How Much Money Do I Need to Retire?
There is no single dollar figure that is "enough to retire" — the honest answer depends almost entirely on how much you spend and how much guaranteed income you will have. The good news is that the calculation is straightforward once you break it into pieces. Below is the same process a fee-only planner would walk you through, and you can plug your own numbers into our retirement and FIRE calculators as you go.
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Step-by-step
- 1
Start from spending, not from your salary
Your retirement number is driven by what you will spend, not what you currently earn. Most retirees spend 70%–85% of their pre-retirement income: you drop commuting, payroll taxes, and retirement contributions, but you add healthcare, travel, and more free-time spending. Build a bottom-up budget from your last 12 months of actual expenses rather than guessing a round percentage.
- 2
Apply the 25× rule to get a first number
Multiply your expected annual retirement spending by 25 — the inverse of the 4% safe withdrawal rate. Spend $50,000/year? That is a $1,250,000 target. Spend $80,000/year? $2,000,000. This is your "lazy" number: a fast, defensible starting point that assumes a balanced portfolio and a roughly 30-year retirement.
- 3
Subtract Social Security and any pension
The 25× rule only applies to the spending your portfolio has to cover. The average Social Security retired-worker benefit in 2026 is roughly $1,950/month (about $23,400/year), and a two-earner couple often draws $40,000–$50,000 combined. If you spend $80,000/year and Social Security covers $40,000, your portfolio only needs to fund $40,000 — cutting the target from $2,000,000 to $1,000,000.
- 4
Adjust for the age you want to retire
The 4% rule assumes about 30 years. Retire in your 50s and you may need 40–45 years of income, which calls for a more conservative 3.3%–3.5% withdrawal rate (28–30× spending) and a bigger cushion. Retiring closer to 65 or later lets you lean on the standard 25×. Our retire-at pages lay out the nest egg and the rule changes at 50, 55, 60, 62, 65, 67, and 70.
- 5
Add a healthcare bridge if you retire before 65
Medicare does not start until 65. Retire before then and you are buying ACA marketplace coverage or COBRA — often $400–$1,200/month per person with subsidies, far more without them. Budget this gap separately; an extra $50,000–$150,000 commonly covers a multi-year pre-Medicare bridge that the 25× number does not include.
- 6
Translate today's number into future dollars
Your target should be stated in today's purchasing power, then projected forward for inflation. A $2,000,000 goal at age 35 is closer to $4,400,000 in nominal dollars by 65 at 3% inflation. A good retirement calculator shows both so you are not blindsided by the larger headline figure decades from now.
- 7
Pressure-test with margin for the unexpected
Roughly 70% of people over 65 will need some long-term care, at $5,500–$9,800/month in 2026. Plan for 2–3 years of potential care ($150,000–$350,000) outside the core number, via insurance, earmarked savings, or home equity. Then re-run the whole calculation every year or two as your spending and savings evolve.
💡 Tips
- Use real spending data from the last 12 months, not an idealized budget. People routinely undercount by 15%–25% until they itemize every recurring charge.
- Each $100/month of permanent spending you can cut lowers your retirement number by about $30,000 (the 25× rule applied to $1,200/year). Trimming fixed costs is often more powerful than chasing higher investment returns.
- Do not count home equity as part of your withdrawal portfolio. It produces no income unless you downsize, rent, or take a reverse mortgage — treat it as a long-term-care backstop instead.
FAQ
How much money do I need to retire comfortably?
Multiply your expected annual spending by 25, then subtract Social Security and any pension to find what your portfolio must cover. Many middle-class households land between $1,000,000 and $2,000,000 once Social Security is factored in, but the right number is entirely personal — a $40,000/year lifestyle needs far less than a $100,000/year one.
Is $1 million enough to retire on?
It can be. At the 4% rule, $1,000,000 supports about $40,000/year, and combined with average Social Security of roughly $23,000/year that is $63,000/year — comfortable in lower-cost areas, tighter in expensive metros. See our "retire on $1 million" page for the full income breakdown.
How much do I need to retire at 55 or 60?
More than for a 65 retirement, because the money must last longer and you face a pre-Medicare healthcare bridge. As a rough guide, a 55-year-old often targets around 28–30× spending plus a healthcare cushion. The retire-at pages give an age-by-age estimate and the rules that change at each age.
Should I include Social Security in my retirement number?
Yes — subtract it from your spending before applying the 25× rule. Social Security is an inflation-adjusted, government-backed income stream, so every dollar it covers is a dollar your portfolio does not have to. This typically reduces the required nest egg by hundreds of thousands of dollars.
How do I know if I am on track?
Compare your current savings against age-based milestones (roughly 1× salary by 30, 3× by 40, 6× by 50, 10× by 67) and re-run a retirement calculator with your real numbers each year. The trend matters more than any single snapshot.