How much do you need to retire? The 4% rule explained
Retirement planning sounds daunting, but two rules of thumb get you most of the way: the 25× target and the 4% rule. The rest is starting early and capturing free money.
Your number: 25× spending
A common target is 25 times your annual spending — the inverse of the 4% rule. Plan to spend $40k/year? Aim for about $1,000,000. The Retirement calculator projects your nest egg and the income it can sustain.
The 4% rule
The 4% rule says you can withdraw about 4% of your portfolio in the first year (adjusting for inflation after) with a high chance of lasting ~30 years. It’s a guideline, not a guarantee — markets and lifespans vary — but it’s a solid anchor.
Plan around inflation-adjusted spending, not a nominal number — see what inflation does to your money.
Free money first
- Capture the full employer 401(k) match — an instant, guaranteed return. See the 401(k) calculator.
- Start early: compounding rewards the first dollars most.
- Low-cost index funds keep fees from eating your returns.
Frequently asked questions
- How much do I need to retire?
- Roughly 25× your annual spending — the inverse of the 4% rule. The exact figure depends on lifestyle, other income like Social Security, and how long your retirement lasts.
- What is the 4% rule?
- A guideline that you can withdraw about 4% of your portfolio in the first year, adjust for inflation after, and likely not run out over a 30-year retirement.
- Should I count Social Security or a pension?
- Yes — they reduce how much you need to save yourself. This projection covers only your own savings, so any guaranteed income on top lowers your target.
Run your own numbers
Put this guide into practice — these calculators run free in your browser.