Why a $10 Million Retirement Isn’t as Lavish as It Sounds
A $10 million retirement portfolio sounds like the finish line. For many people, it represents ultimate financial freedom, the ability to spend without worry and live lavishly for decades. In reality, retiring with $10 million is far less about excess and far more about discipline, structure, and planning.
Most people who reach this level of wealth didn’t do it by spending freely. They built it through equity compensation, long-term investing, or selling businesses. By the time retirement arrives, habits are set and spending confidently can be harder than saving aggressively.
What cash flow actually looks like
Consider a typical high-net-worth couple approaching retirement. Roger and Katherine are both 62 and plan to retire at 65. Their net worth is close to $10 million, with roughly $7 million in taxable investments and the rest in retirement accounts.
Their planned spending isn’t extravagant. They target $10,000 per month for core living expenses, $120,000 annually, adjusted for inflation. They also budget an additional $25,000 per year for travel and experiences, and they account for healthcare costs before Medicare eligibility, which could exceed $9,000 per year.
This isn’t excess. It’s structure.
In the first year of retirement, total outflows approach $288,000 once taxes, healthcare, travel, and lifestyle expenses are included. That surprises many people who assume high net worth automatically equals low financial friction.
Portfolio withdrawals are lower than expected
Despite the large portfolio, withdrawals are modest. Early retirement withdrawals sit around 2% of assets well below traditional retirement guidelines. Once Social Security benefits begin around age 70, the portfolio becomes even less strained, with withdrawal rates dropping closer to 1%.
At that point, the portfolio may continue growing even while supporting lifestyle spending. Over long-time horizons, conservative withdrawals combined with market growth can lead to portfolios expanding dramatically sometimes far beyond what retirees ever expected to use.
That’s where psychology enters the picture.
Spending confidence is often the hardest part
Many high-net-worth retirees struggle not because they lack money, but because they lack permission to spend it.
After decades of discipline, frugality becomes instinctive. Increasing spending even safely feels uncomfortable. Yet without intentional planning, wealth becomes something to preserve rather than enjoy.
This is why defining spending goals matters. Travel, experiences, family support, and philanthropy don’t automatically happen just because the money exists. They require conscious choices.
Taxes don’t disappear in retirement
Taxes remain one of the largest expenses even for wealthy retirees.
Capital gains taxes apply to taxable investment sales. Ordinary income taxes apply to retirement account withdrawals. And after age 75, required minimum distributions can push taxable income higher than expected.
Without proactive planning, retirees can find themselves paying more in taxes later in life than during their working years.
Strategies such as Roth conversions, charitable giving using appreciated assets, and donor-advised funds help manage this risk. Estate planning also becomes central not just to reduce taxes, but to ensure wealth transfers align with personal values.
The real lesson of a $10 million retirement
A $10 million portfolio doesn’t guarantee excess. It guarantees optionality.
It provides freedom from financial stress, flexibility in how and when money is used, and the ability to absorb uncertainty. But it still requires planning, intentional spending, and thoughtful tax management.
In the end, the challenge isn’t having enough money. It’s knowing how to use it well and giving yourself permission to do so.
You should always consult a financial, tax, or legal professional familiar about your unique circumstances before making any financial decisions. This material is intended for educational purposes only. Nothing in this material constitutes a solicitation for the sale or purchase of any securities. Any mentioned rates of return are historical or hypothetical in nature and are not a guarantee of future returns.
