How Much Do I Need to Retire?
Rule of thumb: you need about 25 times the yearly spending your savings must cover. Say you spend $60,000 a year and Social Security pays $24,000. The gap is $36,000. That gap needs $900,000 in today's dollars. In 30 years at 2.5% inflation, it needs about $1,887,811.
The 4% rule, explained
The 4% rule comes from financial planner William Bengen's 1994 study in the Journal of Financial Planning. The "Trinity study" (Cooley, Hubbard and Walz, 1998) later found the same thing. Here is the idea. You withdraw 4% of a stock/bond portfolio in the first year of retirement. Each year after, you raise that dollar amount with inflation. In every historical U.S. period tested, the money lasted at least 30 years. Dividing by 4% is the same as multiplying by 25. That's where the 25 comes from.
- Yearly spending in retirement: $60,000.
- Subtract guaranteed income (Social Security, pension): $60,000 − $24,000 = $36,000.
- Inflate to your retirement year: $36,000 × 1.02530 = $75,512.
- Divide by the withdrawal rate: $75,512 ÷ 0.04 = $1,887,811.
Get your own Social Security estimate at ssa.gov/myaccount. The 4% rule is a starting point. It is not a guarantee. A retirement longer than 30 years calls for a lower rate. So do high fees, or a bad market early in retirement.
Nest egg by withdrawal rate
Here is a $36,000 yearly gap in today's dollars. Half a point on the rate moves the target a lot.
| Withdrawal rate | Multiple of spending | Nest egg needed |
|---|---|---|
| 3% | 33.3× | $1,200,000 |
| 3.5% | 28.6× | $1,028,571 |
| 4% | 25× | $900,000 |
| 4.5% | 22.2× | $800,000 |
| 5% | 20× | $720,000 |
Monthly savings needed to reach $900,000 by 65
This starts from zero at a 7% average annual return. The target is in today's dollars. So for a stricter test, use a return after inflation. Compare age 25 with age 45. At 7%, waiting 20 years multiplies the monthly amount by about 4.9. That's worth thinking about for a moment.
| Start saving at | Years | At 7% / month | At 5% / month |
|---|---|---|---|
| 25 | 40 | $364 | $607 |
| 35 | 30 | $770 | $1,104 |
| 45 | 20 | $1,773 | $2,218 |
| 55 | 10 | $5,262 | $5,830 |
Frequently asked questions
Is $1 million enough to retire?
At a 4% withdrawal rate, $1,000,000 supports about $40,000 a year of spending. Social Security or a pension comes on top. Whether that is enough depends on your expenses, where you live, health costs and retirement age.
What withdrawal rate is safe?
Historically, 4% lasted 30 years with a balanced portfolio. Early retirees planning for 40+ years often use 3-3.5%. Nobody can guarantee a rate. Future returns are unknown.
Should I count Social Security?
Yes. Subtract your expected benefit from your spending first. Then divide by the withdrawal rate. The Social Security Administration has your personal estimate at ssa.gov/myaccount.
How much of my income will I need?
A common starting point is 70-80% of pre-retirement income. Your real expenses are a better guide. Add up housing, health care (Medicare premiums too), taxes, travel and support for family.
Not investment advice. These results are estimates. They use the numbers you enter and a constant rate of return. Real returns change every year. They can be negative. They are not guaranteed. Taxes, fees and inflation will change your real results. Talk with a licensed financial professional before you decide.
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Updated: October 2, 2026 · Sources and methodology