How Much Do You Actually Need to Retire?

"How much do I need to retire?" has no one-size answer, but it is very estimable. Instead of chasing a scary round number, you work backward from the life you want, and the result is usually more achievable than the headlines suggest.

Start with spending, not income

What you need in retirement depends on what you will spend, not what you earn today. Estimate your annual retirement expenses in today's dollars. Many people spend somewhat less than their working income (no payroll taxes, no commuting, mortgage often paid off), with a common benchmark of around 70 to 80% of pre-retirement income.

Apply the 25x rule

Once you have a spending estimate, multiply by 25 for a ballpark target portfolio (the inverse of the 4% rule). Annual spending of $50,000 implies roughly $1.25 million. Adjust upward if you want a long retirement or a bigger safety margin.

Subtract other income sources

You do not have to fund all of that from savings. Subtract income from Social Security, any pension, rental income, or part-time work. Social Security alone can cover a meaningful share of a modest budget, which lowers the portfolio you need to build.

The power of starting early

Because of compounding, when you start matters more than almost anything else. Someone who begins saving in their twenties needs to set aside far less per month than someone starting in their forties to reach the same number. Time does the heavy lifting; the longer your money compounds, the smaller your required contributions.

Save a percentage, then automate

A widely used target is saving 15% of gross income (including any employer match) throughout your career. Capture the full employer match first (it is free money), then increase your savings rate with every raise. Automating contributions makes the habit effortless.

Find your number with our retirement savings calculator.