How much do I need to retire?

A multiple of what you spend, not a fixed figure. Take annual spending, subtract income that arrives without you working, and multiply the remaining gap by about 25. The answer is driven almost entirely by the spending number, which is why two people with identical savings can get honest answers that differ by a factor of two.

What is a safe withdrawal rate in retirement?

The 4% figure comes from William Bengen’s 1994 study of US market history, which asked what fixed inflation-adjusted withdrawal survived every historical 30-year window for a stock-and-bond portfolio. It is a finding about the worst case in one country’s past, not a law of nature, and it assumes rigid spending, a 30-year horizon and no fees.

How much will I need per year in retirement?

Most people land somewhere between 70% and 100% of pre-retirement spending, but the range is wide enough that the average is not useful for any individual. Work commuting and retirement contributions stop; healthcare before Medicare and early-retirement travel often rise. Your own last twelve months of statements beat any percentage rule.

Is $750,000 enough to retire on?

It depends on spending more than on anything else. At $40,000 a year of spending with Social Security alongside, $750,000 goes a long way; at $80,000 a year it does not. Our can-I-retire pages run exactly this comparison at three spending levels for every age and portfolio combination.

How much you actually need in retirement

There is no universal number, and the popular ones — 80% of income, the 4% rule, 25× spending — are conventions with assumptions attached. What each actually says, and where each breaks.

Every article about this eventually names a number — a million, two million, eight times your salary. None of them can be right, because the question has a variable in it that the article does not know: what you spend.

What follows is the three conventions people actually use, what each one really claims, and where each one breaks. They are useful. They are just not laws, and they are usually quoted as though they were.

Convention one: a percentage of your income

The familiar version is that you need 70% to 80% of pre-retirement income. It has the advantage of being computable from a number everyone knows, and the disadvantage of being anchored to the wrong thing.

You do not retire on your income. You retire on your spending, and the distance between the two varies enormously between households. A person saving 30% of a salary and paying off a mortgage is already living on far less than their income; a person spending all of it is not. Applying the same 80% to both produces one answer that is much too high and one that is much too low.

The genuine insight buried in the rule is that some costs really do stop at retirement — commuting, work clothes, and, largest of all, the retirement contributions themselves. But you can capture that by adjusting your actual spending, which is both easier and correct.

Convention two: the 4% rule

This one has a real study behind it, and the study says something more specific than the rule it became. In 1994 William Bengen asked: of every 30-year window in US market history, what is the largest fixed inflation-adjusted withdrawal a stock-and-bond portfolio could have sustained through all of them, including the worst? The answer was slightly above 4%.

Note what that is. It is not a prediction, an average, or a recommendation. It is the worst historical case in one country over one span of time — a survivorship figure, and a fairly conservative one for most futures. It also carries assumptions that rarely survive contact with a real retirement:

Exactly 30 years. Retire at 62 in good health and you may be planning for closer to 35.
Rigid spending. The withdrawal never adjusts, in any market. Real retirees do adjust, and that flexibility is worth a great deal.
US history specifically. Applied to most other developed markets over the same period, the safe rate is lower.
No fees and no taxes. Both come out of the same portfolio in practice.

So 4% is a reasonable planning anchor and a poor promise. Treated as “withdraw this and you are safe” it is both too rigid and too confident.

Convention three: 25× your spending

This is the 4% rule turned upside down — if 4% a year is sustainable, the portfolio needs to be 25 times the annual withdrawal — so it inherits every assumption above. It is genuinely useful as arithmetic for finding roughly where you stand.

The important refinement: multiply the gap, not your whole spending. Social Security and any pension cover part of your costs already, and the portfolio only has to carry the rest. Someone spending $60,000 with $24,000 arriving from Social Security needs 25 × $36,000 = $900,000, not 25 × $60,000 = $1.5 million. Missing that is the single most common way people conclude retirement is further away than it is.

Spending is not flat, and no rule here knows that

All three conventions assume one number that holds for thirty years. Actual retirement spending tends to trace a curve: higher in the early active years, drifting down through the seventies as travel and activity decline, then rising again late if care is needed.

This cuts both ways, which is why it rarely gets stated honestly. The middle-years decline means rigid rules probably overstate what you need. The late-life rise means the same rules understate the risk that actually bankrupts people. Neither of those effects is in a 4% calculation, and long-term care is not in our simulation either — it is the largest single thing our methodology page tells you the model cannot see.

What to do with all this

Use 25× the gap to find the neighbourhood. Then stop using rules, because their weakness is not the arithmetic — it is that a single number cannot express how much room for bad luck a plan has.

That is what a simulation adds, and why our can-I-retire pages show every combination at three spending levels rather than one. Looking at the same portfolio and age across $40,000, $60,000 and $80,000 a year makes the real lesson unavoidable: for most people, the spending assumption swings the answer harder than the size of the portfolio does.

And if you want the number for your own case rather than a nearby one, the quick check is free. What the probability it gives you does and does not mean is covered in what a success probability actually means.