How Much Do I Need to Retire?

Use the estimator to get your number, then read on for how it works and where the rules of thumb break down.

Start with spending, not a magic number

The most common retirement question — “is $1 million enough?” — is backwards. The amount you need is driven by how much you plan to spend, not by a round number. Two people with the same savings can have completely different outcomes: one spending $40,000 a year is comfortable, another spending $90,000 a year is not. So the first step is to estimate your annual retirement spending in today's dollars.

The 25x rule and the 4% rule

The simplest target comes from the 4% rule (Bengen, 1994, tested further by the 1998 Trinity Study): if you withdraw 4% of a balanced portfolio in year one and adjust for inflation each year after, the money lasted 30 years in most historical periods tested. Flip that around and your portfolio needs to be 25 times your annual withdrawal — the “25x rule.”

So $60,000 of annual spending implies a $1.5 million portfolio ($60,000 × 25). For a longer retirement of 40+ years — common for early retirees — many planners drop to a 3% to 3.5% withdrawal rate, which raises the multiple to roughly 29–33×.

Subtract Social Security and pensions — this is the big one

Here is where most online “you need $X million” headlines mislead: they ignore Social Security and pensions. Every dollar of that income is a dollar your portfolio does not have to provide. Two cautions: Social Security rises with inflation each year, but it is not guaranteed at today's scheduled level: without reform, the 2026 Trustees Report projects about 78% of scheduled retirement benefits payable after 2032. Most private pensions are fixed in dollars and do not rise with inflation.

Subtract your expected Social Security and pension from your spending first, then apply the 4% rule only to what remains. In our example, $60,000 of spending minus $24,000 of Social Security leaves $36,000 for the portfolio to cover — a target of about $900,000, not $1.5 million. That single adjustment routinely cuts the required nest egg by hundreds of thousands of dollars. You can estimate your future benefit from your Social Security statement (ssa.gov).

Savings benchmarks by age (a quick gut check)

Fidelity's widely cited rules of thumb give a fast sanity check on whether you're on pace:

• By 30: ~1× your salary saved
• By 40: ~3×
• By 50: ~6×
• By 60: ~8×
• By 67: ~10×

Treat these as a gut check, not gospel — they assume a particular savings rate and replacement ratio. Your real target comes from your own spending and guaranteed income, which is what the estimator above uses.

What the simple rules miss

• Taxes. Withdrawals from a traditional 401(k) or IRA are taxed as income; Roth withdrawals are not. A $1M traditional balance is worth less than $1M of Roth.
• Healthcare before Medicare. Retiring before 65 means buying your own health insurance — model the gap years.
• Sequence-of-returns risk. A market crash in your first retirement years hurts far more than the same crash later.
• Inflation. Keep everything in today's dollars and use a real (after-inflation) return so your target isn't understated.

Get a year-by-year projection

The estimator gives you a target number. To see whether your current savings and contributions actually reach it — year by year, with a savings gap — use the retirement calculator.

Frequently asked questions

How much do I need to retire?

Roughly 25× your annual spending at a 4% withdrawal rate — less once you subtract Social Security and any pension.

Can I retire on $1 million?

$1M supports about $40,000/year from the portfolio at 4%, plus Social Security on top. Often enough for a moderate, lower-cost lifestyle; it depends on your spending.

Does Social Security reduce how much I need?

Yes — significantly. Subtract it from your spending before applying the 4% rule; it can cut the target by hundreds of thousands of dollars.

Sources: Bengen (1994) and the Trinity Study (4% rule); Fidelity retirement savings guidelines; Social Security Administration. Estimates are illustrative — your situation may differ.