The question "How much do I need to retire?" keeps more Americans up at night than almost any other financial concern. 56% of U.S. workers say they feel behind on retirement savings, and the median retirement account balance for people aged 55–64 is just $185,000 — far below what most financial advisors recommend.
The good news: calculating your retirement number is straightforward once you understand the key variables. This guide breaks it down with specific 2026 benchmarks, real numbers, and a simple formula anyone can use.
The 4% Rule: Your Retirement Number Formula
The most widely-used retirement planning method is the 4% rule, derived from the Trinity Study. It says you can safely withdraw 4% of your portfolio in the first year of retirement, adjust for inflation each year, and have a very high probability (historically 95%+) of your money lasting 30 years.
The formula is simple: Annual expenses in retirement × 25 = Your retirement number. If you need $60,000 per year, your target is $1,500,000. If you need $80,000 per year, it's $2,000,000.
Important: this is the amount you need in addition to Social Security and any pension income. If Social Security covers $24,000/year, and you need $60,000 total, your portfolio only needs to generate $36,000/year — requiring a $900,000 nest egg.
Retirement Savings Benchmarks by Age
Fidelity Investments provides widely-cited age-based savings benchmarks. By each milestone, you should have saved:
- Age 30: 1× your annual salary saved
- Age 35: 2× your annual salary
- Age 40: 3× your annual salary
- Age 45: 4× your annual salary
- Age 50: 6× your annual salary
- Age 55: 7× your annual salary
- Age 60: 8× your annual salary
- Age 67: 10× your annual salary
Social Security: When to Claim in 2026
Your Social Security claiming age dramatically affects your lifetime benefit:
- Age 62 (earliest): Reduced benefit — about 30% less than full retirement age. Only choose this if you absolutely need the income or have a shortened life expectancy.
- Age 67 (full retirement age for those born 1960+): You receive 100% of your calculated benefit.
- Age 70 (maximum): You receive 124% of your benefit — an 8% per year increase from age 67. For someone with a $2,500/month benefit at 67, waiting until 70 yields $3,100/month — an extra $7,200/year for life.
The Healthcare Wild Card
Healthcare is the expense most retirees underestimate. Fidelity estimates that a 65-year-old couple retiring in 2026 will need approximately $350,000 for healthcare expenses throughout retirement (not including long-term care).
If you retire before 65 (when Medicare kicks in), you will need private insurance. ACA marketplace plans for a 60-year-old cost roughly $800–$1,500/month depending on location and subsidy eligibility. Factor this into any early retirement plan.
How to Catch Up If You're Behind
If you are behind on savings, there are several powerful strategies:
- Max out catch-up contributions: In 2026, workers 50+ can contribute an extra $7,500 to their 401(k) (total $31,000) and an extra $1,000 to IRAs (total $8,000).
- Delay retirement by 2–3 years: Each additional working year gives triple benefit: more savings, fewer years of withdrawals, and higher Social Security benefit. Working to 70 instead of 65 can increase your sustainable retirement income by 30–40%.
- Reduce expenses now and in retirement: Downsizing your home, moving to a lower cost-of-living area, or eliminating a car can each save $500–$1,500/month.
- Consider part-time work in early retirement: Even $1,000/month from part-time work reduces your portfolio withdrawal rate significantly, extending its longevity dramatically.
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Frequently Asked Questions
Can I retire with $500,000?
With $500,000 and the 4% rule, you can safely withdraw $20,000/year from your portfolio. Combined with Social Security (average benefit of $1,907/month or $22,884/year in 2026), that gives you about $42,884/year. Whether that is enough depends on your location and lifestyle. In low-cost areas, this can be comfortable. In high-cost cities, it would be tight. Use our Retirement Calculator to model your specific scenario.
Is the 4% rule still valid in 2026?
The 4% rule has held up well historically, but some researchers suggest 3.5–3.7% may be more appropriate given current valuations and interest rate environment. For conservative planning, use 3.5% (multiply annual expenses by ~29 instead of 25). The key insight remains: your withdrawal rate matters more than your investment returns in retirement.
How much should I save per month for retirement?
A widely-recommended target is to save 15% of your gross income (including any employer match). If you start at 25, saving 15% consistently will likely get you to a comfortable retirement by 65. Starting later requires a higher percentage: 20% if starting at 35, or 25%+ if starting at 45. Use our Retirement Calculator to find your exact required monthly savings.
Should I pay off my mortgage before retiring?
It depends on the interest rate. If your mortgage rate is below 5%, the math often favors investing the extra money (historical stock returns average 7–10%). However, many retirees prefer the peace of mind of no mortgage payment. A good compromise: have enough savings to pay it off if needed, but keep the mortgage if your rate is low and invest the difference.