Guide
How much do I need to retire?
Rules of thumb give you a starting range. Your plan depends on spending, taxes, account types, time, and when other income begins.
By Steven, Founder · Updated September 2, 2026
Short answer
- Annual spending multiplied by 25 is a rough starting point, not a personal retirement target.
- Traditional, Roth, and taxable balances are not equally spendable after tax.
- A year-by-year plan turns one target into a series of changing income gaps you can test.
Use a rule of thumb only as a starting point
The familiar 4% shortcut multiplies first-year portfolio spending by 25. If a portfolio must provide $60,000 in the first year, that shortcut points to $1.5 million before adjusting for taxes or other income.
It is not a personal retirement date. The shortcut does not know your planning horizon, account mix, Social Security, pension, taxes, healthcare, or willingness to change spending after a difficult market.
Calculate the amount the portfolio must provide
Start with annual spending, then subtract dependable income that arrives in the same year. Repeat that calculation as work ends, Social Security begins, a pension starts, or spending changes.
This produces a changing annual portfolio need instead of assuming retirement is one identical expense repeated forever.
Account location changes spendable value
A dollar in a traditional account can create ordinary income when withdrawn. A qualified Roth withdrawal can be tax-free. A taxable-account sale may include both basis and a taxable gain. Equal balances can therefore support different after-tax spending.
RMDs and Social Security taxation can change the annual tax picture again. A year-by-year projection makes those transitions explicit.
Replace the magic number with a tested plan
Model the accounts, income, spending, and taxes through the planning horizon. Then test lower returns, earlier retirement, higher spending, and a longer life one change at a time.
The useful answer is not one permanent target. It is a current plan whose assumptions you can inspect, change, and rerun when life changes.
Related free calculators
Frequently asked
- Is the 4% rule enough to choose a retirement date?
- No. It can provide a rough starting range, but it does not incorporate your taxes, account types, income timing, planning horizon, or actual spending flexibility.
- Does Social Security reduce how much my portfolio must provide?
- Generally, it supplies income that can cover part of spending. The amount, claiming date, and taxation still need to be placed in the same annual projection as portfolio withdrawals.
Read next
Sources
- Retirement benefits — Social Security Administration
Social Security retirement eligibility, claiming, and benefit-estimate resources.
Accessed September 2, 2026
- Required minimum distributions — Internal Revenue Service
RMD starting rules, deadlines, account coverage, and calculation method.
Accessed September 2, 2026
This is an educational estimate, not tax or financial advice. Figures reflect the law year shown and the inputs you provide. Consult a qualified professional before acting.