How Much Do I Need to Retire? Three Ways to Work It Out
Short answer: how much do I need to retire? A common method is to take your yearly spending in retirement, subtract Social Security and any pension, and multiply what is left by 25. Spending $60,000 a year with $24,000 of Social Security means a portfolio of about $900,000, and without Social Security it would be $1,500,000. Two other methods, replacing 80% of income and building a bottom-up budget, work as cross-checks.
Key takeaways
- There is no single number. It depends on what you will spend, your other income and how long you need it to last.
- The 25-times rule is the reverse of the 4% rule: withdraw 4% a year and the money is meant to last about 30 years.
- Social Security cuts the target a lot: $24,000 a year reduces a $60,000 lifestyle's target by $600,000.
- Use all three methods and see where they agree.
Method 1: how does the 25-times rule work?
Target = (yearly spending − yearly Social Security or pension) × 25. Three example lifestyles, in today's dollars, with illustrative Social Security amounts:
| Lifestyle | Yearly spending | Social Security | Target without it | Target with it |
|---|---|---|---|---|
| Lean | $40,000 | $18,000 | $1,000,000 | $550,000 |
| Moderate | $60,000 | $24,000 | $1,500,000 | $900,000 |
| Comfortable | $90,000 | $30,000 | $2,250,000 | $1,500,000 |
Your own Social Security estimate is in your account at the Social Security Administration, so use that figure, not the example. See when to claim Social Security, and whether the 4% rule works.
Method 2: what about replacing 80% of income?
Many planners aim to replace about 70% to 80% of pre-retirement pay, because some costs fall away (work costs, saving for retirement, perhaps the mortgage). On a $100,000 salary, 80% is $80,000 a year. Subtract Social Security of, say, $30,000, and you need $50,000 from savings, a target of $1,250,000. This method is easy, but it guesses your spending from your pay, so check it against Method 3.
Method 3: how does a bottom-up budget work?
List what you expect to spend in retirement, line by line. An illustrative couple:
| Category | Per year |
|---|---|
| Housing (property tax, insurance, upkeep) | $14,000 |
| Food and household | $10,000 |
| Healthcare and insurance | $9,000 |
| Transport | $6,000 |
| Travel and hobbies | $9,000 |
| Gifts, giving and other | $4,000 |
| Taxes | $8,000 |
| Total | $60,000 |
This is the most accurate method because it uses your real costs. Start from your current spending, see where your money goes, then adjust: remove the commute and the mortgage if it will be paid off, add healthcare and travel.
How do the methods compare?
| Method | Result for a $100,000 earner | Strength | Weakness |
|---|---|---|---|
| 25 times spending | $900,000 to $1,500,000, depending on spending | Simple, links to the 4% rule | Needs a spending figure |
| 80% of income | $1,250,000 with $30,000 of Social Security | Easy, needs only your salary | Guesses spending |
| Bottom-up budget | Depends on your list | Most accurate | Takes time |
If the results are far apart, look at the spending assumption first. It drives all three.
What can change the number?
- Retirement age. Retiring earlier means more years to fund and fewer years of saving. See how to know if you can retire at 45.
- Healthcare. It rises with age and before Medicare starts.
- Taxes. Traditional account withdrawals are taxed.
- Inflation and returns. See will my money last in retirement.
- Longevity. Plan for 30 years or more.
What do you do with the number?
- Find the monthly saving that reaches it. See the retirement calculator guide.
- Check your savings rate. See am I saving enough for retirement.
- Compare with benchmarks. See am I on track for retirement.
- Revisit it every few years, or after a big change.
How does the withdrawal rate change the target?
The 25-times rule is the same as a 4% withdrawal rate. A lower rate is safer but needs a bigger pot. For $36,000 a year drawn from savings (spending of $60,000 less $24,000 of Social Security):
| Withdrawal rate | Target | Multiple of the yearly draw |
|---|---|---|
| 3% | $1,200,000 | 33× |
| 3.5% | $1,028,571 | 29× |
| 4% | $900,000 | 25× |
| 5% | $720,000 | 20× |
Retiring early, or wanting a margin for poor markets, argues for the 3% to 3.5% rows. See a safe withdrawal rate for early retirement.
How do you stress-test your number?
- Raise spending 10%. Does the target still look reachable?
- Lower the return. Rerun with a figure a point or two lower.
- Retire two years earlier. You save for fewer years and draw for more.
- Cut Social Security 20%. Benefit rules can change, so see how much you depend on it.
- Add a health shock. Budget a larger medical cost in one year.
If the plan survives most of these, it has margin. If one breaks it, that is the risk to work on first.
What mistakes do people make when estimating?
- Using their current salary as spending. Spending is usually lower than pay, because of tax and saving.
- Forgetting that spending changes. Travel is often higher early on, healthcare later.
- Counting the house twice. If you will live in it, it is not available to fund spending.
- Ignoring inflation. Work in today's dollars, as in the examples.
- Trusting one number. Think in a range, such as $900,000 to $1,500,000, and plan for the upper end if you can.
Sources and further reading: SEC Investor.gov has a free retirement income calculator, and the IRS lists contribution limits and rules for retirement accounts.
General education, not financial or investment advice. Reviewed October 2026. Examples use illustrative spending and Social Security amounts in today's dollars. The 25 times rule is a guideline and does not guarantee a result.
Frequently asked questions
How much do I need to retire?
A common method is yearly spending minus Social Security and pension, times 25. Spending $60,000 with $24,000 of Social Security means about $900,000, and without Social Security it would be $1,500,000.
How much do I need to retire with $60,000 a year?
About $1,500,000 using the 25 times rule, or about $900,000 if you receive $24,000 a year of Social Security. Your own amount depends on your benefit, taxes and how long you need it to last.
Is the 80% rule accurate?
It is a rough guide that assumes spending falls to about 70% to 80% of pre-retirement pay. Your spending may be higher or lower, so check it against a bottom-up budget of your actual costs.
Does Social Security count toward my retirement number?
Yes. Subtract your expected benefit from yearly spending before multiplying by 25. Check your estimate in your Social Security account, because the example figures are illustrations.
How much do I need to retire at 60?
More than at 67, because the money must last longer and you have fewer years to save, and Social Security may not start for years. Run the same method with a longer retirement and a cautious return.