millionaires and people who are not millionaires need to save at a rate that's adequate for future withdrawals. Plus, a million just isn't what it used to be, especially in this economy. The problem is not just that millionaires spend more than average savers. It's also that big economic problems can have a more appreciable impact when you have a lot of money. $1 million today is literally not what it used to be. Inflation has recently taken a big bite out of what money can buy, and losses in the stock market become five or six figure problems if you have a lot of money invested. So what to do if you're a millionaire or anyone and are facing retirement worries? Believe it or not, millionaires really are a lot like everyone else, and the solutions to their retirement savings problems aren't so different either. Work a Little Longer Even though millionaires plan on retiring at the relatively early age of 63, the majority, 58%, believe that they may have to work longer. Your retirement date is a powerful lever to help you achieve a secure retirement, but your time is a big trade off for the extra money you'll get from working longer. Use the new retirement planner to assess your retirement date and look for ways to retire earlier. Number two Create a budget and consider how to reduce retirement spending. Reducing your future spending can dramatically improve your financial security in retirement, and that doesn't always need to be at the cost of what is important to you. If you create a detailed budget for retirement, you can get a better sense of where you might want to economize. Creating detailed spending projections can help you prioritize. You might not be able to afford everything, but you can probably spend on what really matters to you. Our Planner plus Budgeter enables you to set and vary spending levels in over 75 different categories. You can also set required and optional budgets for each line item. This exercise will help you prioritize and see how you might economize to get an earlier Secure Retirement Number three Strongly consider your home equity as a retirement asset. For many people, millionaires included, their home is their most valuable asset. Depending on your estate planning aspirations, prudently using your home equity to help fund retirement can be a good strategy. You can downsize domestically or abroad, secure a reverse mortgage, look at communal living situations, and consider home equity loans to bridge to Social Security or through downturns in the stock market. These strategies can improve your cash flow, give you an infusion of savings to spend in retirement, and have other benefits. However, remember that retaining your home equity is a good backup plan in case you encounter a major unexpected financial need, a medical event, or require long term care in the future. Turn Savings into Lifetime Income if you're worried about running out of money in retirement, you may want to consider how to turn your savings into lifetime income. There's no one size fits all approach to retirement income, but I have an article with 18 different retirement income strategies that you can mix and match to your advantage. And number five Work with an advisor, but don't give away all your money to them. You've worked hard to save a million dollars is still a great achievement and used effectively, it can likely enable a rewarding retirement. Getting help with your investments and guidance on your plan, especially with regards to retirement income, insurance options and taxes, is a great idea. However, be wary of paying someone to manage your assets, especially if they're charging you based on assets under management or AUM. If they're managing a million dollars at a 1.5% AUM fee, that's $15,000 a year that could otherwise be used by you, you may want to consider working with a Fee only advisor instead. A Fee only Advisor charges a fixed fee in exchange for advice. The cost of fee only advice is typically a fraction of aum, and there's typically no conflict of interest between what's in the advisor's best interest and yours. As can sometimes be the case with aum, will you ever have enough? There's a lot that can and will go wrong in the future, and that can make planning your retirement seem futile and frustrating. No matter how much money you have saved, it's important to anticipate potential risks to your finances, inflation, stock market downturns, living a long life, long term care, and more. However, plan for efficient ways to deal with those stressors instead of letting them keep you from your goal. You just listened to the post titled I have a Million Dollars and I Still Can't Afford to Retire by Kathleen Coxwell of NewRetirement.com. this message is brought to you by Apple Card.

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I've often heard that retirement isn't an age, it's a mathematical equation. You're able to retire at the point that your investments can cover your expenses for the rest of your life at a safe withdrawal rate. And the way most of us figure out what that nest egg needs to be is by starting with our current expenses. There are plenty of calculators and simulators online, but I think a good place to start is to check out the article titled the Shockingly Simple Math behind early retirement by Mr. Money Mustache. This was the first thing I read that convinced me that it is possible to retire on a million dollars, but you'd need to get your yearly expenses down to about $40,000. Also, all retirement planning and modeling is based on a lot of assumptions. It's nearly impossible to know with 100% certainty that you will never run out of money because there's too many variables that we can't control. But what I've learned from my friends who are retired and actively drawing down on their portfolios. The key is to be flexible and to set yourself up with various tools and options to help you navigate your finances in light of an uncertain future. And that'll do it for this episode. Have a happy rest of your day and I'll be back with you again tomorrow, where your optimal life awaits.