How Much Do I Need to Retire?
The honest answer is a range, but there’s a respected shortcut: estimate your annual spending in retirement and multiply by 25. Spend $60,000 a year, and the target is roughly $1.5 million of invested assets — before counting Social Security or pensions, which reduce the savings the portfolio must cover.
Where 25x comes from
It’s the inverse of the 4% rule, drawn from research on safe withdrawal rates (the Bengen study and the “Trinity study”): historically, a diversified portfolio supported withdrawing 4% of its starting value, adjusted annually for inflation, through 30-year retirements — including ones that began at terrible moments like 1929 or 1966.
Know the assumptions before leaning on it: ~30-year horizon (longer or earlier retirements argue for 3.25–3.75%, i.e., 27x–31x), a substantial stock allocation, and based on historical U.S. returns, which nothing guarantees repeat. It’s a planning estimate, not a contract — most planners treat it as a starting framework plus flexibility, not autopilot.
Build your number in four steps
1. Estimate retirement spending — not your salary. Start from current spending, subtract what disappears (retirement contributions, payroll taxes, commuting, possibly a paid-off mortgage), add what grows (healthcare, travel, hobbies). Many land near 70–85% of pre-retirement spending, but it’s personal.
2. Subtract guaranteed income. Get your Social Security estimate at ssa.gov (the real number, not folklore). Spending $60k with $24k of Social Security leaves $36k for the portfolio.
3. Multiply the gap by 25 (or 28–30 to be conservative): $36k × 25 = $900,000.
4. Check your trajectory. Use the compound interest calculator to project your current balance plus monthly contributions to your retirement date. The gap between projection and target tells you whether to adjust contributions, timeline, or expectations — and decades out, small contribution changes move the endpoint enormously.
Rough milestones along the way
Fidelity’s widely cited guideposts: about 1x your salary saved by 30, 3x by 40, 6x by 50, 8x by 60, 10x by 67. Behind? The levers, in rough order of power: capture the full employer match, raise your savings rate a point or two per year, work slightly longer (each year both grows the portfolio and shrinks the years it must fund), and keep costs low with simple diversified investments like index funds.
The number is personal, the uncertainty is real, and the direction is always the same: a higher savings rate now buys options later.