Many people dream about having 1 million dollars and retiring early. For sure, it is a lot of money, and it requires a lot of time and self-discipline to accumulate that much. What if you are almost there and don’t want to spend a few more years saving and postponing retirement?

In this article, we will analyze the case of a person with $800k in savings who plans to retire. Of course, we are talking about a comfortable retirement where you can enjoy your life. 

Right now, $5k a month could ensure a pretty decent standard of living for a single or even a household. Of course, we assume that you don’t have any mortgage and you are debt free.

For the simulation below, we assumed the following criteria:

• Your entire amount will be invested, so the interest earned will let your savings last longer;
• Interest earned will be taxed at 15% ;
• Each month you will spend $5000 (no more and no less than that);
• Some part of that amount will come from interests earned. The rest will require you to withdraw from the accumulated capital;
• The annual interest rate of your investments for the purpose of this calculation is 8%, which is the long-term average for the U.S. stock market.

If you wish to check different scenarios, you can always use the living from savings calculator available at Calcopolis.

Now let’s dive deep into the repost. Since we don’t know how old you are, you should answer yourself if the given answer suits you.

Assuming you will not just keep your capital in a savings account but have it invested in high-yield asset classes like stocks or REITs with an average return rate of 8%, you could withdraw $5 000,00 a month for 34 years 11 months until your capital of $800 000,00 gets depleted.

Unfortunately, this assumption is rather optimistic and, in practice, difficult to replicate in real life. For several reasons:

The interest rate of 8% is too optimistic.

Although an assumed APR of 8% is what you could expect from stocks, it is advised to lower your exposure to high-volatility assets during retirement. So in practice, your $800 000,00 will give you a lower return rate than in the example above.

Inflation

What’s more, the example above does not consider inflation which is a main obstacle in long-term investing.

Taxes

As you probably expect, you will have to pay income tax from interests earned on your capital. The calculation below assumes that those $5 000,00 are after-tax deductions.

Can I retire on $800 000,00?

In most cases. yes. You can retire with $800 000,00. Below we describe what criteria you should meet in order to retire early with $800 000,00 in savings. You could calculate your own scenario using our calculator.

In order to find the precise answer, you need to ask yourself the following questions.

How much money do I need per month?

Answering this question is key to preparing a retirement plan. If your monthly expenses are in balance, there is a high possibility you will be able to quit your job with $800 000,00 in savings, but if your costs of living are very high, there is no chance that $800 000,00 will be enough for early retirement.

It’s very important to be as precise as possible. You need to calculate not only your regular daily expenses for food and bills.

You should also include expenses you pay once a year, like property tax, insurance, etc. Finally, you should add a reserve to some unexpected events like car and home repairs. The best way to do that is to add an extra 20% to 30% to the projected monthly expenses.

What is my projected time of retirement?

This question is as important as the previous one. The situation for people in their 30s or even 40s is much different than for those above 50 years old.

The older you are, the less money you will spend on retirement. Therefore older people have an advantage over millennials.

At the end of the article, we present the table with calculations of how much money you could withdraw per month from your saved $800 000,00, depending on your age.

What is my effective interest rate from your investments?

The compound interest is your greatest ally. Thanks to this magic formula, you will be able to benefit twice from each dollar you make, and that $800 000,00 you have saved will last longer.

The table below shows how much interest per month you can get from $800 000,00, depending on the average interest rate of your portfolio.

Interest rate	Monthly interests	Tax	Interests after tax
4%	$2 683,32	$402,50	$2 280,82
5%	$3 354,17	$503,12	$2 851,03
6%	$4 025,00	$603,75	$3 421,25
7%	$4 695,82	$704,37	$3 991,44
8%	$5 366,67	$805,00	$4 561,65
9%	$6 037,50	$905,62	$5 131,86
10%	$6 708,32	$1 006,25	$5 702,07

How high will inflation be in the future?

Another important factor that is most often forgotten is inflation. The biggest enemy of savers. It should never be underestimated since even low inflation of 1% to 2% could ruin your plan of early retirement.

The table below shows how $800 000,00 will decrease in value over time due to inflation.

Inflation	Initial value	Future value after:
		10 years	20 years	30 years
1%	$800 000,00	$734 787,09	$674 890,13	$619 875,65
2%	$800 000,00	$674 849,97	$569 278,02	$480 221,42
3%	$800 000,00	$619 764,50	$480 134,94	$371 963,00
4%	$800 000,00	$569 141,06	$404 901,78	$288 057,50

For more details, you may visit our inflation loss calculator to check how much will be $800 000,00 worth in the future.

How long will $800 000,00 last in retirement?

This depends mostly on two factors: the number of monthly withdrawals and the effective interest rate of your investments. The table below shows how long your savings will last depending on those two factors. The calculations assume that the entire amount of $800 000,00 will be invested, and you will receive regular interest. In most cases, in order to keep a certain standard of living, you will need to spend not just the interest but some portion of accumulated capital as well.

Interest rate	Monthly withdrawal	Savings will last for
4%	$4 000,00	24 years 7 months
	$5 000,00	17 years 9 months
	$6 000,00	13 years 11 months
	$7 500,00	10 years 7 months
6%	$4 000,00	37 years 3 months
	$5 000,00	22 years 4 months
	$6 000,00	16 years 5 months
	$7 500,00	11 years 10 months
8%	$4 000,00	1000 years 1 months
	$5 000,00	34 years 11 months
	$6 000,00	20 years 9 months
	$7 500,00	13 years 8 months
10%	$4 000,00	1000 years 1 months
	$5 000,00	1000 years 1 months
	$6 000,00	34 years 1 months
	$7 500,00	16 years 7 months

As you see, if you keep your expenses in check, you could retire with $800 000,00 in savings. With the monthly withdrawals of $4 000,00 you will be more likely to retire than if you keep spending $7 500,00 a month.

A high-interest rate is also an important factor. However, since you won’t have direct control over it is best to assume the low performance of your investments and be positively surprised eventually.

How to retire with $800 000,00?

Once you know what criteria should be met in order to be able to retire with $800 000,00, you can prepare your plan.

1. Calculate your monthly living expenses. Try to be as accurate as possible.
2. Calculate how much interest a month you make from $800 000,00 in savings. You can use our interest calculator.
3. Deduct income tax from the interest earned.
4. If the interest amount after tax may cover your expenses, you could safely retire.

If you wish to retire comfortably with $800 000,00 you can live not only from interests, but you could start spending saved capital. However, such an approach carries a risk that your savings will get depleted sooner than you might expect.

At what age can you retire with $800 000,00?

If you are young, in your 20s or 30s, you might need to accumulate higher capital or wait a few more years. Below we will analyze at what age you could retire safely with $800 000,00.

How can you retire early at 35 with $800 000,00?

To be completely honest, it will be very difficult. It will require a lot of effort and a bit of luck.

1. You need to decrease your spending in order not to deplete $800 000,00 too soon.
2. You need to take some risk and invest aggressively in order to reach a high return rate.

Of course, you can always move to a country with lower costs of living where you can retire with $800 000,00.

How can you retire early at 45 with $800 000,00?

This scenario will be difficult as well but much more probable than retirement at 35 with $800 000,00. These additional 10 years make a big difference.

1. You need to decrease your spending in order not to deplete $800 000,00 too soon.
2. You need to invest your savings with a decent interest rate, but it could be a balanced portfolio according to the 60/40 rule.

How can you retire early at 50 with $800 000,00?

If you are reasonable and can keep your spending in check, $800 000,00 is more than enough to retire early. This is much sooner than the official retirement age in the US and any other country. With Calcopolis you can estimate your standard of life on that early retirement.

1. Visit our living from a savings calculator.
2. Fill in the form with all necessary data, like your desired retirement income, expected interest rate, and income tax value.
3. The calculator will give you precise information if the analyzed scenario is viable or not.

Summary

As you saw above, early retirement with $800k in savings is possible. Although it requires keeping your spending in check, even then, there are many treats that could make it through. 

One of them is inflation since it is difficult to predict, and over a long period of time, you may expect periods of high inflation. 

The second threat is market volatility. However, it is wise to invest the money instead of keeping it in a bank account. It exposes you to the risk of a market crash. While such events are not that big a problem if you are in the accumulation phase, since markets will bounce back eventually when it happens on your retirement, you may not have the time required to wait for another bull market.

Another treat for early retirement is any unexpected event like disease or any accident. 

Of course, we are not enumerating those treats to discourage you from your path but to let you better prepare for your retirement. 

There will be some positive events too. For example, once you reach the official retirement age, you start receiving payments from your 401k, which will give you another influx of money. 

If the results of this report do not satisfy you or you feel it is too optimistic, you could always wait a little bit longer and save $1 million. We prepared a detailed calculation that tells you what you could expect on retirement with $1,000,000 in savings. 

If you, on the contrary, don't have $800k but wish to retire anyway, check out our report on what criteria should be met in order to retire with $500k in savings.