Education
How Much Do You Need to Retire? A Complete Guide
5 min read · Last updated June 2026
Retirement planning starts with one simple question: how much money do I actually need? The answer is more specific than most people think, and getting it right makes everything else easier.
1. How Much Do You Actually Need
The amount you need to retire depends on how much you plan to spend each year in retirement, how long you expect to live, and what rate of return your investments earn. There is no universal number, but most financial planners use 25 times your annual expenses as a starting point.
If you plan to spend $60,000 per year in retirement, you need roughly $1,500,000 saved. If you plan to spend $40,000, you need $1,000,000. This comes from the 4% rule, which we explain next.
2. The 4% Rule Explained
The 4% rule says that you can withdraw 4% of your portfolio in the first year of retirement, then adjust for inflation each year after, and your portfolio should last at least 30 years with a high probability of success.
4% rule examples
$500,000 saved$20,000/year
$1,000,000 saved$40,000/year
$2,000,000 saved$80,000/year
The 4% rule is a guideline, not a guarantee. It was based on historical US market returns and may not hold in all scenarios. Many financial planners now suggest a 3% to 3.5% withdrawal rate for extra safety.
3. How to Know If You Are On Track
A common benchmark is to have saved 1x your annual salary by age 30, 3x by 40, 6x by 50, and 8x by 60. These are rough targets, not rules, and your specific situation matters more than any benchmark.
Better approach
Use a retirement calculator that accounts for your current savings, monthly contributions, expected return, inflation, retirement age, and desired income. That gives you a personalised answer rather than a generic benchmark.
4. Why Inflation Matters
Inflation erodes the purchasing power of your savings over time. $1,000,000 today will buy significantly less in 30 years. This is why you need to plan in real terms, accounting for inflation in both your investment returns and your spending projections.
A 7% nominal return with 2.5% inflation gives you a real return of roughly 4.5%. That is the actual growth in your purchasing power.
5. Social Security and Pensions
Social Security or pension income reduces how much you need in your own portfolio. If you receive $2,000 per month from Social Security and need $5,000 per month total, you only need to cover $3,000 per month from your savings, which changes your target dramatically.
Always factor in expected government benefits when calculating your retirement number. Our retirement calculator has a dedicated field for this.
5. Social Security and Pensions
Social Security or pension income reduces how much you need in your own portfolio. If you receive $2,000 per month from Social Security and need $5,000 per month total, you only need to cover $3,000 per month from your savings, which changes your target dramatically.
Always factor in expected government benefits when calculating your retirement number. Our retirement calculator has a dedicated field for this.