# How much monthly income does $1 million generate in retirement?

By James Ustby, CFP®, APMA®. Published 2026-10-09, updated 2026-10-15. Canonical URL: https://jamesustby.com/articles/million-dollars-monthly-retirement-income

> About $3,300 a month before tax at a 4 percent withdrawal rate, and the real answer depends on taxes, Social Security, and which year you retire. Here is the math.

## Key takeaways

- At a 4 percent withdrawal rate, $1,000,000 pays about $40,000 a year, or $3,333 a month, before tax.
- Hold it all in a traditional IRA and a married couple at 66 can owe surprisingly little federal tax on that income under current law, often under $2,000 a year, because of the standard deduction and the extra deductions for people 65 and older.
- Once required minimum distributions begin at 73, the IRS sets a floor on what you must take out, starting near 3.8 percent and rising every year.
- The million is not the income plan. Social Security is the floor, the portfolio is the variable layer, and the order you draw from each account decides how much you keep.

## The short answer

A million dollars pays about $3,333 a month at a 4 percent withdrawal rate. That is $40,000 a year before tax, and it is the number most people have in their head when they ask this question.

It is also the least useful version of the answer, because nobody retires on a portfolio alone. The real monthly figure is the portfolio check plus Social Security, minus tax, and the tax depends on which account the million is sitting in. Walk through it in that order and the number you actually get to spend becomes clear.

## Step one: the withdrawal rate sets the paycheck

The withdrawal rate is the percentage of your starting balance you take in year one. You then raise that dollar amount with inflation each year and leave the percentage behind. Three rates, same million:

| Withdrawal rate | Per year | Per month |
|---|---|---|
| 3 percent | $30,000 | $2,500 |
| 4 percent | $40,000 | $3,333 |
| 5 percent | $50,000 | $4,167 |

The same three rates on larger balances, before tax:

| Starting balance | 3 percent per month | 4 percent per month | 5 percent per month |
|---|---|---|---|
| $1,000,000 | $2,500 | $3,333 | $4,167 |
| $2,000,000 | $5,000 | $6,667 | $8,333 |
| $3,000,000 | $7,500 | $10,000 | $12,500 |

Put your own balance and spending into the [retirement income calculator](https://jamesustby.com/retirement-income-calculator) to see how long a given rate lasts, or start the free [Retirement Reality Report](https://jamesustby.com/report/) for a written answer on your situation.

The 4 percent figure comes from William Bengen's 1994 study, which tested every 30-year retirement in U.S. market history back to 1926 and found that 4 percent survived all of them with a balanced portfolio. Later research, including the annual safe withdrawal work from Morningstar, has landed anywhere from the high 3s to 4 percent depending on the year's starting valuations and bond yields. Treat 4 percent as the middle of a range, not a law.

Who should be at 3? Someone retiring at 55, someone with a family history of living to 95, or someone whose spending has no fat to cut. Who can be at 5? Someone with a pension that covers the essentials, or someone retiring at 72 with a 20-year horizon instead of 30. The rate is a decision about your situation, which is why a planner asks about your health and your parents before quoting a number.

## Step two: Social Security is the floor, not a bonus

The average retired worker's benefit is roughly $2,000 a month as of early 2026, according to the Social Security Administration's monthly snapshot. A couple with two work histories often collects $4,000 or more a month combined, and that income is adjusted for inflation every year and lasts for life.

Put the two layers side by side for a couple with a $1 million IRA and $48,000 a year in combined Social Security:

| Income source | Per year | Per month |
|---|---|---|
| Social Security (both spouses) | $48,000 | $4,000 |
| IRA withdrawals at 4 percent | $40,000 | $3,333 |
| Total before tax | $88,000 | $7,333 |

Notice which layer is bigger. For most households with a million saved, Social Security is still the larger check. That is why the decision about [when to claim Social Security](https://jamesustby.com/retire-when-to-take-social-security) often matters more than a half percent on the withdrawal rate. Delaying from 62 to 70 raises the benefit by roughly 77 percent, and every dollar of that is inflation protected for both lifetimes.

## Step three: the tax is smaller than you fear, if the account is traditional

Suppose the whole million is in a traditional IRA, every withdrawal is ordinary income, and the couple above is 66 and files jointly. Under the rules in place for tax year 2026:

1. The $40,000 IRA withdrawal is fully taxable.
2. Social Security is taxed on a formula. Half of the benefit plus other income is $64,000 for this couple, which is above the $44,000 threshold, so a portion of the benefit becomes taxable. Run the IRS worksheet and about $23,000 of the $48,000 is included in income.
3. Gross taxable income is about $63,000.
4. The standard deduction for a married couple is $32,200 for 2026. Each spouse 65 or older adds $1,650, and the temporary senior deduction created by the 2025 tax law adds up to $6,000 per person for those 65 and older, subject to income limits. That is roughly $47,500 in deductions.
5. Taxable income lands near $15,500, all inside the 10 percent bracket. Federal tax is about $1,550.

A $1,550 federal bill on $88,000 of cash flow is an effective rate under 2 percent. North Carolina adds its own tax on the IRA withdrawal but does not tax Social Security. The point is not the exact figure, which changes with every year's inflation adjustment and will change again when the senior deduction expires after 2028. The point is that the fear of a giant tax bill on a traditional IRA is usually wrong at this income level, and it becomes right only when the withdrawals get large or a spouse dies and the survivor files single on nearly the same income.

That survivor problem is the quiet one. Same income, half the standard deduction, narrower brackets. It is the main reason to look at [which account to draw from first](https://jamesustby.com/retire-which-account-to-withdraw-from-first) and whether partial Roth conversions in the early years make sense.

## Step four: at 73 the IRS takes over the withdrawal rate

Required minimum distributions begin at 73 for people born in 1951 through 1959 and at 75 for people born in 1960 or later. The IRS Uniform Lifetime Table sets the minimum, and it rises every year because the divisor shrinks:

| Age | Table factor | Required withdrawal on $1,000,000 | Rate |
|---|---|---|---|
| 73 | 26.5 | $37,736 | 3.8 percent |
| 75 | 24.6 | $40,650 | 4.1 percent |
| 80 | 20.2 | $49,505 | 5.0 percent |
| 85 | 16.0 | $62,500 | 6.3 percent |
| 90 | 12.2 | $81,967 | 8.2 percent |

The balance in the table stays at a million for illustration. In real life it moves with markets and with what you have already withdrawn, which is the whole point: a plan that only looks at year one is not a plan. By 85 the government requires a 6.3 percent withdrawal whether you need it or not, and every dollar is taxable. Households that never spend their RMDs end up reinvesting after-tax money they were forced to realize. That is fine, but it is better to have decided it on purpose at 65 than to discover it at 80.

## What the million actually buys, month by month

Pull it together for our 66-year-old couple:

| Line | Per month |
|---|---|
| Social Security | $4,000 |
| IRA at 4 percent | $3,333 |
| Less federal tax (about) | ($130) |
| Less state tax, North Carolina estimate | ($50) |
| Less Medicare Part B, two people at the standard premium | ($400 to $420) |
| Spendable, roughly | $6,700 |

Around $6,700 a month, or about $80,000 a year, is what a million dollars plus two average Social Security checks tends to produce for a couple who claims at full retirement age. Change one input and the number moves. Claim at 70 instead of 66 and Social Security rises by roughly a third. Hold half the money in a Roth and the federal tax line goes to almost nothing. Retire at 58 and the Social Security line is zero for years while the health insurance line is $1,500 or more a month.

## The question to ask yourself

Not "is a million enough." The question is: what is my monthly gap after Social Security, and does 4 percent of what I have cover it? If your gap is $3,000 a month, a million covers it with room. If your gap is $6,000 a month, no withdrawal rate fixes that, and the honest conversation is about spending, timing, part-time income, or housing.

Most people have never written the gap down. It takes ten minutes with your Social Security statement and a bank statement. If you want the diagnosis done for you, the [Retirement Reality Report](https://jamesustby.com/reality-report) asks the fourteen questions I ask a new client and gives you a written answer, including your three biggest risks and your next three actions.

## Questions people ask next

### Can I live on $1 million in retirement?

Many households do, because Social Security covers a large share of spending and the portfolio only has to fill the gap. If your gap after Social Security is $40,000 a year or less, $1 million is in range. If the gap is $80,000, it is not, and the honest fix is spending, timing, or working one more year.

### What is the 4 percent rule?

A guideline from a 1994 study by financial planner William Bengen. Withdraw 4 percent of your starting balance in year one, raise the dollar amount with inflation each year, and historically the money lasted 30 years in every period tested. It is a starting point, not a promise, and more recent research puts the figure a little lower in some years.

### Is $1 million enough at 55?

It has to last longer, Social Security is years away, and health insurance before Medicare at 65 is expensive. A withdrawal rate closer to 3 percent, or $30,000 a year, is the more cautious planning number at 55.

### How much does $1 million pay in interest alone?

At a 4 percent yield on a money market or Treasury bills, $40,000 a year, but that yield is not fixed and the principal does not grow with inflation. Living on interest alone works only when rates cooperate.

### What is the required minimum distribution on $1 million?

At 73, the IRS Uniform Lifetime Table factor is 26.5, so the first required withdrawal is about $37,700. At 80 it is about $49,500. At 85 it is $62,500. The percentage rises every year.

### How much monthly income does $500,000 generate in retirement?

At a 4 percent withdrawal rate, about $20,000 a year, or $1,667 a month before tax. At a more cautious 3 percent, about $15,000 a year, or $1,250 a month. Social Security usually does more of the work at this size, so the claiming decision matters even more.

### How much can I safely withdraw from $2 million?

At a 4 percent starting rate, $2 million supports about $80,000 a year, roughly $6,700 a month before tax. At a more cautious 3 percent it is about $5,000 a month, and at 5 percent about $8,300 a month. The right rate depends on your age, your other income and how much of your spending is fixed.

### How much monthly income does $2 million generate in retirement?

At a 4 percent withdrawal rate, about $80,000 a year, or $6,667 a month before tax. A larger traditional IRA also means larger required distributions after 73, so the tax plan deserves as much attention as the withdrawal rate.

## Sources

- [Social Security Administration, Monthly Statistical Snapshot (average retired worker benefit)](https://www.ssa.gov/policy/docs/quickfacts/stat_snapshot/)
- [IRS, Retirement topics, required minimum distributions](https://www.irs.gov/retirement-plans/retirement-plan-and-ira-required-minimum-distributions-faqs)
- [IRS Publication 590-B, Uniform Lifetime Table (Appendix B)](https://www.irs.gov/publications/p590b)
- [IRS, IRS releases tax inflation adjustments for tax year 2026](https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill)
- [IRS, One Big Beautiful Bill provisions, deduction for seniors](https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors)
- [Social Security Administration, Income taxes on your benefits](https://www.ssa.gov/benefits/retirement/planner/taxes.html)
- [Bengen, W. (1994), Determining Withdrawal Rates Using Historical Data, Journal of Financial Planning](https://www.financialplanningassociation.org/sites/default/files/2021-04/MAR04%20Determining%20Withdrawal%20Rates%20Using%20Historical%20Data.pdf)

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Author: James Ustby, CFP®, APMA®, Wealth Advisor, LPL Financial, Durham and Chapel Hill, North Carolina. This material is for general information only and is not intended to provide specific advice or recommendations for any individual. Examples are hypothetical and for illustration only. Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA / SIPC. Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP® and CERTIFIED FINANCIAL PLANNER® in the United States to Certified Financial Planner Board of Standards, Inc., which authorizes individuals who successfully complete the organization’s initial and ongoing certification requirements to use the certification marks.