How Much Do You Need to Retire?

The Two Numbers That Matter

There are two ways to think about how much you need to retire, and they answer the same question from opposite ends:

• The 25× rule — your retirement number is roughly 25× your annual spending
• The 4% rule — a portfolio can sustainably support withdrawals of about 4% of its initial value per year

Both come from the same retirement-withdrawal research family (Bengen-style safe withdrawal studies and the Trinity Study), and they're algebraically the same: 1 ÷ 4% = 25.

If you spend $60,000/year, you need roughly $1.5M. If you spend $40,000/year, you need $1M. Cut your spending by 20% and your target drops by 20%.

See How Far You Are

Plug in your current savings, contribution, and timeline. The default scenario assumes 7% returns, 3% inflation, and retirement at 65:

What the 4% Rule Actually Says

The 4% rule is shorthand for: "a retiree who withdraws 4% of their starting portfolio in year one, then adjusts that dollar amount for inflation each subsequent year, would not have run out of money in any historical 30-year period."

It assumes:

• A 50–75% stock allocation
• A 30-year retirement
• Withdrawals from a tax-advantaged portfolio

It does not account for:

• Lifespans longer than 30 years (early retirement)
• Sequence-of-returns risk (a bad market in years 1–5 can break the rule)
• Spending changes (most retirees spend less in their 80s)

For early retirees (FIRE), many planners model a more conservative 3.25%–3.5% withdrawal rate, meaning 28–31× spending. For traditional retirees in their late 60s, 4% is still a useful starting point, and some plans can support 4.5–5% when the expected retirement horizon is shorter or spending is flexible.

Retirement Savings Benchmarks by Age

Fidelity publishes widely-cited age-by-age savings benchmarks as a multiple of annual salary:

So a 40-year-old earning $80,000 would use roughly $240,000 as a benchmark. These targets assume retirement at 67, a long-term stock-heavy mix, and contributions of about 15% of salary including employer match — which lines up with what the 401(k) calculator shows for the same inputs.

If you're behind, the fix isn't panic — it's increasing your savings rate by 1–2 percentage points and giving compounding more time. See the compound interest explainer for why even a few extra years of contributions matter so much.

Don't Forget Social Security

The Social Security Administration estimates the average retired-worker benefit after the 2026 COLA at about $2,071/month ($24,852/year). The maximum benefit for a worker retiring at full retirement age in 2026 is $4,152/month.

You can verify current figures in the SSA 2026 COLA fact sheet.

That income reduces what your portfolio has to cover. If you spend $60,000/year and expect $24,000/year from Social Security:

• Portfolio needs to cover $36,000/year
• 25× that = $900,000 target

That's a 40% reduction in your "number" — significant enough that ignoring Social Security can lead to over-saving, especially for middle-income workers whose benefits replace a meaningful share of pre-retirement income.

Inflation Is the Quiet Killer

A 30-year retirement at 3% inflation roughly doubles your cost of living. If you need $60,000/year today, the same lifestyle costs about $145,000/year in year 30.

This is why the 4% rule is inflation-adjusted — your withdrawal amount grows each year. Plans built on a fixed nominal number (e.g., "I'll spend $50,000/year forever") quietly run out of room.

A stock-heavy portfolio is the main inflation defense in retirement. Bonds, cash, and CD ladders are useful for sequence-of-returns risk and short-term spending, but the long-term growth has to come from equities.

FIRE: How the Math Changes

The Financial Independence / Retire Early movement uses the same math with two twists:

1. Higher savings rate — often 40–70% of income, vs the traditional 15%
2. More conservative withdrawal rate — 3.25–3.5% (28–31× spending) to handle longer retirement

A 30-year-old earning $100,000 and saving 50% can reach financial independence in ~17 years at 7% returns. The same earner saving 15% takes ~40 years. Savings rate matters far more than investment return in the accumulation phase.

Common Mistakes

• Targeting a round number with no math behind it. "I want to retire with $1M" is fine if your spending is $40k. It's not enough if it's $80k.
• Assuming a flat market. Plans that don't model sequence-of-returns risk break in the years they're tested.
• Ignoring healthcare costs before Medicare (age 65). Early retirees often underestimate this by $1,000–$2,000/month.
• Not increasing contributions with raises. A 1% bump in savings rate every raise can push your retirement age earlier by 3–5 years.

Key Takeaways

• The 25× rule and the 4% rule are the same equation
• Many people's actual number is lower than they think once Social Security is included
• For early retirement, use a more conservative 3.25–3.5% withdrawal rate (28–31×)
• Your savings rate matters more than investment returns
• Inflation roughly doubles your cost of living over a 30-year retirement
• Use the calculator above to test how saving 1–2% more changes your retirement age