Can You Retire at 60 with $1.5 Million? A Real-Life Case Study
Joe and Tracy’s Retirement Question
Meet Joe and Tracy — both 60 years old, living in sunny Florida. Over the years, they’ve worked hard, saved diligently, and now have $1.5 million earmarked for retirement.
Their question is simple:
“Can we actually retire now and live comfortably for the rest of our lives?”
This is one of the most frequently asked questions I receive from couples in their late 50s and early 60s. The answer depends on more than just the size of your nest egg — it’s about income optimization, Social Security strategy, tax efficiency, and affordable healthcare before Medicare begins at 65.
Breaking Down Their Financial Picture
Here’s how Joe and Tracy’s retirement savings are divided:
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$1,000,000 in a 401(k) (tax-deferred)
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$250,000 in a brokerage account (taxable)
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$250,000 in a Roth IRA (tax-free)
At first glance, this looks strong — but the real question is how to make that money last 30+ years.
Step 1: Projecting Monthly Income
Using retirement planning software, I modeled their income across several scenarios.
The result: they could generate around $9,850 per month in after-tax income starting at age 60.
That’s their “spendable” money — what actually lands in their checking account after taxes and healthcare costs.
Step 2: Social Security Timing
Social Security is one of the biggest levers in retirement income planning.
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Joe’s full benefit at age 67: $4,500/month
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Tracy’s full benefit at age 67: $2,500/month
But here’s the thing: timing matters.
By claiming Tracy’s benefit at 63 and Joe’s at 67, they balance lifetime benefits with near-term cash flow. That strategy gives them strong income now without overly depleting their portfolio early.
Step 3: Healthcare Before 65
The next big hurdle — health insurance before Medicare eligibility.
If you’ve looked at private insurance rates, you know the sticker shock is real. A couple in their 60s might face premiums of $1,700 or more per month.
However, by carefully managing income, they can qualify for Affordable Care Act (ACA) subsidies, dropping that cost to as low as $50–$100 per month.
For example, keeping modified adjusted gross income (MAGI) under about $80,000 allows substantial premium tax credits. Smart withdrawals from Roth and brokerage accounts (instead of all from 401(k)s) can help stay under that line — potentially saving over $20,000 per year in healthcare premiums.
Step 4: Tax Efficiency Through Diversification
Here’s where tax planning really shines.
Each account type behaves differently:
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401(k): fully taxable withdrawals
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Brokerage: mostly capital gains and dividends (tax-favored)
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Roth IRA: tax-free withdrawals
By mixing withdrawals — say $80K from the 401(k), $20K from Roth/brokerage — Joe and Tracy can:
✅ Stay under the ACA income threshold
✅ Qualify for subsidies
✅ Keep their effective tax rate low
That’s cash flow optimization meets tax strategy — the key to sustaining wealth.
Step 5: Roth Conversions After 65
Once they reach Medicare age, the plan shifts again. Now that healthcare subsidies no longer apply, it becomes strategic to perform Roth conversions.
Converting a portion of their 401(k) each year can:
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Lower future required minimum distributions (RMDs)
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Reduce taxable Social Security income later
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Protect against “widow’s tax” if one spouse passes away
In Joe and Tracy’s case, timed Roth conversions could save around $345,000 in lifetime taxes and increase their after-tax legacy by $200,000.
Step 6: Making Retirement Realistic
When we ran the numbers, the result was encouraging:
Joe and Tracy could confidently retire at 60, maintain their lifestyle, and plan for long-term security — all while managing healthcare and taxes intelligently.
Their case shows that with proper planning, early retirement is absolutely possible for many couples with around $1.5 million saved.
Key Takeaways
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Model your income sources early. Don’t guess — project.
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Plan Social Security intentionally. The right age combo can add hundreds monthly.
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Use tax-efficient withdrawals. Blend 401(k), brokerage, and Roth sources.
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Leverage ACA subsidies before 65. Control taxable income to lower premiums.
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Convert to Roth after 65. Avoid future tax brackets and leave a cleaner legacy.
Frequently Asked Questions (FAQ)
Q: Is $1.5 million enough to retire at 60?
Yes — for many couples, it can be. But success depends on spending habits, location, and tax strategy. Joe and Tracy’s example shows it’s possible with the right balance of income planning and healthcare management.
Q: Should I delay Social Security until 70?
Not always. For many couples, one spouse claiming earlier while the other delays offers a better lifetime outcome.
Q: How do I qualify for ACA subsidies in early retirement?
By keeping your modified adjusted gross income (MAGI) under the federal threshold (around $80K for two people), often by using Roth or brokerage withdrawals instead of 401(k) distributions.
Q: What’s the benefit of Roth conversions after 65?
They can lower your long-term tax burden, reduce RMDs, and protect your surviving spouse from higher tax rates.
