How much money do I need to retire?

The short answer: a common planning rule is 25 times the amount you will spend from savings each year. If you need $40,000 a year from your portfolio, that is about $1 million saved. Social Security covers part of your income, and Fidelity's milestones give a faster check: 10 times your salary by age 67.

Start with the 25 times rule

The classic 4 percent rule, tested across decades of stock and bond returns, says you can withdraw 4 percent of your portfolio in year one, adjusted for inflation. That implies a nest egg of 25 times annual spending. Morningstar's 2026 research lowers a conservative starting rate to about 3.9 percent, which suggests roughly 26 times spending for a 30-year retirement, but 25 times remains the standard first estimate.

A table for common spending levels

What Social Security covers

The average retired worker received about $2,071 a month in 2026 (roughly $25,000 a year, or about $31,000 for an average couple), and the maximum at full retirement age is about $4,152 a month. Social Security replaces around 40 percent of pre-retirement income for a typical worker. The rest must come from savings, which is why Fidelity's replacement guidance and the milestones below matter.

Fidelity milestones as a shortcut

Fidelity suggests aiming for savings of about one times your salary by 30, three times by 40, six times by 50, eight times by 60, and ten times by 67. If you earn $75,000, the age 67 milestone is $750,000 in retirement accounts, which is consistent with the tables above for a mid-range spender. The 15 percent savings rate is the machine that gets you there.

Rough numbers by income

• Earning $50,000: Fidelity target near $500,000 by 67, roughly 25 times a $20,000 spending need.
• Earning $75,000: target near $750,000, assuming Social Security covers about half of a $60,000 lifestyle.
• Earning $100,000: target past $1 million as withdrawals rise above the 25x midpoint, since Social Security replaces less of high incomes.
• Planning a long life or early retirement: every extra year of drawdown lowers the safe rate, so build 30 years of runway or more.

How to check your personal number

1. Estimate annual retirement spending, typically 70 to 80 percent of current income after taxes.
2. Subtract expected Social Security from the SSA's my Social Security portal and any pension, leaving the amount your portfolio must fund.
3. Multiply that amount by 25 (or 26 for a more conservative 30-year plan) to get your target nest egg.
4. Check the target against Fidelity's 10 times by 67 rule as a sanity check.
5. Model contributions at the 15 percent guideline with a retirement calculator to see if you are on pace.

The gap many people miss

The single biggest planning error is underestimating how much the portfolio alone must provide. Higher earners get less of their income replaced by Social Security, so their 25 times number rises fast. The milestones also assume continuous saving from your 20s; starting later means saving more than 15 percent or targeting a longer work life, and how much should I invest every month walks through the contribution math.

The bottom line

Most Americans need somewhere between $500,000 and $1.5 million saved, depending on income, Social Security, and desired lifestyle. Run the four-step check above with your real numbers, then automate savings at 15 percent and increase it with raises. The number is business planning, not fantasy, and the milestones make it measurable from here to there.

For the tax-advantaged accounts that hold this savings, the difference between a 401(k) and an IRA and the 2026 contribution limits are the operating manual.

The 2026 numbers everyone should know

The IRS raised the 2026 elective deferral limit for 401(k), 403(b), 457, and Thrift Savings Plans to $24,500, up from $23,500, and the annual IRA limit to $7,500, up from $7,000. Savers 50 and older can add an $8,000 401(k) catch-up, bringing the total to $32,500, and the SECURE 2.0 super catch-up allows those ages 60 to 63 to add $11,250 for a $35,750 ceiling. IRA catch-up contributions rose to $1,100, for an $8,600 total. These ceilings matter most to high earners and late starters, because they define how fast a nest egg can be rebuilt.

What the average saver actually has

Vanguard's How America Saves 2026 report, based on nearly five million 401(k) accounts at year-end 2025, put the average balance at $167,970 but the median at just $44,115. Run through the 4 percent rule, the median withdraws only about $1,765 a year, which is nowhere near the income most retirees need. The same report found just over half of participants meet Vanguard's recommended 12 to 15 percent total savings rate. Fidelity's Q1 2026 data puts the average 401(k) balance at $141,000, with 645,000 401(k) millionaires, and shows the average total savings rate reaching 14.4 percent.

A real-world annual income budget

This table uses conservatively a single average Social Security benefit near $25,000 a year covering part of the total. The key pattern: the higher the lifestyle, the more the portfolio must supply, because Social Security replaces a smaller share as income climbs. A $50,000 lifestyle needs roughly a $625,000 nest egg, while a $100,000 lifestyle pushes the target past $1.7 million.

Age milestones that make it real

The Federal Reserve's Survey of Consumer Finances gives a sobering contrast to the milestones. The median retirement account holder aged 55 to 64 has about $185,000 saved, and those aged 65 to 74 have about $200,000, well short of the $500,000 to $750,000 Fidelity targets for a mid-range income by 67. Fidelity tracks that fewer than one in ten 401(k) savers at most ages even shares the milestone benchmarks. The gap between where people are and where the 4 percent rule says they need to be is the single clearest argument for automating 15 percent early and raising it with raises.

The claim timing decision

When you claim Social Security changes your retirement number more than most rate assumptions. Waiting from full retirement age to 70 raises the monthly benefit by 8 percent a year, and in 2026 the maximum monthly benefit at 70 is $5,181 versus $4,152 at full retirement age and $2,969 at 62, a swing of more than $2,200 a month between the youngest and latest claiming ages. Delaying claims reduces how much your portfolio must supply each year, which directly lowers the 25 times target. The tradeoff is the years you forgo checks, so the decision is a real cash-flow choice, not a one-size rule.

Taxes and the retirement number

The retirement target is a pre-tax number, but taxes matter. The Congressional Budget Office estimates about 48 percent of Social Security beneficiaries will pay federal income tax on their benefits in 2026, and withdrawals from a traditional 401(k) or IRA are taxable ordinary income. A Roth 401(k) or Roth IRA avoids that, which is why Fidelity data shows a rising share of workers, more than one in five Gen Z 401(k) participants, choosing Roth contributions. When estimating the 70 to 80 percent of income you need, decide whether that figure is gross or after-tax, and build the tax estimate into the portfolio need.

Common mistakes that inflate or shrink the number

• Using your total income instead of spending, then subtracting nothing for Social Security, which doubles the nest egg needed. The 25 times rule applies only to the gap after benefits and pensions.
• Assuming Social Security will not be there. It remains the largest single retirement income source and typically covers about 40 percent for a mid-income household, so ignoring it inflates the target.
• Ignoring sequence-of-return risk in the first few years after retiring. A portfolio that drops early needs a lower first-year withdrawal, which is why Morningstar's conservative rate sits near 3.9 percent.
• Forgetting required minimum distributions. Traditional 401(k) and IRA balances above a threshold force taxable withdrawals starting at age 73, which can affect Medicare premiums and taxes late in retirement.

Catching up when you started late

1. Use the full 2026 catch-up: $8,000 extra in a 401(k) if 50 or older, or $11,250 if 60 to 63, plus $1,100 in an IRA if 50 or older.
2. Push the total savings rate to 20 percent or higher, not the 15 percent baseline, because the milestones assume a full working career.
3. Delay claiming Social Security toward age 70 when possible to raise the guaranteed benefit and lower the portfolio pull.
4. Use a more conservative 4 percent, roughly 26 times spending, if retiring early stretches the horizon past 30 years.
5. Front-load contributions early in the year when cash allows, so the dollars earn returns longer.

Tools and calculators to pin down the target

Several free tools make the estimate precise. The Social Security Administration's my Social Security portal gives your actual benefit estimates; a retirement calculator like those on the Fidelity or Vanguard sites runs your numbers against realistic returns; and the IRS contribution limit pages set the annual ceiling. Run the four-step calculation using all three, then compare the resulting target against Fidelity's milestones and your current balance. The output from the calculators is directionally right even when the assumptions differ, and that is enough to turn the retirement question from a guess into a plan.

The final number and how to reach it

For most workers the number lands between about $500,000 and $1.5 million, and the 2026 limits, catch-ups, and claim timing decide how fast it can be assembled. Automate 15 percent including the match, use catch-up allowances after 50, and delay claiming when you can. The survey data shows most people are far behind where the 4 percent rule requires, but the milestones, contribution ceilings, and a single automated payday transfer turn the gap into a measurable, catchable target.

The gap between what people think and what they need

Americans consistently overestimate the magic number but fall short on the balances to reach it. Northwestern Mutual's 2026 survey put the amount people say they need to retire comfortably at $1.46 million, up $200,000 from a year earlier, while Vanguard's data shows the median 401(k) balance is just $44,115. Kiplinger's review of Federal Reserve Survey of Consumer Finances data found the median retirement saver aged 55 to 64 holds about $185,000 and those 65 to 74 about $200,000, versus Fidelity's milestone target of six to eight times salary for that age range. The interesting part is that the $1.46 million perception is not absurd for a comfortable multi-income lifestyle, but the working plan has to start with the four-step calculation and a sustainable savings rate, not a headline number that invites paralysis.

A phrase-by-phrase explanation of the 25 times rule

When people say they need 25 times their spending, they mean the portfolio withdraws 4 percent in year one, adjusted for inflation each year, and is built to last roughly 30 years. If your annual spending from savings is $40,000, then 25 times that is $1 million, and 4 percent of the first year is exactly $40,000. The rule assumes a diversified portfolio, not cash or a single stock, and it is a planning shorthand, not a guarantee. Morningstar's 2026 conservative estimate of a 3.9 percent starting rate pushes the multiplier toward 26, which is why the tables here show both columns. The 25 times figure also assumes withdrawals adjust with inflation, so the amount spent in year ten is higher in nominal dollars than in year one, and the portfolio must weather both inflation and market swings.

A comparison of the major estimate methods

Each method answers a slightly different question. The 4 percent rule and its conservative variant price the portfolio you need for a given spending level, while the Fidelity milestone prices it by your current income and the replacement-rate method starts from your desired retirement lifestyle. The numbers tend to converge for a mid-income worker: Fidelity's 10 times $60,000 is $600,000, and the 4 percent rule on $25,000 of portfolio-coverable spending just above a $25,000 Social Security benefit lands near the same neighborhood. Running all three methods and averaging the result is a reasonable sanity check.

The bottom line

The retirement number is a range, roughly 25 to 26 times the spending your portfolio must cover, after Social Security and pensions, and for most workers that lands between $500,000 and $1.5 million. Use the 2026 limits and catch-ups to automate a 15 percent rate or more, check the milestones at each age, and delay claiming when you can. The perception gap between the $1.46 million people imagine and the $44,115 median balance is exactly the distance that a consistent, automated savings rate is designed to close, and the four-step calculation above turns that gap into a concrete monthly transfer.