How Much Do You Need to Retire? Rules, Formulas & Examples (2026)
Learn how to calculate your retirement number using the 25x rule, 4% withdrawal rate, and age-based benchmarks.
Estimate the annual spending your portfolio must cover after Social Security and pensions, then multiply that number by 25 — that is your starting nest-egg target.
What you'll walk away with
Skim these first — then dig into the details below.
- 1Multiply annual spending by 25 for a starting nest-egg target (4% rule).
- 2Subtract Social Security and pensions before applying the 25x rule.
- 3Fidelity benchmarks: 1x salary by 30, 3x by 40, 6x by 50, 8x by 60.
- 4Healthcare costs can add $5,000–$15,000/year — build a buffer.
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“How much do I need?” sounds like one question but it is really two: how much will you spend each year, and how much of that spending has to come from your own portfolio?
Answer the second one and the math gets simple. Model your age, savings rate, and expected returns in the free retirement calculator.
The 25x rule, step by step
The 25x rule comes from the 4% withdrawal guideline: take 4% of your portfolio in year one, then adjust that dollar amount for inflation each year afterward.
- 1
Estimate annual retirement spending — start with today’s spending, then subtract commuting and add travel and healthcare.
- 2
Subtract guaranteed income: Social Security estimate from SSA.gov, pensions, annuities, planned part-time work.
- 3
The remainder is your portfolio gap — the amount your investments must produce each year.
- 4
Multiply the gap by 25. That is your target nest egg.
Age-based benchmarks to check your pace
Multiples of salary are a fast sanity check between now and retirement. Fidelity’s widely cited benchmarks are the easiest version.
- 1x your salary saved by age 30.
- 3x by 40, 6x by 50, 8x by 60, and roughly 10x by 67.
- High earners in expensive metros usually need more, because Social Security replaces a smaller share of their income.
- Behind the curve? Contribution increases and a later retirement date both close gaps quickly.
Count all your income sources
Applying 25x to your entire spending number is the most common planning mistake. Guaranteed income does a lot of the work for most households.
- Social Security: pull your real estimate at SSA.gov rather than guessing.
- Pensions and annuities: note whether payments adjust for inflation.
- Rental income: subtract vacancy, taxes, and maintenance before counting it.
- Part-time or consulting income: treat it as a bonus, not a foundation.
Where the 4% rule can break
The 4% guideline came from historical 30-year retirements with a stock-and-bond portfolio. Longer retirements and bad early years both strain it.
- Retiring before 60 means a 40+ year horizon — many planners drop to 3–3.5% (28–33x spending).
- Poor returns in the first few years hurt far more than the same returns later.
- Healthcare before Medicare at 65 can add $5,000–$15,000 per year.
- High fees reduce your sustainable withdrawal rate directly.
Your next five moves
Turn the target into a plan you can start this month.
- 1
Write down real annual spending from the last 12 months of statements.
- 2
Get your Social Security estimate and subtract it.
- 3
Multiply the gap by 25, then by 28 for a conservative version.
- 4
Compare the target to your current balances and raise your savings rate to close the gap.
- 5
Plan the drawdown side too — see retirement withdrawal order.
Disclaimer: This page includes AI-assisted educational content reviewed for general accuracy. It is not personalized financial, tax, or legal advice. Verify numbers with a qualified professional and our editorial standards.
Continue reading
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