Retirement Calculator Guide: How Much Money Do You Need to Retire?
The 4% rule says your retirement number is 25× your annual expenses. But the right number for you depends on age of retirement, expected expenses, tax-advantaged income, and sequence-of-returns risk. Learn how to calculate your personal target.
The 4% Rule: Origins, Evidence, and Limits
The 4% rule originates from the 'Trinity Study' — a 1998 research paper by three Trinity University professors (Cooley, Hubbard, and Walz) who analyzed historical portfolio success rates at various withdrawal rates using data from 1926–1995. The study found that a 60% stock / 40% bond portfolio could sustain inflation-adjusted withdrawals of 4% of
Estimating Retirement Expenses
The quality of your retirement number is entirely determined by the quality of your expense estimate. Most retirement planning fails not from incorrect return assumptions but from systematic misestimation of spending needs. The replacement ratio rule of thumb: target 70%–80% of pre-retirement income. The logic: no more payroll taxes, no mortgage (i
Social Security: How It Changes Your Retirement Number
Social Security is the most underutilized retirement planning tool in the US. For the median American worker, Social Security will replace 40%–50% of pre-retirement earnings. Correctly accounting for this benefit dramatically reduces the required portfolio size. Estimating your benefit: Create an account at ssa.gov to view your Social Security stat
How Retirement Age Changes Your Required Number
The age you retire affects your retirement number through two mechanisms: the number of years the portfolio must sustain withdrawals, and the number of years remaining to accumulate savings. Retirement horizon by age: Age 55 retirement: ~35–40 year horizon. Use 3.5% withdrawal rate → multiply expenses by 28.6 Age 60 retirement: ~30–35 year horizon.
Frequently Asked Questions
How much do I need to retire at 65?
Using the 4% rule: 25× your expected annual expenses in retirement. If you expect to spend $65,000/year, you need $1,625,000. Subtract the portfolio equivalent of Social Security: if SS provides $24,000/year, you need to fund $41,000 from savings → $41,000 × 25 = $1,025,000. The
What is the 4% rule in retirement?
The 4% rule states that you can withdraw 4% of your portfolio in the first year of retirement, then adjust each subsequent year for inflation, and historically the portfolio has survived for 30+ years across all historical market scenarios. The origin is the Trinity Study (1998)
Can I retire with $1 million?
Yes — $1 million supports approximately $40,000/year in withdrawals under the 4% rule. Combined with Social Security ($15,000–$30,000/year for most retirees), a $1 million portfolio can comfortably fund $55,000–$70,000/year in retirement spending. The sustainability depends on yo
What is a good retirement savings rate?
Financial planners typically recommend saving 15%–20% of gross income for retirement, including employer match. At 25 starting from zero at 7% annual return, 15% of a $65,000 salary ($812/month) grows to approximately $2.1 million by age 65 — a strong outcome. If starting later (
How do I calculate how much to save for retirement?
Step 1: Estimate annual retirement expenses in today's dollars. Step 2: Subtract expected Social Security benefit. Step 3: Multiply remaining expenses by 25 (4% rule) to get target portfolio. Step 4: Use the savings formula C = (Target − Current Savings × (1+r)^n) × r / [(1+r)^n
Is Social Security enough to retire on?
For most Americans, no. The average Social Security benefit in 2025 is approximately $1,900/month ($22,800/year). If your retirement expenses are $50,000/year, SS covers roughly 46% — you'd need portfolio income of $27,200/year, requiring approximately $680,000 in savings (at 4%)