How Much Do I Need to Save for Retirement?
Last updated 2026-07-08
Most "how much do I need to save for retirement" answers throw out a single number — $1 million, $2 million, "10x your salary." These are useful anchors, but your real number depends on your own spending, not a stranger's average. Here's how to calculate yours.
Work backwards from your spending, not your salary
Salary-based rules of thumb (like "save 10-12x your final salary") are popular because they're easy to remember, but they ignore the fact that your retirement spending is what actually depletes your portfolio — not your income while working. Someone earning $150,000 but spending $60,000 a year needs a very different retirement number than someone earning $150,000 and spending $110,000.
The more accurate approach: estimate your expected annual expenses in retirement (housing, healthcare, travel, everyday living), then work backwards to the portfolio size that supports that spending indefinitely.
The 25x rule, explained
If you plan to withdraw about 4% of your portfolio per year (the historical safe withdrawal rate discussed in our retirement runway guide), then your target portfolio is simply 25 times your annual expenses. Spend $70,000/year → target roughly $1.75 million. Spend $40,000/year → target roughly $1 million.
Want more of a safety margin? Target 28-30x expenses instead (a ~3.3-3.5% withdrawal rate) if you're retiring early and need your money to last 40+ years rather than 30.
What the 25x rule leaves out
- Social Security or pension income reduces the amount your portfolio needs to cover — subtract your expected guaranteed annual income from your expenses before multiplying by 25.
- Inflation between now and retirement means your future expenses in today's dollars aren't the number you should multiply — you need your expenses expressed in the dollars of the year you actually retire.
- Major upcoming costs — a mortgage payoff, a child's wedding, long-term care — need to be layered on top of your steady-state annual number.
Turn this into a savings plan
Once you know your target portfolio, the next question is how much to contribute monthly to get there by your target retirement age, given your expected investment returns. Our retirement calculator does this calculation for you: enter your current savings, monthly contribution, expected returns, and target retirement age, and it shows your projected corpus against your retirement target side by side — so you know immediately if you're on track or need to save more.
Key takeaway
Your retirement number is a function of your spending, not your income. Multiply your expected annual retirement expenses (net of Social Security/pension) by 25-30 to get a realistic target, then build a savings plan that gets your portfolio there.