How much money do you need to retire comfortably? This is one of the most common questions in personal finance, and the honest answer is that it depends. It depends on where you live, how you want to spend your time, what your health looks like, and what you expect your life to cost.
But "it depends" is not a plan, so let us give you something better.
In this guide, we will walk through a few rules of thumb that can get you to a working estimate, show you the benchmarks that help you check your progress by age, and explain the factors that move your personal number up or down. The more you understand your finances, your budget, and your likely expenses, the sharper your estimate gets. That is the real goal here: not a universal number, but your number.
The Average American Thinks They Need $1.46 Million
A 2026 Northwestern Mutual study found that Americans believe they need $1.46 million to retire comfortably. Treat it as a national average of opinions, not a target.
That figure is useful as a reference point. Some people will need far less. Others, particularly those planning to retire early or in expensive areas, will need more.
The better approach is to build your estimate from your own expenses. Here is how.
Use These Three Rules of Thumb to Estimate Your Retirement Number
We want to give you a few rules of thumb. None of them is perfect, but each one gives you a different way to sanity-check your progress, and together they get you surprisingly close to a workable target.
The 80% Rule
Most people need somewhere between 70% and 80% of their pre-retirement income to maintain their lifestyle after they stop working. If your household earns $100,000 today, plan for roughly $70,000 to $80,000 in annual retirement income.
Why less than 100%? A few expenses tend to fall away in retirement: commuting, payroll taxes, retirement contributions themselves, and often a mortgage that gets paid off along the way. Some costs rise, healthcare being the big one, but for most households the total comes in below their working-years spending.
The Multiply-by-25 Method
Take the annual income you want your savings to provide and multiply it by 25. If you want $60,000 per year from your portfolio, you are aiming for roughly $1.5 million. If you want $40,000, the target is $1 million.
This method is the 4% rule worked backward, and it is the fastest way to translate a spending goal into a savings goal.
The 4% Rule
The 4% rule says you can withdraw 4% of your portfolio in your first year of retirement, adjust that amount for inflation each year afterward, and have a high probability of your money lasting 30 years. A $1 million portfolio supports about $40,000 in first-year withdrawals. A $2 million portfolio supports about $80,000.
The 4% rule is a planning guideline, not a law of nature. It assumes a diversified portfolio and a roughly 30-year retirement. If you retire at 50, plan to be more conservative. If you retire at 70 with a pension covering your fixed costs, you may have room to be more flexible. But as a starting point, it has held up well for decades.
Assumes a diversified portfolio and a ~30-year retirement. Retiring early? Plan closer to 3.5%.
Do not forget Social Security. The rules of thumb above cover what your savings need to provide. Your Social Security benefit reduces that burden, often by $20,000 to $40,000 per year per person. Your personal number is the gap between your expected expenses and your guaranteed income, not your total expenses.
Savings Benchmarks by Age
Data from T. Rowe Price provides useful checkpoints for how much you should have saved at each age, expressed as a multiple of your current salary:
Retirement Readiness at a Glance
If you are behind these benchmarks, don't panic, and don't give up. The ranges are wide for a reason. Households with higher incomes need higher multiples because Social Security replaces a smaller share of their income. And the trajectory matters more than any single checkpoint. Someone who is slightly behind at 50 but saving 15% of their income consistently is in better shape than the benchmark suggests.
If you are ahead of these numbers, that is worth knowing too, because it may open options you have not considered: retiring earlier, working part-time in your final years, or being more generous in your giving.
Try Our Retirement Calculator to See Your Number
Enter your income, savings, and target retirement age to get an estimate built on your numbers, not a national average.
Open Retirement CalculatorWhere You Live Dictates Your Retirement Cost of Living
Here is the factor that most retirement calculators gloss over: an identical nest egg buys very different retirements in different places.
Cost-of-living data makes the point clearly. Hawaii's cost of living runs nearly twice the national average, driven by housing costs that are roughly three times the national baseline. Mississippi sits about 13% below the national average, with some of the lowest housing costs in the country.
Source: MIT living wage data. According to MIT, the basic annual cost of living for an individual is roughly $41,000 in Hawaii versus $29,500 in Mississippi, and that gap widens considerably once you account for housing quality, healthcare access, and lifestyle.
A $1 million nest egg might fund a comfortable, decades-long retirement in one state and run meaningfully short in another. If you are flexible about where you retire, that flexibility is worth real money. If you are committed to staying where you are, build your estimate around your actual local costs, not a national average.
State taxes matter here too. Some states exempt all retirement income, including Social Security and IRA withdrawals, from state taxes. Others tax most of it. Over a 25-year retirement, that difference compounds.
How much do you think you need? Ask a financial planner for free.
Get matched free5 Factors That Can Move Your Number Up or Down
Once you have a rough estimate from the rules of thumb, a handful of personal factors determine how much to adjust it.
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1
Your retirement age
Retiring at 55 instead of 65 means your savings must cover more years, you will wait longer for Social Security, and you will need to bridge the gap to Medicare eligibility at 65. Early retirement is achievable, but it raises the target meaningfully.
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2
Your health and healthcare costs
Healthcare is the expense most likely to rise throughout retirement. A realistic plan accounts for premiums, out-of-pocket costs, and the possibility of long-term care.
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3
Your housing situation
Entering retirement with a paid-off mortgage dramatically reduces the income your savings need to generate. Carrying housing debt into retirement does the opposite.
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4
Your goals
A retirement built around travel and hobbies costs more than one built around home, family, and community. Neither is wrong. But your number should reflect the retirement you actually want, not a generic template.
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5
Inflation
Prices roughly double every 25 years at historical inflation rates. A plan that looks comfortable in today's dollars needs room to grow with the cost of living.
The single most valuable exercise in retirement planning is a realistic monthly budget for your first year of retirement. Not a guess. An actual line-by-line estimate of what your life will cost. Everything else in your plan builds on that foundation, and most people who do it discover their assumptions were off in at least one meaningful category.
Turn an Estimate Into a Plan
Rules of thumb get you to a target. A plan gets you to the target. The difference is the work in between: how much to save each year, which accounts to use, how to invest at each stage, when to claim Social Security, and how to sequence withdrawals once you retire so that taxes take the smallest possible bite.
This is where a financial advisor earns their fee. A good advisor will pressure-test your assumptions, model scenarios you have not considered, and adjust the plan as your life changes. They will also help with the part no calculator can: keeping you steady when markets are volatile and your instincts are telling you to do exactly the wrong thing.
If you do not have an advisor, or you are not sure the one you have is engaged with your retirement plan specifically, Kapitalwise can match you with a vetted fiduciary advisor based on your goals, your asset level, and your stage of life. The matching service is free, and the first conversation carries no obligation.
Frequently Asked Question
Clear answers to the retirement questions we hear most often.
“Is $1 million enough to retire?”
For many people, yes, particularly with Social Security covering a meaningful share of expenses and a moderate cost of living. Using the 4% rule, $1 million provides roughly $40,000 per year, and combined with an average Social Security benefit, that supports a comfortable retirement in much of the country. In high-cost states or for early retirees, $1 million may fall short. Your expenses, not a round number, determine the answer.
“How much should I have saved by age 50?”
Data from T. Rowe Price suggests 3.5 to 5.5 times your current salary by age 50. If you earn $100,000, that is $350,000 to $550,000. If you are behind, the years between 50 and 65 offer catch-up contribution limits and are often your highest-earning years, which makes them the most powerful savings window of your career.
“Can I retire at 55?”
Yes, with planning. Retiring at 55 means funding a longer retirement, bridging roughly a decade before Medicare eligibility, and potentially waiting years before claiming Social Security. Most successful early retirees target a larger multiple of their expenses, often 28 to 33 times annual spending rather than 25, and plan carefully for healthcare costs in the gap years.
“Does the 4% rule still work?”
The 4% rule remains a reasonable planning guideline for a roughly 30-year retirement with a diversified portfolio. Researchers debate the exact safe rate, and some suggest starting closer to 3.5% for longer retirements or being flexible with withdrawals in down markets. As a starting estimate, it continues to serve well. As a rigid rule followed for 30 years without adjustment, no single number is that reliable.
“How do I account for where I live?”
Build your estimate from your actual local expenses rather than national averages. Housing, taxes, and healthcare are the three categories that vary most by state. If you plan to relocate in retirement, run your numbers for the destination, not your current location, and remember that some states tax retirement income while others exempt it entirely.