How much do you need to retire?

How much do you need to retire?

Most of the "how much do I need" answers you will find boil down to one of three shortcuts: the 4% rule (multiply spending by 25), an age-based savings multiple of your salary, or a replacement ratio (a percentage of your working income). None of these is personalized advice, and none accounts for your specific health, taxes, pension, or how long you will live. They are rules of thumb built to give you a rough target, not a guarantee. This page walks through each one, shows the math, and explains where each one breaks down.

What is the 4% rule?

The 4% rule says that if you withdraw 4% of your portfolio's starting value in your first year of retirement, then adjust that dollar amount every year after for inflation, your money has historically lasted at least 30 years. Financial planner William Bengen introduced the idea in a 1994 Journal of Financial Planning paper, "Determining Withdrawal Rates Using Historical Data," after testing withdrawal rates against actual U.S. stock and bond returns going back to 1926. He found 4% to be the highest starting rate that never ran out of money in any 30-year period in his dataset.

In 1998, three Trinity University professors, Philip Cooley, Carl Hubbard, and Daniel Walz, ran a similar analysis (the "Trinity study") across different withdrawal rates and stock/bond mixes. For a portfolio with a meaningful stock allocation, a 4% withdrawal rate succeeded in a large majority of the rolling 30-year periods they tested, which is why the 4% figure stuck as the popular shorthand.

The rule is a starting-year calculation, not a percentage you recalculate annually. You take 4% of your balance once, in year one, and then simply increase that same dollar amount by inflation every year after, regardless of what the market does.

What is the 25x rule, and how much do you need at different spending levels?

The 25x rule is just the 4% rule turned around. If 4% of your savings should cover a year of spending, then your savings need to be about 25 times your annual spending (1 divided by 0.04 equals 25). This is the version most people actually use to set a target number, because it is easier to reason about a lump sum than a withdrawal percentage.

Source: math derived from the 4% rule (Bengen, 1994; Cooley, Hubbard & Walz, 1998). Not personalized advice.

Two things to notice. First, this is spending, not income. Someone earning $100,000 today may only need to replace $70,000 to $80,000 of that in retirement (see the replacement-ratio section below), which changes the target considerably. Second, this table ignores Social Security entirely. It answers "how much savings do I need to fund all of my spending," not "how much do I need on top of Social Security." That distinction matters, and it is covered further down.

How much should you have saved by age 30, 40, 50, and 60?

A separate shortcut skips withdrawal math and instead benchmarks your savings against your current salary at different ages. The best-known version comes from Fidelity Investments, which publishes savings-factor milestones expressed as a multiple of salary:

Source: Fidelity Investments, "How much do I need to retire?" (Fidelity Viewpoints).

For example, someone earning $70,000 at age 30 would be "on track" with $70,000 saved; at $100,000 salary by age 40, the milestone is $300,000 saved. Fidelity built these numbers on a specific set of assumptions: you start saving 15% of income (including any employer match) at age 25, keep more than half of your portfolio in stocks over your lifetime on average, retire at 67, and plan for the money to last through age 93. Change any of those inputs (a later start, a lower savings rate, an earlier retirement) and the multiple you actually need shifts too. This is a directional gut check, not a diagnosis.

What is a retirement income replacement ratio?

A replacement ratio is the percentage of your pre-retirement income you plan to replace once you stop working. It is usually well under 100%, because retirees typically no longer pay payroll (Social Security and Medicare) tax on wages, are no longer saving for retirement itself, and often have paid off a mortgage or no longer commute. Fidelity's version of this approach targets replacing about 45% of pre-retirement income from savings alone (this figure held fairly steady across salaries from $50,000 to $300,000 in their analysis), on the assumption that Social Security and any pension cover a meaningful share of the rest. The same 15%-savings-rate, age-25-start, age-67-retirement assumptions from the age-benchmark table above underlie this number.

Replacement-ratio thinking and the 25x table above are two lenses on the same problem: the replacement ratio tells you roughly what fraction of your current income you need to plan for; the 25x table tells you what savings that translates into once you subtract what Social Security is expected to contribute.

How much will Social Security cover?

Social Security is designed to replace only part of your pre-retirement earnings, and the share is larger for lower earners than higher ones because the benefit formula is progressive. The Social Security Administration's own guidance puts the replacement rate at roughly 40% of average pre-retirement earnings for a medium earner, with the figure running higher (around 55% to 75%) for lower earners and lower (around 34%) for higher earners.

In dollar terms, the average monthly Social Security retirement benefit for a retired worker was $2,071 starting in January 2026, after that year's 2.8% cost-of-living adjustment, or about $24,850 a year. Your own benefit depends on your earnings history and the age at which you claim; this average is a population-wide figure, not a personal estimate.

This is the piece that most "how much do I need" shortcuts leave out. The 25x table above targets 100% of your spending from savings. If Social Security is realistically going to cover a chunk of that spending every year, the savings you actually need to accumulate is smaller. The worked example below shows the arithmetic.

What are the limits of the 4% rule?

The 4% rule is a rule of thumb built on a specific historical dataset and a specific time horizon, and both matter.

Sequence-of-returns risk. The rule assumes a 30-year retirement, but it does not assume a smooth 30 years. If the market drops sharply in your first few retirement years while you are also withdrawing money, you lock in losses by selling shares at depressed prices early, leaving less principal to recover when the market eventually rebounds. Two retirees with identical average returns over 30 years can end up in very different places depending on the order those returns arrived in. A bad first five years is far more damaging than a bad last five years.

The 30-year assumption. Bengen's and the Trinity study's data were built around a person retiring in their 60s and living roughly another 30 years. Someone retiring earlier (a 20, 30, or 40-year horizon, as in early-retirement planning) is asking the portfolio to survive longer than the original research tested, which generally argues for a lower starting withdrawal rate, not 4%.

The rate itself keeps getting re-argued. Bengen has since suggested that a more diversified portfolio could support a higher starting rate than his original 4% under certain conditions, while other analysts (Morningstar's annual withdrawal-rate research, for instance) have at times argued for a more conservative starting rate given current market valuations and lower expected returns. The 4% figure is a well-studied historical benchmark, not a law of physics, and reasonable analysts land in different places depending on their assumptions about future returns and how long the money needs to last.

Example: how much would you need to retire on $70,000 a year?

Take someone who wants $70,000 a year in retirement spending, in today's dollars.

• Using the 4% rule alone (25x, ignoring Social Security): $70,000 x 25 = $1,750,000 needed in savings.
• Netting out an average Social Security benefit: if this person expects something close to the average benefit, about $24,850 a year (2026), the amount that needs to come from savings drops to $70,000 minus $24,850 = $45,150 a year.
• Applying 25x to that smaller number: $45,150 x 25 = about $1,128,750 needed in savings, roughly $621,000 less than the figure that ignores Social Security.

This is illustrative math, not a personal projection. An individual's actual Social Security benefit depends on their own earnings history and the age they claim, and can be meaningfully higher or lower than the population average used here.

The flat truth: these are starting points, not a plan

Every number on this page, the 25x target, Fidelity's salary multiples, the 45% replacement ratio, the 40% Social Security offset, is a population-level rule of thumb, built to be easy to remember and roughly right for a typical case. None of them is a substitute for working through your own expected spending, your own Social Security estimate, and your own time horizon. What they are useful for is a sanity check: if you are wildly below 1x your salary at 40, or your projected spending is nowhere near covered by 25x your current savings plus expected Social Security, that gap is real information, even if the exact target number is not.

Two related pages on this site can help you fill in the account-level details behind these targets: the 2026 contribution limits for 401(k)s and IRAs, which shape how fast you can build the savings side of this math, and what is a Roth IRA and Roth IRA vs 401(k), which cover which accounts to hold that savings in and in what order to fund them.