The most common answer to "how much do I need to retire?" is 25 times your annual expenses — based on the 4% withdrawal rule. If you spend $60,000/year, you need $1.5 million. But this is a starting point, not a final answer. Your actual number depends on when you retire, your Social Security benefit, healthcare costs, and how long you expect to live.
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Use our Compound Interest Calculator to model how long it takes to reach your retirement number at your current savings rate.
The 4% Rule Explained
The 4% rule comes from the Trinity Study (1998), which analyzed historical market data and found that a portfolio of 50–75% stocks could sustain a 4% annual withdrawal rate for 30 years with a 95%+ success rate.
In practice: if you have $1,000,000 saved, you can withdraw $40,000/year (4%) and your portfolio will likely last 30+ years — because investment returns replenish what you withdraw.
The math: 1 ÷ 0.04 = 25. So you need 25× your annual spending.
Limitations of the 4% rule
- Based on 30-year retirements — if you retire at 50, you may need 40–50 years of withdrawals
- Based on US market historical returns — future returns may differ
- Doesn't account for variable spending (healthcare spikes in later years)
- Doesn't account for Social Security income reducing your withdrawal need
A more conservative approach: use a 3.5% withdrawal rate (28.5× expenses) for early retirees or those with longer time horizons.
How to Calculate Your Number
Step 1: Estimate annual retirement spending
Most people spend 70–80% of their pre-retirement income in retirement. But this varies widely — some spend more (travel, healthcare), some less (no mortgage, no commuting costs).
Better approach: build a retirement budget from scratch. What will housing, food, healthcare, travel, and discretionary spending actually cost?
Step 2: Subtract guaranteed income
Social Security, pension income, and rental income reduce how much your portfolio needs to cover. If you'll receive $24,000/year from Social Security and need $60,000/year total, your portfolio only needs to cover $36,000/year.
$36,000 × 25 = $900,000 needed (vs. $1.5M without Social Security).
Step 3: Apply your withdrawal rate
| Retirement Age | Suggested Withdrawal Rate | Multiplier |
|---|---|---|
| 65–70 | 4.0% | 25× |
| 60–64 | 3.75% | 26.7× |
| 55–59 | 3.5% | 28.5× |
| 50–54 | 3.25% | 30.8× |
| Under 50 | 3.0% | 33× |
Retirement Savings Benchmarks by Age
Fidelity's widely-cited benchmarks (based on saving 15% of income starting at 25):
| Age | Savings Target | Example (on $75K salary) |
|---|---|---|
| 30 | 1× salary | $75,000 |
| 35 | 2× salary | $150,000 |
| 40 | 3× salary | $225,000 |
| 45 | 4× salary | $300,000 |
| 50 | 6× salary | $450,000 |
| 55 | 7× salary | $525,000 |
| 60 | 8× salary | $600,000 |
| 67 | 10× salary | $750,000 |
These are guidelines, not requirements. Your actual target depends on your expected spending, Social Security benefit, and retirement age.
What to Do If You're Behind
Most Americans are behind on retirement savings. Here's how to accelerate:
- Maximize catch-up contributions. If you're 50+, you can contribute an extra $7,500 to your 401(k) and $1,000 to your IRA annually.
- Delay retirement by 2–3 years. Working longer does three things simultaneously: adds more savings, reduces the number of years your portfolio needs to last, and increases your Social Security benefit.
- Reduce planned retirement spending. Cutting $500/month from your retirement budget reduces your required nest egg by $150,000 (at 4% withdrawal rate).
- Eliminate debt before retirement. Entering retirement debt-free dramatically reduces your income needs. See our debt payoff guide.
- Consider part-time work in early retirement. Earning $20,000/year in early retirement reduces portfolio withdrawals and extends its longevity significantly.
FAQ
Is $1 million enough to retire?
At a 4% withdrawal rate, $1 million generates $40,000/year. Combined with Social Security ($20,000–$30,000/year), that's $60,000–$70,000/year — comfortable for many retirees, especially in lower cost-of-living areas. In high-cost cities, it may not be enough.
What if I have a pension?
A pension is like Social Security — it reduces how much your investment portfolio needs to cover. Subtract your annual pension income from your retirement spending target before applying the 25× multiplier.
How does inflation affect retirement savings?
Inflation erodes purchasing power over time. The 4% rule accounts for inflation by assuming you increase withdrawals by inflation each year. A $40,000 withdrawal in year 1 becomes $41,200 in year 2 (at 3% inflation).
Should I pay off my mortgage before retiring?
Entering retirement mortgage-free significantly reduces your monthly income needs. If your mortgage rate is below 5%, the math may favor investing over accelerated payoff — but the psychological benefit of a paid-off home is real and valuable.
Your retirement number is personal — it depends on your spending, your Social Security benefit, your health, and when you want to retire. The 25× rule is a useful starting point, but build your own estimate using your actual projected expenses. Then use our 401(k) Calculator to see if your current savings rate gets you there.
Social Security's Role
Social Security replaces roughly 40% of pre-retirement income for average earners. The average benefit in 2026 is approximately $1,920/month ($23,040/year). High earners receive more; the maximum benefit at full retirement age is approximately $3,800/month.
Delaying Social Security from age 62 to 70 increases your benefit by approximately 77%. For every year you delay past full retirement age (67 for most people), your benefit grows 8%/year. This is one of the best guaranteed returns available.
Check your estimated benefit at ssa.gov/myaccount.