‘I am scared to death that I’ll run out of money’: My wife and I are in our 50s and have $4.4 million. Can we retire early?

My adviser says it won’t happen; however, I am always worried. How can I get it through my head that we are good and that I can retire?

The Constant Worrywart

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Dear Constant,

Wealthy people get the heebee-jeebies too.

Your business interests alone ensure a comfortable retirement, assuming the company continues to thrive. I don’t know the specifics of your business, so I can’t talk about the company’s long-term survival. At the very least, it’s got to be an extremely comfortable backup plan for a multimillion-dollar retirement.

Assuming you genuinely worry about your ability to have a secure retirement — and you’re not trolling me and the readers with your letter — let’s take the business interests out of the picture and look at your savings. Your biggest expense, housing, is taken care of. That’s huge. You also have $250,000 in readily accessible savings for renovations or other emergencies.

If you retire early and expect to live into your 80s, you could be looking at roughly $150,000 a year in retirement income if you use the 4% rule. Withdraw 4% of your $4.4 million capital sum every year, which is about half your current combined income. You would, over that time, presumably still earn money on your investments, which would outpace inflation. 

Remember, if you and your wife are not working, you will need to seek private health insurance until you reach 65. The cost will vary based on your age. For example, a 60-year-old could pay up to $1,500 per month for a PPO (preferred provider organization) plan, while a 30-year-old would likely pay around $620 per month, according to eHealth.

If no one is working, you will need private health insurance until you reach 65. The cost varies based on your age.

About your $250,000 savings. Some liquidity is good, but this is an avalanche that’s being eaten up by inflation in a bank account. Think about CDs and high-yield savings accounts. The latter are more liquid, meaning you can take your money out more easily. Typically, withdrawals are limited to half a dozen per month. With CDs, you are committing to a set period of time.

Perhaps it will surprise some (or many) readers, but people who are multimillionaires on paper often suffer from the same insecurities as the rest of Americans who aspire to have the same amount of wealth. Just one-third of millionaires consider themselves “wealthy” and nearly half (48%) say their financial plans need improvement, this study by Northwestern Mutual says.

Use your savings to beat inflation

Interest rates can change with high-yield savings accounts — even after you deposit your money —  based on the Federal Reserve’s benchmark rate. When you buy a CD, the rate does not change. CD rates typically track the federal-funds rate, which is in the range of 4.25% to 4.5%. Currently, you can get rates of around 5.25%. 

CD ladders allow you to buy 1-, 2-, 3-, 4- and 5-year CDs, so that you have one maturing every year. You can still get CD and high-yield savings account rates of up to 4.4%, which still beats the current 2.4% inflation rate. Economists have upped their predictions of a recession happening in 2025, so maybe don’t make any sudden changes right now.

You need some context and perspective outside of your predicament. The average 401(k) balance hovers at around $242,200 for baby boomers (born 1946–1964) and $182,100 for Generation X (born 1965–1980), according to Fidelity, and the average 401(k) retirement balance across all age groups is $127,100. 

If you are that worried about your ability to retire, keep working and accumulating savings.

One theory as to why someone with $4.4 million feels so insecure: The more you have, the more you stand to lose (in theory). You need a financial plan, with dates and goals, including the kind of retirement you envisage for yourself and your wife. As John Roberts, chief field officer at Northwestern Mutual says, everyone has feelings of anxiety and insecurity.

You definitely belong among the “worry-nots” rather than the “have-nots.” “Among those with retirement savings, these savings were most frequently in defined contribution plans, such as a 401(k) or 403(b),” according to another report by the Federal Reserve. Some 75% of non-retired adults had at least some retirement savings, but 25% had no retirement savings, it added.

Oftentimes, the clue is in the question. If you are that worried about your ability to retire, keep working and accumulating savings. As humans, we constantly want more — more money, more leisure time, more excitement, more appreciation, more security and more peace of mind. Unless you hate your job, the answer may be to enjoy what you have.

Let’s hope your $25 million ship comes in.

Don’t miss: My ailing father’s house burned down in the California fires. Will our brother, who took care of them, lose his inheritance?

You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com, and follow Quentin Fottrell on X, the platform formerly known as Twitter. 

More columns from Quentin Fottrell:

I’m 5 years from retiring and moved my money into non-U.S. stocks. Was that a big mistake?

‘I’m very cynical’: My stepmother, 85, makes bizarre requests for money from my father’s $10M trust. Should I be concerned?

‘My retirement is going to be a disaster’: I’m 59 and have $45,000 in my 401(k). I earn $72,000. Am I doomed?

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