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The average 60-something American today has $112,500 in retirement savings, according to Northwestern Mutual. So if you’re retiring with a $1 million IRA or 401(k), you’re clearly well ahead of the game.

A $1 million nest egg could make it possible to enjoy the lifestyle you’ve always dreamed of for your retirement and do things like travel and pursue fun hobbies. And with a savings balance like that, you may find that you don’t have to stress so much when your home needs a sudden repair or you have a month with a lot of medical bills.

But even with $1 million in savings, it’s important to manage your nest egg wisely. If you’re not careful, you could end up depleting it despite starting out with such a large sum.

Don’t just take retirement withdrawals at random

Many people worry about running out of retirement funds. That risk exists whether you’re retiring with $100,000, $1 million, or $10 million.

If you’re not careful about taking withdrawals from your savings, you might whittle your balance down at a faster rate than expected. And that could put you in a tough position later on in retirement.

Remember, the tricky thing about retirement is that there’s no way to know how long yours will last. If you wrap up your career at age 65, you may need your money to last another 20 years, 25 years, or longer — you just don’t know. But if you’re careful with taking withdrawals, you can hopefully set yourself up to make that money last as long as you need it to.

How much should you take out of your savings each year?

For years, many financial experts supported a 4% withdrawal rate for retirement savings. For a $1 million nest egg, that would translate to $40,000 a year.

These days, financial experts have gotten a bit more conservative, and some will tell you a 3% rate is more appropriate so your money doesn’t run out. That would give you $30,000 a year if you have $1 million to start with.

But there are different variables to account for when establishing your own withdrawal rate. These include:

Your age at retirementThe state of your healthYour expensesThe way your savings are investedOther income sources you have available, including potential wages from a part-time job, profits from a family business, and Social Security

It’s smart to sit down with a financial advisor and have them help you establish a withdrawal rate that makes sense for you given all of these factors. You might also have to adjust your withdrawal rate over time as your expenses or needs change. An advisor can help you with that, too.

Generally speaking, retiring with $1 million means having plenty of financial freedom. But it’s still important to manage your money carefully and be mindful of your withdrawal rate. The good news is that you don’t have to crunch those numbers alone. If you work with a professional, running out of money may become less of a concern.

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