Will $1.4 Million Last in Retirement for a Couple in Their 70s Paying $1,750 in Rent?
As retirement looms, many Americans grapple with the question: Will my savings be enough? For a couple in their 70s with $1.4 million in savings and a monthly rent of $1,750, the answer depends on several factors, including lifestyle, location, additional income sources, and financial planning strategies. With careful management, this nest egg can provide a comfortable retirement, but it’s not without challenges. Here’s a breakdown of what this couple should consider to ensure their savings last.
Understanding the 4% Rule
A common guideline for retirement withdrawals is the 4% rule, which suggests withdrawing 4% of your savings annually, adjusted for inflation, to sustain a 30-year retirement. For a $1.4 million portfolio, this translates to $56,000 in the first year. With rent at $1,750 monthly ($21,000 annually), this leaves $35,000 for other expenses like healthcare, food, and leisure. However, the 4% rule assumes a balanced investment portfolio and doesn’t account for unexpected costs or market downturns.
Impact of Location on Cost of Living
Where you live in the United States significantly affects how far $1.4 million will stretch. In high-cost states like California or New York, $1 million may last less than 15 years, while in more affordable Midwestern or Southern states, it could last over 20 years. For renters, annual rent increases can also erode savings. At $1,750 monthly, the couple’s rent is relatively moderate, but they should budget for potential increases of 3-5% per year. Choosing a lower-cost area or securing a long-term lease could help manage this expense.
Additional Income Sources
The couple’s adjusted gross income of $160,000 last year suggests they may have income beyond savings, such as Social Security or pensions. Social Security benefits, averaging around $1,900 per month per person in 2025, could add $45,600 annually for a couple. This income can significantly reduce reliance on savings, potentially covering rent and leaving the $1.4 million to grow or cover other expenses. Optimizing Social Security claim timing is crucial to maximize benefits.
Healthcare and Long-Term Care Costs
Healthcare is a major concern in retirement, with Fidelity estimating that a 65-year-old couple retiring in 2024 needs $165,000 for medical expenses throughout retirement. Since this couple is in their 70s and reports good health insurance, they may have lower out-of-pocket costs. However, long-term care, which Medicare typically doesn’t cover, could be a significant expense. Planning for potential nursing home or in-home care costs, possibly through long-term care insurance, is essential.
Investment and Withdrawal Strategies
To avoid running out of money, the couple should maintain a diversified investment portfolio, balancing stocks, bonds, and cash to manage risk while aiming for modest growth. A financial advisor can tailor a withdrawal strategy beyond the 4% rule, adjusting for market conditions and personal needs. For example, withdrawing less in down markets or tapping into emergency savings for unexpected costs can extend the portfolio’s lifespan. Converting some savings to a Roth IRA could also provide tax advantages.
Lifestyle and Spending Choices
Lifestyle plays a big role in retirement sustainability. The average retiree household (ages 65-74) spends about $60,844 annually, with housing as the largest expense. If the couple keeps discretionary spending modest—limiting travel or expensive hobbies—their $1.4 million, combined with Social Security, could support a comfortable lifestyle. Budgeting for smaller expenses like gifts or home maintenance is also critical to avoid dipping into savings unexpectedly.
Planning for Longevity
Life expectancy is a key variable. A 70-year-old couple may live another 15-20 years, requiring their savings to last into their late 80s or beyond. If they withdraw $60,000 annually (including rent) and earn a conservative 5% return on their portfolio, their $1.4 million could last approximately 25 years, assuming 2% inflation. However, living longer or facing high medical costs could shorten this timeline. Regular financial check-ins can help adjust their plan as needed.
Conclusion: Can They Make It Work?
With $1.4 million, $1,750 monthly rent, and potential Social Security benefits, this couple is well-positioned for a secure retirement if they plan wisely. Living in a moderate-cost area, maintaining a diversified portfolio, and managing healthcare and discretionary expenses can help ensure their savings last. Consulting a financial planner to create a personalized strategy is highly recommended to navigate market volatility and longevity risks. By taking these steps, the couple can enjoy their retirement years with confidence.