The $4 Million Question: Can a Couple in Their 60s Afford to Stop Working?

A reader's argument over an $8,000 trip to Italy has turned into a sharper money question: with $4 million saved and both spouses in their 60s, is it time to stop working?

The reader says his wife believes they cannot afford to retire, and he vetoed the trip. His stated worries are the ones most people at this stage share: health care costs, long-term care, inflation, a long bear market, and the chance of living to 95. Each is a real risk. None of them settles the question on its own.

Start with the arithmetic. A $4 million portfolio supports roughly $160,000 a year at a 4% withdrawal rate, a common planning benchmark rather than a guarantee. Whether that is enough depends on how much they spend, what Social Security or pension income will add, whether they carry debt, and how the savings are held. Withdrawals from traditional IRAs and 401(k)s are taxed as ordinary income, so the spendable figure is lower than the headline number.

The bear market worry deserves particular attention. A steep decline early in retirement, while withdrawals are coming out of a shrinking portfolio, does far more damage than the same decline later on. Planners call this sequence-of-returns risk. A cash reserve covering a few years of spending, or a flexible plan that trims withdrawals after bad years, can soften the blow.

Health and long-term care are harder to model. Medicare covers a great deal, but it does not pay for most extended custodial care, and out-of-pocket costs can climb quickly. Couples typically handle this with insurance, a dedicated reserve, or a larger cushion in the plan. Living to 95 argues for planning as if the money must last three decades, not two.

That leaves a middle path that many couples in this position choose: work a few more years or move to part-time, let savings keep compounding, and delay Social Security, which grows with each year past full retirement age, up to 70. Then reassess with real numbers.

Before anyone cancels or approves a trip, both spouses should sit down with a fee-only planner and run a projection that includes a bad market in year one and a long life. The Italy trip, for what it is worth, may be the cheapest decision in the whole conversation.