How Much Do You Need to Retire? A Realistic Way to Find Your Number

"$1 million" isn't a real answer. Here's how to calculate the number that actually applies to you.

"How much do I need to retire?" gets answered with round numbers like $1 million or $2 million far too often. The real answer depends on your annual expenses and how much of them Social Security or a pension already covers — two people with the same savings balance can have completely different retirement outlooks. Here's how to work out your actual number.

1. The simple formula: multiply your expenses

The most common starting point is to take your expected annual retirement expenses and multiply by 25 — the inverse of a 4% withdrawal rate. If you expect to spend $50,000 a year in retirement, that suggests a target of roughly $1.25 million. Spend $80,000 a year, and the target rises to $2 million. This is a rough starting point, not a precise answer, but it immediately shows why a flat number like "$1 million" means very different things depending on your spending.

2. Why the 4% rule is a starting point, not a guarantee

The 4% rule comes from research done in the 1990s testing how a 60/40 stock-and-bond portfolio would have survived the worst historical 30-year stretches, including the Great Depression and the high-inflation 1970s. It has held up reasonably well as a rule of thumb, but current research puts the range closer to 3.7%–4.7% depending on your specific asset mix, how long your retirement needs to last, and how willing you are to adjust spending in a down market.

A lower withdrawal rate (3.7%) means you need a larger portfolio for the same income. A higher rate (4.7%) means you need less saved, but with somewhat more risk of running low late in retirement. Neither number is "correct" — they represent different trade-offs between spending comfortably now and certainty later.

3. Working backward from your actual expenses

Rather than starting with a savings target, start with your expected monthly expenses in retirement — housing, healthcare, food, travel, and everything else — and build up from there:

1. Estimate your total annual expenses in retirement (adjust for a paid-off mortgage, reduced commuting costs, but higher healthcare spending).
2. Subtract any guaranteed income — Social Security, a pension, rental income.
3. The remainder is what your portfolio needs to generate each year.
4. Divide that remainder by your chosen withdrawal rate (0.037 to 0.047) to get your target portfolio size.

4. A worked example

Suppose you expect $70,000/year in total retirement expenses, and you'll receive $28,000/year from Social Security. Your portfolio needs to cover the remaining $42,000/year. At a 4% withdrawal rate, that means a target of $1.05 million ($42,000 ÷ 0.04). At a more conservative 3.7% rate, the target rises to about $1.14 million. At a less conservative 4.7% rate, it drops to roughly $894,000.

Notice that Social Security alone cut the required portfolio by $700,000 compared to covering the full $70,000 from savings — which is why ignoring guaranteed income when estimating your number leads to a wildly inflated target.

5. How your retirement age changes the math

Retiring at 55 means your portfolio needs to last potentially 35-40 years instead of 25-30, which argues for a more conservative withdrawal rate and a larger target. Retiring at 67 or later, with a full Social Security benefit and a shorter time horizon, supports a somewhat higher withdrawal rate and a smaller required portfolio for the same spending level. Age at retirement is often a bigger lever on your number than most people expect — delaying by even two or three years both shrinks the years your money needs to cover and (if you delay Social Security) increases your guaranteed monthly income.

6. Building the number step by step

Rather than solving for one final number years in advance, most people find it more useful to build toward an evolving target: max any employer match, contribute consistently to tax-advantaged accounts, and recalculate your projected number every year or two as your expenses, income, and expected retirement age become clearer. The number you calculate at 30 will look very different — and be far less reliable — than the one you calculate at 55.

7. Start with what you can control today

You can't control future market returns, but you can control how much you save and which accounts you use to do it. See our comparison of 401(k), Roth IRA, and traditional IRA accounts to make sure the money you're already setting aside is going into the right place, and our explainer on compound interest for why starting a few years earlier matters more than almost any other decision in this whole calculation.

The 4% rule has real critics worth knowing about

The 4% guideline came from research using historical U.S. market returns over a specific period, and more recent analysis has questioned whether it's too optimistic for someone retiring today, given valuation levels and the risk of a bad sequence of returns early in retirement. Treat 4% as a reasonable starting point for a rough estimate, not a guarantee — a more conservative rate, or professional guidance for your specific situation, is worth considering as you get closer to actually retiring.

Frequently Asked Questions

Is $1 million enough to retire?

It depends entirely on your annual expenses. At a 4% withdrawal rate, $1 million supports about $40,000 a year before tax, plus whatever Social Security or pension income you receive on top. For someone with modest expenses and a paid-off home, that may be plenty. For someone with $80,000 in annual expenses, it likely is not, without significant other income.

What is the 4% rule and should I still use it?

The 4% rule says you can withdraw 4% of your portfolio in your first year of retirement, then adjust that dollar amount for inflation each year after, with a strong chance of lasting 30 years. It's still a reasonable starting point, but current research suggests a range of roughly 3.7% to 4.7% depending on your asset mix, retirement length, and flexibility, rather than treating 4% as an exact figure.

How does Social Security affect how much I need to save?

Social Security reduces how much your portfolio needs to cover. If your expenses are $60,000/year and Social Security covers $24,000 of that, your portfolio only needs to generate $36,000/year, not the full $60,000 — which can lower your target by hundreds of thousands of dollars.

Should I use a higher or lower withdrawal rate than 4%?

Retiring earlier than 65, wanting to leave a large inheritance, or having no other income sources all argue for a lower, more conservative withdrawal rate. Retiring later, having Social Security or a pension cover a meaningful share of expenses, or being willing to reduce spending in a bad market year all support a somewhat higher rate.