How Much Interest Would $10 Million Net Me For Retirement?

As you build a nest egg, you need to understand how much income you can expect it to produce. We explore how much interest $10 million could earn. The answer is going to vary based on where you stash your savings and what you’re actively investing in, but we’ll provide a few examples of popular investments. If you need help mapping out a financial plan for your personal retirement needs, consider talking to a financial advisor.

How Much Interest Would $10 Million Earn?

The amount of income you can expect to receive from a $10 million portfolio varies dramatically based on where you store your cash and what you’re investing in. With a higher-risk investment, for example, you can potentially earn higher returns. But that risk could mean you earn less if the investment fails or falls on hard times.

Here’s a closer look at the income you can expect, at time of writing, to receive from several popular investment options if you have $10 million.

1. Savings accounts. A savings account is easily the most accessible place to store cash. With the help of FDIC insurance, the risks of losing money in a reputable savings account are non-existent. With a traditional savings account, you might find an interest rate near the national average of 0.06%. But with a high yield savings account, that interest rate might be around 0.80%. On a $10 million portfolio, you’d receive an annual income of $6,000 to $80,000 per year.

2. Certificate of Deposit: A CD offers slightly better interest rates. But you won’t have access to the funds whenever you like. Instead, you’ll have to wait until the end of a CD term to tap into the funds. CD terms range from 30 days to several years. You can find interest rates near the national average of 0.26% or rates as high as 2.25%. With a $10 million portfolio, you’d receive an annual income of $2,600 to $225,000. If you are concerned about regular access, then consider building a CD ladder. 

3. Annuities. An annuity is an insurance product that you buy in exchange for an agreed-upon payment on a regular basis at some point in the future. The amount you have to put into an annuity isn’t the only factor when it comes to returns. Annuity providers also consider your age, state, and gender. For example, a 59-year-old male from Florida would receive a monthly income of around $50,000 per month for a $10,000,000 annuity. But the details will change based on your situation.

4. Bonds. Bonds are generally considered a relatively safe investment if you are working with a reputable issuer. But there are risks if you aren’t working with a well-respected organization. Bond investors can earn around 2% to 5% per year. So, how much interest would $10 million earn? Bond investors can expect to earn between $200,000 to $500,000.

5. Dividend stocks: Dividend stocks offer investors an income stream. In addition to the income, the value of the underlying stock can also grow. On average, dividend stock investors earn between 2% to 5% in dividends each year. So, with a $10 million portfolio, you would earn between $200,000 to $500,000 per year.

6. Real estate: Real estate is a very popular investment. Although the returns can vary widely for those buying individual properties, we’ll look at real estate investment trusts (REITs) for the purposes of this discussion. On average, REITs offer returns of 3% to 10% annually. So, how much interest would $10 million earn in a REIT? Around $300,000 to $1,000,000

Other types of accounts you can store your money in include money market accounts, money market funds and high-yield savings accounts.

Factors That Impact Retirement Income

The amount of money you have to invest is just one factor that affects your retirement income. How much you’ll have to pay in fees to invest could be another huge factor that negatively impacts your final dollar amount. Here are some other important variables to keep in mind:

• Taxes: You cannot completely avoid taxes in retirement. But working with a qualified financial advisor can help you avoid paying more than you need to.

• Diversification: Although we discussed how much interest would $10 million earn for several asset classes, it’s unlikely that you put all of your eggs in one basket. Consider building a diverse portfolio to ensure different income streams come in.

• Inflation: The funds your investments earn in the future might be less valuable. Use our inflation calculator to see how this economic factor could eat into your returns.

Each of these factors can significantly impact how much interest would $10 million earn. As you build out a plan, don’t forget to think about these variables, especially the ones that you can control such as diversification. You get to choose how you invest your funds so you can make sure that your financial future is well balanced and protected.

Sustainable Withdrawal Rate

A sustainable withdrawal rate is the percentage of your savings that you are able to take out for living expenses each year without ever exhausting the funds in your investments. This is likely the answer many people are looking for when considering retiring on $10 million. A general rule of thumb is to have a 4% or 5% withdrawal rate every year, but of course it will depend on your situation and also inflation.

For example, let’s say that on your $10 million we believe in a sustainable withdrawal rate of 5%. This means that every year you’re going to take $500,000 out to live on quite comfortably, which gives you $41,666.67 per month. If you’ve invested your money in bonds and you’re getting 5% interest, your money will last this way for 40 years without you running out or changing how much you’re receiving each month.

Based on how you choose to invest your funds you can then determine what your sustainable withdrawal rate is going to be. It also depends on how long you plan on being in retirement because the last thing you want is to adjust your monthly lifestyle or run out of money.

Bottom Line

It’s entirely possible to live off the interest earned by a $10 million portfolio, depending on how much you need and what your investment choices are. You’ll want to make sure that your lifestyle goals are in line with the income produced if you’re going to make it through retirement without running out of funds. Mapping out a financial plan with an advisor can make sure this sizeable nest egg helps you enjoy the retirement you’ve been dreaming of.

Tips For Retirement Planning

• The best way to determine how much you can earn in retirement is to probably speak to an expert who can help navigate your personal financial situation with you. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

• It’s important to evaluate your risk tolerance because not all investments are created with equal risk. Weigh out your risk tolerance with SmartAsset’s free asset allocation calculator.

• Projecting your savings growth is important because the money you save will earn interest. When compounded over time, those interest savings can add up quickly. See how far your savings will grow with SmartAsset’s free savings calculator. 

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