How much do you need to retire?

There's no single number everyone needs to retire. What you need depends on the income you want, how much of it Social Security will cover, and how long your savings have to last. This guide walks through a simple way to estimate your own number, explains where the popular 4% rule came from, and lists the 2026 limits for saving toward it.

Start with the income you want

Instead of guessing a lump sum, start with yearly income. Ask what you expect to spend each year in retirement. Some costs may go down, such as commuting or saving for retirement itself. Others may go up, such as health care or travel.

A common shortcut is to aim for a percentage of your pre-retirement income, often called an income replacement rate. A better approach is to build a rough retirement budget from your current spending and adjust each category for how you expect it to change. Either way, you end up with a target yearly income in today's dollars.

Find your Social Security estimate

Social Security will likely cover part of that income, but not all of it. The Social Security Administration says that if you start benefits in 2026 at your full retirement age, the share of pre-retirement income Social Security replaces ranges from as much as 79% for very low earners, to about 43% for medium earners, to about 28% for maximum earners. Your share depends on your lifetime earnings and when you start.

For a personal estimate, sign in to my Social Security on ssa.gov. You can get your Social Security Statement and estimate the benefits you could receive at different ages.

Timing changes the amount. Full retirement age is 67 for anyone born in 1960 or later. You can start benefits as early as 62, but for someone with a full retirement age of 67, starting at 62 reduces the benefit by 30%.

Close the gap with savings

Subtract your Social Security estimate from your target income. What's left is the yearly income your savings, pensions or other sources need to provide.

To turn that yearly gap into a savings target, many people use the "4% rule." The idea comes from a 1994 study by financial planner William Bengen, published in the Journal of Financial Planning. Using historical US market data and a requirement that the money last at least 30 years, he concluded that withdrawing 4% of a portfolio in the first year, then increasing the dollar amount each year for inflation, should be safe. In no past case he studied did that pace empty a portfolio in under 33 years. He suggested keeping 50% to 75% of the portfolio in stocks.

If you can withdraw 4% a year, you need about 25 times your yearly gap, because 1 ÷ 0.04 = 25.

A hypothetical example

This is an illustration only, with round numbers, not a recommendation.

Check: 4% of $900,000 is $36,000, which covers the gap in the first year.

If this person had 30 years to save and assumed a 6% annual return compounded monthly, they would need to invest about $896 a month to reach $900,000. Real returns vary from year to year, and the result also leaves out taxes, fees and inflation.

The limits of the 4% rule

The 4% rule is a useful starting point, but it has limits:

• It is based on the past. Bengen's result came from historical US returns. Future returns and inflation may be different.
• It assumes about 30 years. Bengen tested a minimum of 30 years. If you retire early or live longer, your money may need to last longer.
• It is close to the edge. Bengen noted that a slightly higher 4.25% starting rate could have run out in as little as 28 years in some historical periods.
• It depends on your mix. His figures assumed a portfolio split between stocks and bonds, not all cash or all stocks.
• Real life isn't fixed. Taxes, investment fees and big one-off costs, like a new roof or medical bills, all affect how far savings go.

Many people revisit their withdrawal rate every year rather than setting it once. A fee-only financial planner can help you test a plan against your own situation.

2026 contribution limits

Tax-advantaged accounts help you close the gap. For 2026, the IRS has set these limits:

The IRS also sets income ranges for contributing to a Roth IRA and for deducting traditional IRA contributions, and those ranges increased for 2026. Check them on IRS.gov if your income is near the limits.

When you have to start withdrawing

Traditional retirement accounts don't let you keep money in forever. The IRS says required minimum distributions (RMDs) generally begin once the account holder is age 73. You can delay the first one until April 1 of the following year, but your second RMD is then still due by December 31 of that same year.

If you're the original owner of a Roth IRA, you don't have to take distributions regardless of your age. Knowing these rules helps you plan which accounts to draw from first.

How SpendySaver helps

The Retirement planner shows the future value of a lump sum or of monthly investing, and can work out the monthly investment needed for a target retirement income. Subtract your Social Security estimate from your target income first, then try different assumptions to see how they change the monthly amount. Results are estimates for education, not a guarantee of future returns.