How much you need to retire

The number depends on three things only. What you spend, how long the money has to last and what withdrawal rate you trust. Everything else is detail.

Most people work it backwards from a salary they remember rather than the spending they actually have. Spending is the honest input, because it is the thing the portfolio has to replace.

Common questions

How much do I need to retire at 65?

Take annual spending, subtract any Social Security or pension income you will receive, and multiply what is left by 25. If you spend $60,000 and expect $24,000 from Social Security, the portfolio only has to cover $36,000, so the target is around $900,000 rather than $1.5 million.

How much should I invest each month?

That falls out of the gap between what you have and what you need, the years remaining and an assumed return. A useful sanity check is that at 7 percent, a dollar invested 30 years out becomes about $7.61, and one invested 10 years out becomes about $1.97. Early money does almost all the work.

What return should I assume?

Use a real return, meaning after inflation, and plan your spending in today's dollars. Around 5 percent real for a stock heavy portfolio is a defensible middle. Using 10 percent nominal against spending that never inflates is the most common way these calculations flatter themselves.

Does the 401k contribution limit affect my plan?

Only if you are saving enough to hit it. The 2026 employee deferral limit is $24,500, and the IRA limit is $7,500. Above that, extra saving goes to a taxable brokerage, which matters for early retirement because taxable money is reachable before 59 and a half.

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