Retiring With $2 Million? Here's the Lifestyle You Might Have.

Many Americans retire without any savings at all. If you've managed to retire with a $2 million nest egg, that's an accomplishment to celebrate.

But does having $2 million in retirement savings guarantee a comfortable lifestyle? Let's find out.

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How much income can a $2 million portfolio generate?

While $2 million is certainly a lot of money, you're not going to spend it all at once. That money may need to last 20 or 30 years, so it's important to withdraw from your savings carefully.

If you opt to use the popular 4% rule, a $2 million nest egg gives you $80,000 in retirement income each year, plus adjustments for inflation. That's a nice amount of money for someone with moderate fixed expenses. If you still have a mortgage on your home that costs you $3,000 a month and a $1,000 monthly property tax bill on top of that, your options may be more limited.

That said, your $2 million IRA or 401(k) probably isn't your only income stream. You're most likely eligible for Social Security as well.

The average retirement benefit for Social Security recipients today is about $2,081. If you managed to save $2 million for retirement, though, then it probably means you were a higher earner. In that case, you may be looking at $3,000 a month in Social Security or more. And if you delay your claim past full retirement age, your Social Security checks could be even larger.

Even if we assume that your Social Security benefits are in line with the average today, that still gives you an annual retirement income of over $100,000 when combined with your nest egg withdrawals. That could easily cover your essential expenses and still leave you plenty of money for hobbies and splurges.

Granted, you may not be able to afford first-class tickets to Europe three times a year. But it may certainly be reasonable to expect to take one nice trip per year with the income you're looking at, or a few smaller trips -- especially if your fixed costs like housing and transportation are on the lower side.

You still need to be careful

While retiring with $2 million gives you plenty of options, inflation will likely erode your buying power over time. That's why it's important to invest your nest egg strategically.

Retirees are often inclined to dump their stock holdings to unload the associated risk. But doing so could cause your $2 million portfolio to generate lower returns. And lower returns could mean less available income. So rather than abandon stocks completely, a better bet may be to simply scale back.

But you'll need to be mindful of market conditions if you keep a portion of your portfolio in stocks. If there's a serious downturn, it's generally wise to cut back on spending and let your savings recover rather than continue tapping your portfolio at your usual pace.

It's also important to maintain a cash cushion so you can keep up with your bills during a market decline without having to tap your portfolio aggressively. If your annual expenses, including leisure, total $100,000, you may want to keep between $100,000 and $300,000 in cash.

It's a good position to be in

All told, $2 million in savings could give you a very enjoyable retirement. You may not be living a life of luxury. But you should be able to cover your costs with minimal stress.

Just be mindful of inflation and market crashes and set yourself up to manage them well. If you do that, your savings, coupled with Social Security, should allow you to live well during your senior years.

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