Retirement Planning 101: How Much Do You Actually Need?

Retirement planning seems overwhelming. How much do you need? When can you retire? How do you know you've saved enough? The answer is simpler than you think: the 4% rule.

The 4% Rule

Research shows that if you withdraw 4% of your portfolio in year 1 of retirement, then adjust that amount for inflation each year, your money will last 30+ years with 95% confidence.

In other words: Needed Savings = Annual Expenses / 0.04

If you need $80,000/year in retirement, you need $2 million saved. If you need $50,000/year, you need $1.25 million.

Account for Inflation

$80,000/year today might be $194,000/year in 30 years due to 3% average inflation. Your retirement number should account for this. Our retirement calculator handles this automatically—just enter your current annual need and desired retirement age.

Include Social Security

Social Security covers part of retirement (average ~$2,070/month or ~$24,800/year in 2026). Subtract this from your annual needs, then calculate your required savings on the gap:

• Annual need: $80,000
• Social Security: $25,000
• Gap to cover: $55,000
• Needed savings: $55,000 / 0.04 = $1.375 million

Practical Takeaway

Use the 4% rule to calculate your number, subtract Social Security, then work backward to figure out how much to save monthly. Start early—compound growth does most of the heavy lifting. A 25-year-old needs to save much less monthly than a 45-year-old targeting the same retirement number.