Can You Retire in Orange County With $2 Million?
Can You Retire in Orange County With $2 Million? A Real Retirement Planning Scenario
For many households, yes. But whether $2 million is enough to retire in Orange County depends on far more than the size of your portfolio. Retirement isn't just about how much you've saved. It's about how you create income, manage taxes, decide when to claim Social Security, evaluate Roth conversions, navigate Medicare premiums, and coordinate all of those decisions into a plan that can support the retirement you envision.
Can You Retire in Orange County With $2 Million?
Inspired by a real client planning scenario. The names, ages, and some of the numbers have been changed to protect client privacy, but the planning concepts reflect the types of retirement planning conversations I have with clients every day.
One of the questions I hear most often is:
It’s a fair question.
Orange County is one of the most desirable places to retire, but it’s also one of the most expensive. Housing costs are high. Healthcare continues to get more expensive. And for many people, retirement could last 30 years or more.
The honest answer?
Maybe.
I’ve worked with couples who retired comfortably with less than $2 million. I’ve also met people with significantly more who still worried about running out of money.
The difference usually isn’t the portfolio.
It’s the plan.
Recently, I worked through a planning scenario very similar to the one below. While I’ve changed the details to protect my clients’ privacy, the planning decisions are representative of the work I do with families preparing for retirement.
Meet Our Orange County Couple
Let’s imagine a married couple living in Laguna Niguel.
They’re both 61 years old and hope to retire in four years.
Here’s what their financial picture looks like today:
| Assets | Current Value |
|---|---|
| Traditional IRAs | $2,000,000 |
| Joint Brokerage Account | $280,000 |
| Home, Paid Off | $1,700,000 |
They estimate they’ll need about $14,000 per month, or roughly $168,000 per year, to maintain the retirement they’ve envisioned.
That covers everything from property taxes and healthcare to travel, hobbies, and spending time with their grandchildren.
Like most people sitting across from me, they have one simple question:
The First Thing I Notice Isn’t the $2 Million
Most people immediately focus on whether they’ve saved enough.
I don’t.
The first thing I notice is where the money is located.
Almost all of their retirement savings are inside traditional IRAs. That means almost every dollar they eventually withdraw will likely be taxable.
That one observation immediately starts a completely different conversation.
I’m no longer thinking only about investment returns. I’m thinking about taxes, retirement income, Social Security, Medicare premiums, and Required Minimum Distributions.
Because every one of those decisions affects the others.
That’s what retirement planning looks like.
Fast Forward Four Years
Assuming their investments average about a 6% annual return and inflation averages 2.5%, here’s what retirement could look like at age 65.
| Item | Estimated at Retirement |
|---|---|
| Traditional IRAs | About $2.53 million |
| Brokerage Account | About $353,000 |
| Home Value | About $1.88 million |
| Annual Spending Need | About $185,000 |
At first glance, they appear to be in good shape.
But another number catches my attention.
Their initial retirement spending would represent roughly 6.4% of their investable assets before considering Social Security.
That doesn’t automatically mean they’re in trouble.
It simply tells me we need to be intentional about how retirement income is created.
Here’s What Starts Going Through My Mind
This is where retirement planning becomes much more interesting than simply asking whether they’ve saved enough.
I’m immediately thinking about three questions:
- When should they claim Social Security?
- Should we spend from the brokerage account before the IRA?
- Should they complete Roth conversions before Required Minimum Distributions begin?
The important thing is that you can’t answer any one of those questions by itself.
They’re connected.
First, Social Security
Many people assume claiming Social Security is simply a matter of choosing an age.
In reality, it’s often one of the most important income and tax-planning decisions in retirement.
If this couple delays benefits, they may receive a larger guaranteed lifetime income. Delaying the higher earner’s benefit can also help provide a larger survivor benefit if one spouse passes away first.
But delaying Social Security may create something else.
Opportunity.
Those early retirement years may have relatively low taxable income because employment income has stopped, Social Security hasn’t started, and Required Minimum Distributions are still years away.
That creates valuable planning space.
You can learn more about this decision on my Social Security planning page or watch Episode 4 of the Retirement Transition Series .
Then I Start Thinking About Roth Conversions
During those lower-income years, we can evaluate converting part of the traditional IRA into a Roth IRA.
The goal isn’t to avoid taxes.
It’s to be intentional about when we pay them.
Every dollar converted today is generally one less dollar that may be subject to future Required Minimum Distributions.
Smaller future RMDs may mean lower taxable income later in retirement, greater flexibility when creating income, and potentially less tax paid over a lifetime.
But we wouldn’t make a Roth conversion in isolation.
We would coordinate the conversion with the couple’s other income, tax brackets, Social Security strategy, Medicare premiums, investment withdrawals, and long-term estate considerations.
For a deeper explanation, visit my Roth Conversion Planning Guide .
But We Can’t Just Convert as Much as Possible
This is usually where people begin to see how connected retirement planning really is.
Medicare premiums are generally based on income reported two years earlier.
If we convert too much in one year, we could unintentionally push the couple into a higher Income-Related Monthly Adjustment Amount, commonly called IRMAA. That could increase their Medicare Part B and Part D premiums.
So each year, we’re balancing two competing goals:
- Convert enough to reduce the size of the traditional IRA and future RMDs.
- Avoid creating unnecessary Medicare surcharges or moving into an undesirable tax bracket.
It’s rarely about finding one perfect number.
It’s about finding an appropriate conversion amount for that particular year, based on the information available at the time.
If IRMAA is unfamiliar, my IRMAA Planning Guide explains how the Medicare income thresholds work and why the two-year lookback matters.
And Then There Are Required Minimum Distributions
If we ignore all of this and simply allow the traditional IRA to continue growing, Required Minimum Distributions eventually arrive.
Whether the couple needs the income or not.
Larger RMDs can increase taxable income, affect Medicare premiums, reduce flexibility, and make future Roth conversions less attractive because much of the planning opportunity may have already passed.
RMDs can become especially important after the death of one spouse, when the survivor may have similar income but is now filing a single tax return.
This is why retirement planning isn’t just about this year’s tax bill.
It’s about thinking ten or fifteen years ahead.
This Is Usually the Point Where Clients Stop Me
They’re right.
Most financial topics are discussed independently:
- Investments
- Social Security
- Taxes
- Medicare
- Retirement income
- Estate planning
But retirement doesn’t happen one decision at a time.
Every one of those decisions influences the others.
That’s why I rarely think about them separately.
So, Can This Couple Retire?
Based on what we’ve looked at, I’d say they’re in a strong position.
But not simply because they have $2 million.
Because they have options.
They have time before retirement.
They have taxable savings that create flexibility.
They have an opportunity to evaluate Roth conversions before Required Minimum Distributions begin.
They can thoughtfully decide when Social Security fits into the bigger picture.
Most importantly, they have the opportunity to build a coordinated retirement income plan instead of making each decision independently.
That’s the difference.
What About You?
Your numbers may be different.
Maybe you’ve saved more. Maybe you’ve saved less.
Maybe your biggest question isn’t whether you can retire, but when, how, or whether you’re paying more taxes than necessary.
These resources can help you take a closer look:
- Retirement Readiness Calculator — Get a quick snapshot of where you stand.
- Roth Conversion Planning Guide — Learn when Roth conversions may make sense.
- IRMAA Planning Guide — Understand how retirement income can affect Medicare premiums.
- Retirement Transition Series — Watch short videos covering the retirement questions I hear most often.
- Common Retirement Planning Questions — Explore additional questions that often come up before retirement.
Are All the Pieces of Your Retirement Plan Working Together?
A good place to start is the Retirement Readiness Calculator. It takes about a minute and can help identify areas that may deserve a closer look.
Try the Retirement Readiness CalculatorOr schedule a 20-minute Retirement Fit Call to talk through your own situation.
Schedule a Retirement Fit CallRetirement isn’t about having all the answers.
It’s about making sure all the pieces are working together.
About Patrick Thompson: Patrick Thompson, AWMA® is the founder of Sentient Financial LLC, a fee-only fiduciary Registered Investment Adviser based in Laguna Niguel, California. He helps professionals and families prepare for the transition from saving for retirement to creating retirement income.
This article is for educational purposes only and should not be considered personalized investment, tax, or legal advice. The scenario is illustrative, and certain facts and figures have been changed to protect client privacy. Assumed rates of return and inflation are hypothetical and are not guarantees of future results. Every household’s circumstances are unique and should be evaluated individually.
