How Much Do You Need to Retire?
🇩🇪 Diesen Artikel auf Deutsch lesenA common rule of thumb is to save about 25 times the annual spending your portfolio needs to cover, based on the 4% withdrawal guideline. Subtract expected Social Security and pensions from your planned spending first. Social Security replaces roughly 40% of pre-retirement income for an average earner, so most people need savings to fill the rest.
On this page
“How much is enough?” is the central retirement question. A simple framework gets you a solid first estimate.
Step 1: Estimate retirement spending
Many people need 70–80% of their pre-retirement income, but your actual budget matters more: housing costs, health care, travel and whether your mortgage will be paid off.
Step 2: Subtract guaranteed income
Check your estimated Social Security benefit in your my Social Security account at ssa.gov. Add any pensions. The rest must come from your savings.
Step 3: Apply the 25× rule
| Annual spending from savings | Target nest egg (25×) |
|---|---|
| $20,000 | $500,000 |
| $30,000 | $750,000 |
| $40,000 | $1,000,000 |
This is based on the “4% rule”: withdrawing about 4% in the first year and adjusting for inflation has historically lasted around 30 years in many scenarios. It's a guideline, not a guarantee.
Step 4: Work out your monthly savings
Compound Interest CalculatorSee how your savings grow over timeTry the calculator →Ways to close a gap
- Save more, especially by capturing your full employer match.
- Work a few years longer; it adds savings and shortens retirement.
- Delay Social Security — benefits grow for each year you wait up to age 70.
- Keep investment costs low.
Frequently asked questions
Is the 4% rule still valid?
It's a useful starting point. Some planners suggest slightly lower rates for early retirees or very long retirements, and flexible spending improves the odds.
What if I start saving late?
Use catch-up contributions after age 50, consider working a bit longer and delaying Social Security, and focus on cutting large fixed costs.