How Much Do I Need to Retire

November 7, 2026 Invest Clarity Path Team

Retirement can feel far away, and the first question many people ask is simple: how much money will I need? There is no single answer for everyone, because people spend different amounts and stop work at different ages. A few simple rules of thumb can give you a starting point. This guide explains those rules in plain words, and shows what they mean at ages 40, 50, 62 and 65.

The short answer

There is no single number that fits everyone. A common rule of thumb is to save about 25 times the amount you plan to spend each year in retirement. So if you plan to spend $40,000 a year, the rule points to about $1,000,000. Your number depends on your spending, your health, and how much Social Security will pay you.

Start with your spending, not a magic number

Many guides start with a big number, but the better place to start is your spending. Retirement is paid for from your savings plus income you still receive, such as Social Security. What matters most is how much you need each year. A person who spends $30,000 a year needs far less saved than a person who spends $80,000 a year.

To find your yearly number, look at what you spend now on housing, food, transport, bills, and fun. Then think about what will change. Some costs may fall, such as commuting. Other costs may rise, such as health care. Write down your spending for three months and use the average as your starting point.

Rule of thumb 1: 25 times your yearly spending

The best known rule of thumb is the 25 times rule. Take the amount you plan to spend each year in retirement, after Social Security and any other income, and multiply it by 25. The idea is simple. If you spend 4 percent of your savings in the first year and then adjust that amount for rising prices, the money is meant to last about 30 years.

Here is a labelled example. Example: Maya plans to spend $50,000 a year in retirement. Social Security and a small pension will pay $20,000 a year, so she needs $30,000 a year from savings. Multiply $30,000 by 25 and the rule points to $750,000. If her spending were $60,000 a year, the rule would point to $1,000,000.

Rule of thumb 2: Save about 15 percent of your income

A second rule of thumb looks at saving while you work. Many guides suggest saving about 15 percent of your income for retirement, including any money your employer adds. The 15 percent is a starting point, not a law. Saving 15 percent from your first job gives your money many years to grow. If you start later, you may need to save a higher share, or plan to spend less in retirement.

Here is a labelled example. Example: Jordan earns $60,000 a year. Saving 15 percent means putting aside $9,000 a year, or $750 a month. If Jordan earns $80,000 a year, 15 percent is $12,000 a year, or $1,000 a month. The percentage stays the same, but the dollar amount rises with income.

Rule of thumb 3: Replace a large share of your working income

A third rule of thumb works from your pay, not your spending. It says to aim for retirement income equal to a large share of what you earned while working, often around 70 to 80 percent. The reason is that some costs fall when you stop work. You no longer pay for commuting, and you no longer save for retirement. But health costs often rise, so the share is only a rough guide. Compare it with the other two rules and see where they agree.

Here is a labelled example. Example: Alex earns $70,000 a year before retirement. Replacing 75 percent of that income means aiming for about $52,500 a year in retirement. If Social Security will pay $22,000 a year, Alex needs about $30,500 a year from savings and other income. Using the 25 times rule, that points to about $762,500 in savings.

What the number looks like at 40

Retiring at 40 means your savings may need to last 50 years or more, so the 25 times rule is only a starting point. A longer retirement needs a bigger cushion. Example: Sam spends $45,000 a year and expects $5,000 a year from other income, so Sam needs $40,000 a year from savings. The 25 times rule points to $1,000,000, but for a retirement that starts at 40, many people plan for more, or for some part time work in the early years. Health cover is a big cost before Medicare age.

What the number looks like at 50

Retiring at 50 means a long retirement, but you have ten more years to save than someone who retires at 40. Example: Priya spends $55,000 a year and expects $10,000 a year from other income, so she needs $45,000 a year from savings. The 25 times rule points to $1,125,000. Social Security will not start until at least age 62, so the years between 50 and 62 must be paid for from savings alone. That gap is why many people who retire at 50 keep a cash cushion for the first few years.

What the number looks like at 62

Age 62 is the earliest age you can apply for Social Security retirement benefits, according to the Social Security Administration. Starting at 62 means a smaller monthly payment than waiting, because the payment is higher the longer you wait, up until age 70. Example: Lee spends $48,000 a year. Social Security at 62 will pay $18,000 a year, so Lee needs $30,000 a year from savings. The 25 times rule points to $750,000. Waiting a few years would raise the Social Security payment and lower the amount needed from savings, but it also means working longer.

What the number looks like at 65

Retiring at 65 is close to the full retirement age for many people, which the Social Security Administration puts at 66 to 67. At 65 you are also close to Medicare age, which helps with health costs. Example: Rosa spends $50,000 a year. Social Security will pay $24,000 a year, so she needs $26,000 a year from savings. The 25 times rule points to $650,000. A retirement at 65 may last 25 to 30 years, so the 25 times rule fits this age better than it fits age 40, but it is still only a guide.

Why the real number depends on spending, health and Social Security

The rules of thumb are useful, but three things move your real number more than any rule. The first is spending. A paid off home, a low cost town, and simple habits can cut yearly spending by thousands of dollars, and every $1,000 less in yearly spending cuts the 25 times target by $25,000. The second is health. Health care costs often rise with age, and a long illness can change a plan fast. Remember that Medicare does not pay for everything.

The third is Social Security. The Social Security Administration says you can apply for monthly retirement benefits between age 62 and 70, and the payment is higher the longer you wait, up until age 70. Before your full retirement age, benefits are withheld if you work and earn over the annual earnings limit. After full retirement age, work and earnings will not affect your benefits. You can get a personal estimate by creating a my Social Security account, and that estimate is the best starting point for your own plan.

Quick answers

What is a good rule of thumb for how much I need to retire?

A common rule of thumb is to save about 25 times the amount you plan to spend each year from savings, after Social Security and other income. If you need $30,000 a year from savings, the rule points to about $750,000. It is a rough guide, not a promise.

Can I retire at 62 with Social Security?

Yes, 62 is the earliest age you can apply for Social Security retirement benefits, but the monthly payment will be smaller than if you wait. The payment is higher the longer you wait, up until age 70.

How much of my income should I save for retirement?

Many guides suggest saving about 15 percent of your income for retirement, including any money your employer adds. It is a starting point, not a law.

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