Retirement
How Much Should I Save for Retirement? A Practical Guide
There's no single right retirement number. Your target depends on when you plan to stop working, what you expect to spend, and the assumptions you make about growth and inflation. This guide shows how those pieces fit together.
8 min read
Why the answer is different for everyone
Two people with the same salary can need very different amounts. Housing costs, health, expected Social Security or pension income, retirement age and lifestyle all change how much savings must cover. Rules of thumb are a starting point for thinking, not a target to adopt blindly.
The building blocks
| Factor | What to consider |
|---|---|
| Current savings | What you already have in retirement and taxable accounts. |
| Contributions | How much you add each month or year, including any raises. |
| Employer contributions | Matching or profit-sharing contributions in a workplace plan. |
| Time horizon | Years until retirement and how long retirement may last. |
| Growth assumption | An assumed average annual return — not a promise. |
| Inflation | Rising prices reduce what a future balance can buy. |
| Income needs | Expected annual spending minus other income sources. |
| Withdrawal assumption | How much you plan to take out each year in retirement. |
Projecting a balance
A projection combines the growth of today's savings with the growth of future contributions:
Future balance = Current savings × (1 + r)^t + Contribution × [(1 + i)^N − 1] ÷ i
- r
- Assumed annual return
- t
- Years until retirement
- i
- Monthly return (r ÷ 12 as a simple approximation)
- N
- Number of monthly contributions
Worked example
Scenario: age 35, retiring at 65
- Current savings $50,000, contributions $600 a month, assumed 6% average return
- $50,000 grows to about $287,200 over 30 years
- $600 a month grows to about $602,700
- Projected balance ≈ $889,900 in future dollars
- At 3% assumed inflation, that's about $366,600 in today's purchasing power
The inflation-adjusted figure is the one to compare against today's cost of living.
Why time matters
Compare two savers who each put away $400 a month at an assumed 6% return. One starts at 25, the other at 35, and both stop at 65.
| Start age | Years saving | Total deposited | Projected balance |
|---|---|---|---|
| 25 | 40 | $192,000 | ≈ $796,600 |
| 35 | 30 | $144,000 | ≈ $401,800 |
The earlier saver deposits $48,000 more but ends with nearly twice the balance, because the extra decade compounds on everything before it. See the mechanics in How Compound Interest Works.
Turning a balance into income
A common planning shortcut is the "4% rule": withdraw 4% of the starting balance in the first year, then adjust for inflation. On $1,000,000 that's $40,000 in year one. It comes from historical research and is an assumption to test, not a guarantee — retirements that are longer, or begin with poor markets, can need a lower rate. The Retirement Withdrawal Calculator shows how long savings may last at a withdrawal rate you choose.
How account types affect planning
- 401(k) and similar workplace plans: contributions are often pre-tax, and an employer match is an extra contribution — model it with the 401(k) Calculator.
- Roth IRA: contributions are after tax, and qualified withdrawals are tax-free. Annual limits and income rules apply; check current IRS limits. Try the Roth IRA Calculator.
- Taxable brokerage accounts: no contribution limits, but gains may be taxed along the way.
Taxes change how much of a balance you can actually spend, so a pre-tax balance and a Roth balance of the same size are not equivalent.
Using the Retirement Calculator
- Enter your current age, planned retirement age and current savings.
- Add monthly contributions and an assumed annual return.
- Include expected inflation to see results in today's dollars.
- Press Calculate and review the projected balance and estimated income.
- Change one assumption at a time to see which matters most for you.
If you're aiming to stop working early, the FIRE Calculator estimates when savings could cover your expenses.
Run your own numbers
Estimate how much you need to save to retire comfortably.
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Frequently asked questions
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