The $1 million target: Should it be enough to retire?

I didn’t mean to frighten you.

Last week I wrote about a 64-year-old woman I met who had been forced into retirement after losing her job. She was shaking from fear that her $1 million retirement savings wasn’t going to last if she couldn’t go back to work. I asked a certified financial planner about this woman’s concerns. She might not have enough, the planner said.

If the retiree encounters large unreimbursed medical expenses, she might run out of money. A 4 percent withdrawal rate would give her $40,000 a year in addition to her Social Security. But if she doesn’t follow a prudent and systematic withdrawal rate, she could spend down her savings too fast.

I didn’t run down all the woman’s expenses in that column, but her largest was $2,500 a month for rent, not an outrageous sum for the Washington D.C. metro area.

What I wanted to let marinate is that $1 million has become a benchmark for retirement safety. And this fueled a lot of anxiety among readers, who wondered why someone with a seven-figure retirement account would be worried about becoming destitute.

“The idea that $40,000 a year plus Social Security is a stretch is kind of laughable,” one poster said on the popular Mr. Money Mustache retirement blog. “The only real cause for concern I see is large medical bills, but that’s a financial threat for just about everyone (who isn’t Bill Gates or Jeff Bezos).” (Bezos owns The Washington Post.)

Others on the blog could understand the angst. “Having a retirement plan you feel good about upended due to an unexpected job loss must be jarring, even if she’s fairly financially secure from a modern portfolio-theory perspective. In my book, she gets a pass for being kinda irrational. My father has similar feelings despite a healthy portfolio. Your brain can always think of a doomsday scenario where you go broke.”

In an email, one reader wrote, “I worry that I need to save a ridiculous amount to prevent being homeless at some point, and I’m actually doing a good job of saving.”

What I left out of the column was the other half of my conversation with the scared retiree.

I actually think she will be fine — and I told her so. The single senior is in a better position than most. I recommended she downsize from the townhouse she was renting or get a roommate. We talked about lifestyle changes to help make the money last.

Start early enough and you can save $1 million. Time and the financial principle of compounding are on your side. But realistically, many people won’t have $1 million saved for retirement. And making them feel like a financial failure if they don’t isn’t helpful. Scared people often become paralyzed.

But here’s the thing about personal finance that I’ve learned working both with people who have money and with those who don’t. It’s not just the budget details that matter. It’s your state of mind. It’s about your willingness to make changes so that the money you have is enough.

I’m, of course, not talking about people living in poverty. Their challenges are immense and often require outside assistance.

I’m addressing people who make a good living. If you haven’t saved what you estimated you’ll need for the retirement you want, adjust your expectations. You probably can live on less. You may need to have shared housing. Traveling the world might not be feasible, at least not as often as you would have liked.

If you’re falling short of your retirement savings goal, bend. If you stop working in your 50s and 60s, the reality is you very likely will have to fund a retirement that could go on for 20, 30 or even 40 years beyond your desire or ability to work.

There are so many “ifs” in retirement. Some you can predict, most you can’t. You don’t know when you will die. You can’t always count on working as long as you want or need. There’s always the looming possibility of catastrophic medical expenses.

So, control what you can. Be willing to alter plans if something happens out of your control. If your health is seriously failing, don’t give your adult children a hard time when they ask that you move closer — or in with them — so that they can take care of you.

If you’re single, divorce or widowed with no children, are you cultivating relationships with trustworthy relatives or friends who would be willing to help take care of you? And you’re not using them by the way. You’re building a caregiving network. We all need one. You might not end up in the millionaire’s club, but that doesn’t mean you can’t have a rich life.

— Washington Post Writers Group