How Much Do I Need to Save for Retirement?

Figure out how much you'll need

A common starting point is that you'll need 70% to 85% of your pre-retirement income each year, though your own spending is the better guide. Turn that annual figure into a nest egg with the 4% rule: divide your desired annual spending by 4% (or multiply by 25). Someone who wants $60,000 a year from savings would target about $1.5 million. Our retirement savings calculator works this out in today's dollars and shows whether you're on track.

The 4% rule and safe withdrawals

The 4% rule holds that you can withdraw about 4% of your portfolio in year one, adjust for inflation after, and have a strong chance of the money lasting roughly 30 years. Early retirees often use a more conservative 3.5%. It's a guideline, not a guarantee, staying flexible and spending less in down markets meaningfully improves the odds. The FIRE number calculator applies this to find the nest egg your spending requires.

Capture your employer match first

Where you save matters as much as how much. A 401(k) offers high limits and often an employer match, free money you should always capture first. Contributing enough to earn the full match is one of the best returns in finance. Our 401(k) match calculator shows how much you'd be leaving on the table by contributing less than the cap.

Roth vs. traditional

The Roth-versus-traditional choice comes down to taxes. Traditional accounts deduct contributions now and tax withdrawals later; Roth accounts tax contributions now and pay out tax-free in retirement. Roth generally wins if you expect a higher tax rate later, and many savers split across both to hedge. See the trade-off in our Roth vs. traditional calculator.

Start early, the math rewards it

Because returns compound, money invested in your twenties and thirties does far more work than the same amount added near retirement. A saver who invests early and stops can finish ahead of someone who starts a decade later and never stops. Start with whatever you can now, capture the match, and raise contributions as income grows. Benchmarks suggest roughly 1x salary saved by 30, 3x by 40, 6x by 50, and 8-10x by retirement.

Don't forget inflation and Social Security

Inflation quietly erodes purchasing power, at 3% a year, prices double in about 24 years. Good planning works in today's dollars so the figures stay meaningful. Social Security provides an inflation-indexed base that covers part of most retirees' needs, and delaying benefits past full retirement age increases the monthly amount. Estimate your benefit and subtract it from your target to see how much your own savings must realistically provide.

Frequently asked questions