How Much You Need to Retire, by Age

The usual answer is 25 times your annual spending. If you expect to need $60,000 a year beyond Social Security, that implies about $1.5 million.

That multiple comes from the 4% rule, and it is worth understanding what it does and does not promise before planning around it.

The 4% rule, and its limits

The rule suggests withdrawing 4% of your balance in year one, then adjusting that amount for inflation annually. It came from research on historical 30-year retirements in US markets, where that rate survived nearly every starting year including 1929 and 1966.

What it is: a reasonable planning benchmark.

What it is not: a guarantee. It assumes a 30-year retirement, a specific stock/bond mix, and US historical returns. Its main weakness is sequence-of-returns risk - a severe crash in the first few years does far more damage than the same crash later, because you are selling assets to live on while they are depressed. Many advisers now treat 3.5% as safer for early or longer retirements.

Rough targets by age

A common set of milestones, expressed as multiples of your current salary:

Age	Target saved
30	1× salary
35	2×
40	3×
45	4×
50	6×
55	7×
60	8×
67	10×

On a $85,000 salary that means about $85,000 by 30 and roughly $850,000 by 67.

Treat these as a direction of travel, not a verdict. They assume your spending in retirement tracks your salary, which breaks if you plan to move somewhere cheaper, or if your mortgage is paid off by then.

Why starting early matters more than saving hard

This is the part worth internalising. Same contribution, same 7% return, retiring at 65:

Start age	Monthly	Total contributed	Balance at 65
25	$500	$240,000	$1,310,000
35	$500	$180,000	$610,000
45	$500	$120,000	$261,000

Starting at 25 rather than 35 means contributing $60,000 more and ending with $700,000 more. The extra decade does not add 25% - it more than doubles the result, because the first contributions have forty years to compound rather than thirty.

The uncomfortable corollary: someone saving $500 a month from 25 to 35 and then stopping entirely ends up with more at 65 than someone who starts at 35 and pays in every month for thirty years. Model your own figures in the retirement calculator.

The employer match is the best return available

If your employer matches 50% of contributions up to 6% of salary, that is an instant 50% return on every dollar up to the cap. Nothing else in personal finance reliably offers that.

On $85,000, contributing 6% is $5,100 a year and the match adds $2,550. Over 30 years at 7%, that match alone becomes roughly $260,000.

Contributing less than the full match is leaving guaranteed money on the table. It is the first thing to fix, ahead of extra mortgage payments or almost anything else.

What the numbers do not tell you

Inflation. $1.5 million in 30 years buys what about $620,000 buys today at 3% inflation. Either plan in today's money using a real return of 4-5%, or inflate your target.

Social Security. The average benefit is roughly $23,000 a year. That materially reduces what you need from savings - subtract your estimated benefit from your annual need before applying the 25× multiple.

Your return assumption is doing a lot of work. Dropping from 7% to 5% on a 35-year plan cuts the ending balance by roughly 40%. Run 5%, 6% and 7% and look at the range rather than trusting a single figure.

If you are starting late

Three things carry disproportionate weight after 45:

1. Catch-up contributions. From age 50 you can contribute above the standard limit.
2. Working longer is unusually effective. Each extra year adds contributions and growth while removing a year of drawdown - it moves the maths from both ends.
3. Reducing planned spending. Every $1,000 a year less needed reduces the target by $25,000.

Estimates for general information only, not financial advice. Investment returns are not guaranteed and past performance does not indicate future results.