Passive Income to $1M Calculator

How Much Passive Income Does $1 Million Generate?

A common planning rule is to spend about 4% of a portfolio in the first year of retirement and adjust that amount for inflation afterwards. On $1 million that is about $40,000 a year, or $3,333 a month, before taxes. The rule comes from William Bengen's 1994 study and the later "Trinity study", which found that such withdrawals from a stock/bond mix lasted at least 30 years in most historical U.S. periods. It is a rule of thumb, not a guarantee.

• 3% withdrawal: $30,000/year ($2,500/month) — more conservative, for long or early retirements
• 4% withdrawal: $40,000/year ($3,333/month)
• 5% withdrawal: $50,000/year ($4,167/month) — higher risk of depletion over 30+ years

For a $600,000 portfolio, 4% is about $24,000 a year ($2,000/month). See also our guide to how much income $1 million can generate.

How the Calculator Works

Your starting assets compound monthly at the total return you enter. Each month, the calculator adds the money you invest from work plus the reinvested share of any other passive income (for example net rent or royalties that are not part of the portfolio). With the defaults—$50,000 to start, $500/month from work, $500/month of other passive income fully reinvested, and an 8% return—the portfolio reaches $1 million in about 22 years.

Common Sources of Passive Income

Dividend stocks and funds. Companies pay part of their profits as dividends, usually quarterly. Broad U.S. index funds currently yield only around 1–2%; dedicated dividend funds yield more, but yield is only part of total return. A $400,000 portfolio yielding 4% would pay $16,000 a year.

Rental property. Net rent after mortgage, taxes, insurance, maintenance and vacancies. It uses leverage, which magnifies both gains and losses, and it is rarely fully passive.

REITs. Real estate investment trusts must distribute most of their taxable income, so their yields are typically higher than the broad market's. They trade like stocks and can be volatile.

Bonds and bond funds. Pay interest; yields move with interest rates. A $300,000 bond portfolio yielding 4.5% would pay $13,500 a year.

Digital products and royalties. Courses, software, books. Income can last for years but usually needs large upfront effort and ongoing marketing. A $49 course selling 50 copies a month would gross $2,450 before platform fees.

How Much Do You Need to Live Off Passive Income?

Using the 4% rule: annual expenses ÷ 0.04 = target portfolio (25× annual spending).

• $40,000/year → $1,000,000
• $60,000/year → $1,500,000
• $80,000/year → $2,000,000

Taxes, Social Security or pension income, and how long you need the money to last all change the target. A financial planner can help tailor it.

Passive vs. Active Income

Active income stops when you stop working. Passive income comes from assets you own. Most people build those assets with active income first, which is why the calculator lets you add money from work each month.

Results are estimates only; markets do not deliver steady returns. See our disclaimer.