If Your 401(k) Hits $1 Million By 35, Do You Need to Keep Saving for Retirement?

"If you have saved $1 million by 35, you may be able to coast on your investments without putting more money into your accounts - but a lot depends on factors like when you want to retire and how much you want to spend each year. Let's say that you were hoping to retire by age 45. If your $1 million investment earned an 8% average annual return for the next decade, you'd find yourself with around $2,158,925.00 by your target retirement date. At a safe 3.7% withdrawal rate, you'd have around $79,880.23 to live on. That may be enough, but it very likely wouldn't be if you lived in a high-cost-of-living area or were used to spending more while working."

"You'd also need to pay for health insurance if you left work before you became eligible for Medicare, and that could eat up a good amount of your money. Now, if you were OK with working until 55, on the other hand, then your $1 million would grow into $4,660,957.14. This would provide you with a more generous $172,455 in income. Again, though, you'll have to decide if that's enough to travel, fund healthcare, and last you throughout your later years."

Saving heavily at a young age can allow investments to compound and potentially support a COAST FIRE lifestyle where further contributions are unnecessary. A $1 million portfolio at age 35 could grow to about $2,158,925 by 45 with an 8% average annual return, providing roughly $79,880 per year at a 3.7% withdrawal rate. If saving stops, adequacy depends on desired retirement age, spending needs, healthcare costs before Medicare, and local cost of living. Waiting until 55 could increase the balance to about $4,660,957 and support roughly $172,455 annually. Clear goals and realistic expense estimates determine whether coasting is feasible.

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