How Much Money Do You Need to Retire?

"How much do I need to retire?" It's probably the most common question in personal finance, and honestly, the answer depends on you. Your lifestyle, your goals, where you live, how long you expect to live - all of it factors in. But don't worry. There are some solid frameworks that can give you a clear, actionable target to aim for.

Let's walk through the math and figure out your number.

The 25x Rule: Your Starting Point

The simplest way to estimate your retirement number is the 25x rule. Take your expected annual expenses in retirement and multiply by 25. That's roughly how much you need saved.

Why 25? It's the inverse of the 4% withdrawal rate, which we'll get into next. But the basic logic is this: if you've saved 25 times your annual spending, you can withdraw 4% per year and your money should last 30+ years.

Here's what that looks like in practice:

• $40,000/year in expenses - you need $1,000,000
• $60,000/year in expenses - you need $1,500,000
• $80,000/year in expenses - you need $2,000,000
• $100,000/year in expenses - you need $2,500,000

Notice we're talking about expenses, not income. In retirement, you probably won't be saving for retirement anymore (obviously), and many work-related costs disappear. Most financial planners estimate that retirees need about 70-80% of their pre-retirement income to maintain their lifestyle.

The 4% Withdrawal Rate Explained

The 4% rule comes from the famous "Trinity Study," a research paper from the late 1990s that analyzed historical stock and bond returns. The researchers found that a retiree who withdrew 4% of their portfolio in the first year, then adjusted for inflation each year after that, had an extremely high probability of not running out of money over a 30-year retirement.

It's not a guarantee, and it's based on U.S. market history, which has been unusually strong compared to some other countries. But it's held up remarkably well across different time periods, including through the Great Depression, the dot-com crash, and the 2008 financial crisis.

Some financial planners now recommend a more conservative 3.5% or even 3% withdrawal rate, especially for people retiring early (before 60) who need their money to last 40+ years. Others argue that 4% is still perfectly fine if you have some flexibility to cut spending in down years.

How Much You Need by Age

Fidelity Investments has a well-known set of retirement savings milestones based on your salary. While these are rough benchmarks, they give you a useful gut check:

• Age 30: 1x your annual salary saved
• Age 35: 2x your annual salary
• Age 40: 3x your annual salary
• Age 45: 4x your annual salary
• Age 50: 6x your annual salary
• Age 55: 7x your annual salary
• Age 60: 8x your annual salary
• Age 67: 10x your annual salary

So if you're 35 and earning $70,000, you'd ideally have around $140,000 saved for retirement. Behind? Don't panic. These are targets, not deadlines. The important thing is that you're saving consistently and increasing your savings rate over time.

Factors That Change Your Number

The 25x rule gives you a baseline, but several factors can push your actual number higher or lower:

Social Security

If you're expecting Social Security benefits, that reduces how much you need from your own savings. The average monthly benefit in 2025 is about $1,976, or roughly $23,700 per year. If your expenses are $60,000/year and Social Security covers $23,700, you only need to cover $36,300 from your portfolio. That drops your target from $1,500,000 to about $907,500.

Just don't count on Social Security covering everything. Benefits may be reduced in the future, and they were never designed to be your only income source.

Healthcare Costs

Healthcare is one of the biggest wildcards in retirement planning. Fidelity estimates that a 65-year-old couple retiring today will need approximately $315,000 for healthcare expenses throughout retirement. If you're retiring before 65 (before Medicare eligibility), you'll need to budget for private health insurance, which can be $500-$1,500 per month per person.

Where You Live

Location matters a lot. Retiring in rural Tennessee is very different from retiring in Manhattan. Housing, taxes, and general cost of living can vary by 50% or more. Some retirees move to lower-cost areas specifically to stretch their savings further.

Inflation

A dollar today won't buy the same thing in 30 years. At 3% average inflation, prices roughly double every 24 years. Your retirement savings need to grow enough to outpace inflation, which is why keeping some allocation in stocks even during retirement is important.

Try the Calculator

Use the calculator below to see how your current savings trajectory projects forward. Adjust your salary, contribution percentage, and expected returns to see different scenarios.

Practical Steps to Hit Your Number

Knowing your target is one thing. Getting there is another. Here's a practical approach:

1. Start now. Time is your biggest asset. Even small contributions compound dramatically over decades.
2. Get the full employer match. If your employer matches 401(k) contributions, that's free money. Always contribute at least enough to get the full match.
3. Aim for 15%. Financial planners generally recommend saving 15% of your gross income for retirement, including any employer match.
4. Increase contributions when you get a raise. If you get a 3% raise, bump your 401(k) contribution by 1-2%. You'll barely notice the difference in your paycheck.
5. Don't touch it. Avoid 401(k) loans and early withdrawals. The penalties are steep, and you lose years of compounding.

What If You're Behind?

If you're 40 or 50 and haven't saved much, you still have options. The IRS allows catch-up contributions for people 50 and older - an extra $7,500 per year in a 401(k) on top of the regular $23,500 limit (for 2025). That's $31,000 per year you can put away tax-advantaged.

You can also consider working a few extra years. Delaying retirement from 65 to 67 gives you two more years of saving, two more years of investment growth, and two fewer years of withdrawals. That combination can meaningfully improve your retirement outlook.

Another strategy: reduce your planned expenses. Moving to a lower-cost area, downsizing your home, or eliminating debt before retirement all reduce how much you actually need.

The Bottom Line

There's no single magic number that works for everyone. But the 25x rule gives you a solid starting point. Calculate your expected annual expenses in retirement, multiply by 25, and you've got a reasonable target. Adjust for Social Security, healthcare, and your specific situation.

The most important thing isn't hitting a perfect number. It's starting, staying consistent, and letting compound interest do its work over time. Even if you can't save 15% right now, save what you can and increase it gradually. Future you will be grateful.