Reaching $1.5 million in savings by age 62 is a major accomplishment — and for many, it’s enough to retire confidently. But whether it truly supports the retirement lifestyle you want depends on how you invest, withdraw, and plan around taxes, inflation, and longevity.
Let’s walk through how to turn that $1.5 million nest egg into a reliable, sustainable retirement income.
Step 1: Estimate Your Income Needs
The first step in determining whether you can retire is understanding how much income you’ll need each year to cover your lifestyle.
Let’s say your annual spending goal is $90,000.
If Social Security provides $35,000 per year, your portfolio needs to generate the remaining $55,000 annually.
That means you’d be withdrawing about 3.7% per year from your $1.5 million portfolio — a sustainable starting point for a 25- to 30-year retirement.
Step 2: Create an Income Strategy (The Guardrail Approach)
Rather than withdrawing a fixed dollar amount every year, a more flexible and research-backed approach is to use retirement income guardrails.
- Base income: $55,000 per year
- Upper guardrail: $65,000 (if markets perform well)
- Lower guardrail: $45,000 (if markets decline)
This system allows you to adjust withdrawals based on market performance — helping your savings last longer and reducing the risk of running out of money.
Step 3: Balance Growth and Safety in Your Portfolio
At 62, retirement could last 25 to 30 years or more, so your investments need to keep growing to outpace inflation — but without excessive risk.
A common balance might include:
- 60% equities (stocks) for long-term growth
- 30% bonds or fixed income for stability
- 10% cash or short-term reserves for near-term spending
This helps create steady income while preserving the ability to grow over time.
Step 4: Be Strategic With Taxes
Where your $1.5 million is held matters as much as how much you have.
| Account Type | Tax Treatment | Strategy |
|---|---|---|
| Traditional 401(k) / IRA | Taxed when withdrawn | Plan distributions to stay in lower brackets |
| Roth IRA | Tax-free withdrawals | Use strategically for higher-income years |
| Taxable Brokerage | Capital gains taxes | Harvest losses and manage sale timing |
A well-designed withdrawal strategy blends these accounts to minimize taxes and stretch your portfolio further. For example, you might use your Roth IRA in years when you want to stay under a certain tax bracket or avoid higher Medicare surcharges.
Step 5: Plan for Healthcare Before Medicare
Retiring at 62 means you’ll have a three-year gap before Medicare eligibility at 65.
You’ll need to plan for private insurance, COBRA coverage, or Affordable Care Act options.
This is one of the biggest expenses early retirees overlook — and it’s essential to budget for it before you leave the workforce.
Step 6: Optimize Social Security Timing
You can claim Social Security as early as 62, but each year you delay increases your benefit by roughly 8% per year until age 70.
If your health and finances allow, delaying to 67 or 70 can significantly boost lifetime income and help protect against longevity risk.
Step 7: Prepare for Inflation and Longevity
Even modest inflation can erode purchasing power over time.
At 3% inflation, $90,000 today will cost about $145,000 in 20 years.
To stay ahead:
- Keep part of your portfolio invested in growth assets.
- Adjust your income plan regularly.
- Review your spending and re-forecast annually with your advisor.
The Bottom Line
Yes, you can retire at 62 with $1,500,000 — but success depends on how you manage income, taxes, and spending over time.
A flexible withdrawal plan, smart tax coordination, and ongoing investment management can help ensure your savings last — so you can enjoy retirement with confidence and purpose.