How Much Do I Need to Retire? Calculating Your Retirement Number

How much do I need to retire? The foundational answer comes down to one formula: multiply your expected annual retirement expenses by 25. If you plan to spend $50,000 per year in retirement, you need $1,250,000. If your spending will be $80,000 per year, you need $2,000,000. This guide explains exactly where that 25× number comes from, what changes it, and how to calculate your personal retirement number step by step.

The 25× rule — where your retirement number comes from

The 25× rule is the practical shorthand for the 4% safe withdrawal rate, which emerged from the Trinity Study published in 1998 by three finance professors at Trinity University. The study analysed historical portfolio performance across every rolling 30-year period from 1926 to 1995 and found that a portfolio of 50% stocks and 50% bonds could sustain a 4% annual withdrawal without running out of money in virtually every historical period.

The math: if you withdraw 4% of your portfolio each year, your portfolio needs to equal 1 ÷ 0.04 = 25 times your annual expenses.

Use the FIRE Calculator to calculate your personal retirement number based on your expenses, current savings, and monthly contributions — and see exactly how many years remain.

How much do you need to retire at 60?

Retiring at 60 instead of 65 adds 5+ years to your retirement — potentially 35 to 40 years of withdrawals instead of 30. The original Trinity Study was designed for 30-year retirements. For longer periods, many financial planners recommend using a 3.5% withdrawal rate instead of 4%, which means 28.5× expenses rather than 25×.

Example: Planned expenses of $60,000 per year.

• Retiring at 65 (30-year horizon): $60,000 × 25 = $1,500,000
• Retiring at 60 (35-year horizon): $60,000 × 28.5 = $1,710,000

The extra $210,000 accounts for the additional 5 years of withdrawals and greater market uncertainty over a longer period.

Healthcare is the biggest wildcard for early retirement. Before Medicare eligibility at 65, retirees pay for private health insurance. A 60-year-old couple in 2026 typically pays $1,200–$2,000 per month for a marketplace plan — $14,400–$24,000 annually. This amount should be added to annual expense estimates for anyone retiring before 65.

How much retirement savings should I have by age?

Fidelity's commonly referenced benchmarks give a quick gut check against your progress:

The median balances are dramatically below Fidelity's targets — most Americans are not on track by these measures. If you are behind, the two most effective levers are maximising 401k and Roth IRA contributions and reducing planned retirement expenses (which reduces the target number itself).

What actually determines your retirement number

The only variable that truly matters is your annual retirement expenses— not your income. Two people can earn $200,000 a year and need completely different retirement numbers depending on their spending. Here is how to calculate the real number:

1. Estimate annual retirement spending. Start with current expenses and adjust: housing costs often drop (mortgage paid off), commuting costs disappear, but healthcare costs and travel spending typically rise. A common rule of thumb: 70–80% of pre-retirement income, but your actual spending pattern matters more than any rule.
2. Subtract guaranteed income. Social Security, pension income, and rental income all reduce how much your portfolio needs to provide. Every $1,000/month in Social Security reduces your required portfolio by $300,000 (at 4% withdrawal rate).
3. Multiply the shortfall by 25. (Or 28.5 if retiring before 65.)

Worked example: Alice plans to spend $65,000 per year in retirement. Her projected Social Security benefit at 67 is $2,200/month ($26,400/year).

• Annual portfolio withdrawal needed: $65,000 − $26,400 = $38,600
• Retirement number: $38,600 × 25 = $965,000

Social Security cut Alice's required portfolio by nearly $660,000 compared to someone with the same spending but no guaranteed income. Delaying Social Security from 62 to 70 increases the benefit by approximately 77% — the single highest-return "investment" available to most retirees.

Use the 4% Rule Calculator to input your own portfolio and spending figures and see whether you can retire today.

Building toward your number — 401k and Roth IRA

The two primary tax-advantaged vehicles for reaching your retirement number are the 401k and the Roth IRA. In 2026, the contribution limits are:

• 401k: $23,500 (under 50) / $31,000 (age 50+ with catch-up)
• Roth IRA: $7,000 (under 50) / $8,000 (age 50+)

For a detailed breakdown of which account to prioritise and the full priority order for 2026, see Roth IRA vs 401k — which to prioritise in 2026. To understand the 4% withdrawal rule that determines your retirement number, see what the 4% rule is and how to calculate it. And to see how compound growth builds your portfolio toward the target, see how compound interest grows your retirement portfolio over time.

Example: Maxing both accounts from age 35 contributes $30,500 per year. At 7% annual return, that grows to approximately $1.37 million by age 65. That is 30 years of consistent contributions — but starting 10 years earlier at 25 would produce over $2.8 million by 65.

Use the 401k Calculator and Roth IRA Calculator to project your balances with your specific contribution amounts and expected return.

Key takeaways

• Your retirement number = annual expenses × 25 (the 4% safe withdrawal rate expressed as a multiplier).
• Retiring before 65 extends your draw-down period — use 28.5× expenses (3.5% SWR) for retirements starting at 60.
• Social Security income reduces your required portfolio by $300,000 for every $1,000/month in benefit.
• Fidelity's benchmarks: 1× salary by 30, 3× by 40, 6× by 50, 8× by 60, 10× by 67.
• The 2026 contribution limits: $23,500 for 401k, $7,000 for Roth IRA.
• Healthcare before 65 is the most underestimated retirement cost — budget $14,400–$24,000/year for a couple.

Frequently asked questions

Is the 4% rule still safe in 2026?

The 4% rule remains the most widely used starting point, but many researchers now recommend 3.5% for retirements of 35+ years given lower expected bond returns. Vanguard and Morningstar have published research suggesting 3.3–3.8% is more appropriate for current market conditions. For a 30-year retirement, 4% still has strong historical support. For early retirement at 50 or 55, use 3.5% or lower.

Does my retirement number include my house?

Home equity is typically excluded from the retirement number calculation because you need somewhere to live. The retirement number refers to your liquid invested portfolio — 401k, Roth IRA, brokerage accounts. If you plan to downsize or sell your home in retirement, the freed equity can reduce your required portfolio, but only if you have a plan for replacing your housing.

What if I have a pension?

Treat pension income like Social Security — subtract it from your annual expense estimate before multiplying by 25. A $30,000/year pension on $70,000 in annual expenses means your portfolio only needs to provide $40,000/year, giving a retirement number of $1,000,000 rather than $1,750,000.

How does inflation affect my retirement number?

The 4% rule already accounts for inflation — the Trinity Study used inflation-adjusted withdrawals that increased each year with CPI. Your retirement number in today's dollars is already an inflation-adjusted target. What inflation affects is the real purchasing power of your savings — which is why using a 7% real return (after inflation) rather than a 10% nominal return in projections is important.

Can I retire with $500,000?

At a 4% withdrawal rate, $500,000 supports $20,000 per year in portfolio withdrawals. Combined with $2,000/month Social Security ($24,000/year), that is $44,000/year — comfortable in low cost-of-living areas or outside the US. Without Social Security or other income, $500,000 requires expenses of $20,000 or less annually, which is challenging in most US cities. Use the 4% Rule Calculator to model your specific situation.