Guide · Retirement
How much do I need to retire?
The honest answer is “it depends,” but there's a simple, surprisingly reliable way to get a first number. It comes down to one question: how much do you plan to spend each year once you stop working? Everything else builds from there.
The simple rule: 25 times your yearly spending
The most-used starting point is the 4% rule. It says that if you withdraw about 4% of your savings in your first year of retirement and adjust for inflation after that, the money should last roughly 30 years. Turn it around and you get a target: save about 25 times the amount you plan to spend each year.
So if you expect to spend $40,000 a year, you'd aim for about $1,000,000. Spend $60,000? Aim for about $1.5 million. It's a rule of thumb, not a guarantee, but it's a solid place to start.
Estimate your number
You'd aim for roughly
$1,250,000
that's about 25× your yearly spending
Want to see if your savings are on pace to hit that? Try the retirement calculator.
Before the big number: a safety net
A cash cushion protects the whole plan. A few months of expenses in a high-yield savings account means a surprise bill, a job loss, or a market dip doesn't force you to sell investments at the worst possible time. Sort this out before you pour everything into retirement. See how much to keep.
What changes your number
The 25x rule is the starting line, not the finish. A few things push your real target up or down:
Social Security and pensions
Any guaranteed income lowers how much your savings must cover. If Social Security will pay $20,000 a year and you plan to spend $50,000, your investments only need to cover the other $30,000, which cuts your target sharply.
The age you retire
Retiring at 45 means funding 40-plus years; retiring at 67 funds far fewer. Earlier retirements often use a more cautious withdrawal rate, closer to 3.5%, which raises the multiple from 25x toward roughly 28x.
Healthcare
In the US, Medicare starts at 65. Anyone retiring before then has to budget for health insurance out of pocket, which is one of the biggest and most overlooked early-retirement costs.
Inflation and taxes
Prices drift up over decades and withdrawals can be taxed, depending on the account. Build in a margin instead of aiming for the bare minimum, and remember money in a Roth comes out tax-free.
Where you live
Cost of living varies enormously. The exact same lifestyle can cost half as much in one town as in another, so your number is really about your spending, not a national average.
Want to retire early? Meet FIRE
The same 25x math powers the FIRE movement (Financial Independence, Retire Early). The difference is how big a lifestyle you aim to fund, which decides both your number and how fast you can get there. Each flavor is just a different budget:
Frequently asked questions
How much do I need to retire?
A simple starting point is 25 times the amount you plan to spend each year, which comes from the 4% rule. Spend $50,000 a year and that's about $1.25 million. Your real number depends on Social Security, pensions, your retirement age, and lifestyle, so treat it as a first target.
What is the 4% rule?
The 4% rule suggests you can withdraw about 4% of your savings in your first year of retirement, then adjust for inflation each year after, and the money should last roughly 30 years. Working backwards, that means saving about 25 times your yearly spending.
Is $1 million enough to retire?
At the 4% rule, $1 million supports about $40,000 a year before Social Security. That's plenty in a low cost-of-living area or with a modest lifestyle, and tight in an expensive city. It depends far more on your spending than on hitting a round number.
How much do I need to retire early?
The same 25x math applies, but retiring early means funding more years, so many people use a more cautious withdrawal rate near 3.5% (about 28 to 29 times spending) and plan for health insurance before Medicare. This is the idea behind the FIRE movement.
Does my number include Social Security?
The 25x target covers spending from your own savings. Any Social Security or pension income lowers what your investments must cover. If Social Security pays $20,000 and you spend $50,000, your savings only need to cover the other $30,000.
Get your first number with the 25x rule, then pressure-test it with real savings, returns, and time. The sooner you know the target, the easier it is to aim for.
CalcWise is educational and not financial advice. The 4% rule is a rule of thumb based on historical US markets, not a guarantee. For big decisions, consider your own circumstances or a qualified advisor.