Is $1 million enough to retire?

The New York Times carried a story earlier this month with the provocative headline For Retirees, a Million-Dollar Illusion. The story points out the difficult math facing retirees due to ultra-low interest rates, which make it tough to keep up with inflation with fixed-income investments.

But the story leads us to an unfortunate — I think false — conclusion that $1 million isn’t enough to retire. That’s going to spark near-panic among most Americans, who don’t have anything close to that figure socked away. And the conclusion is based on the usual rule-of-thumb logic – you must withdraw four percent annually from your nest egg, with an inflation adjustment. You must replace 80 percent of your pre-retirement income. And so on.

Those aren’t rules of thumb; they’re rules of dumb. See this article, and this one.

I joined a lively conversation about this today on Huffington Post Live. Here’s the video.