Can you retire at 60 with $2.5M?

With $2.5M at age 60, you can safely spend about $106,500/year after tax ($8,875/month) without running out over a ~35-year retirement — about a 4.3% withdrawal rate, a touch above the classic 4% rule, which a shorter horizon like this can support. Whether that's enough comes down to your lifestyle; here's the full picture.

How long $2.5M lasts at different spending levels

The 4% rule is a starting point, not a guarantee — especially retiring at 60, when the money may need to last 35+ years. Here's what $2.5M supports, spending from age 60 to 95 at a 6% nominal return and 3% inflation:

Why the answer isn't just $2.5M × 4%

A back-of-envelope "$2.5M × 4% = $100,000" overstates what you can safely spend at 60, for two reasons this projection captures:

• Taxes. A dollar in a traditional 401(k) or IRA is taxed as ordinary income on the way out; taxable-brokerage gains are taxed too. Only Roth and cash are tax-free. So the safe spendable figure ($106,500) sits below the headline 4% draw.
• A long horizon. Retiring at 60 can mean 35+ years in retirement. The 4% rule was calibrated to about 30 years — stretch it further and a lower rate (nearer 4.3% here) is what actually survives a bad early market.

The portfolio, year by year

Spending the sustainable $106,500/yr from $2.5M at age 60, here's how the portfolio holds up in today's dollars (inflation-adjusted, so it reflects real spending power):

Assumptions: single filer, TX (no state income tax), 60% taxable / 30% traditional / 10% Roth split, 6% nominal return, 3% inflation, no Social Security. Add Social Security, a pension, part-time income, or a spouse in the calculator and the safe number rises — often substantially.

Treating delayed Social Security as longevity insurance

At 60 with this balance, the portfolio can likely carry you to Social Security on its own, which turns the claiming decision into an insurance question rather than a cash-flow one. Each year you delay past full retirement age, around 67, raises the benefit by roughly 8%, an inflation-adjusted, government-backed income stream that keeps paying no matter how long you live, precisely the risk a portfolio alone does not fully cover.

Delaying also keeps the gap years before benefits and RMDs low-income, which is when Roth conversions are cheapest. Filling the lower brackets now shrinks the required distributions that would otherwise land in your seventies.

Two later-life surcharges make this worth planning around. IRMAA raises Medicare premiums as income climbs, and the NIIT adds a 3.8% surtax on investment income above set thresholds. Both bite hardest once RMDs and Social Security stack up, so converting into the quiet years is as much about staying under those thresholds later as about the income tax itself.

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