Retirement Basics
How Much Do You Actually Need to Retire?
Forget the scary headlines. Your number is built from one thing you can measure today: what you actually spend.
Start from spending, not income
Your salary doesn't retire — your expenses do. The first job is to know your real annual spend, including the irregular stuff: insurance, travel, repairs, gifts, taxes.
The quick estimate
Take your annual spending and multiply by 25 (the inverse of the 4% rule). That's a reasonable first target for the investable assets you need.
Annual spend
$48,000
× 25
$1.20M
Today saved
$540k
Then adjust for your reality
- Pensions & Social Security. Guaranteed income lowers what your portfolio has to cover — subtract it from spending first.
- Retirement age. Earlier means more years and a bigger multiple (closer to 28–33×).
- Healthcare. Before Medicare, US early retirees must fund their own coverage — budget for it explicitly.
- Where you'll live. A lower cost of living abroad can cut the number dramatically.
Two people with the same salary can have wildly different numbers. The one who spends $40k needs ~$1.0M; the one who spends $90k needs ~$2.25M. Spending is the lever you control.
Make it a moving target
Your number isn't fixed — it moves as your spending, markets, and plans change. Track it, re-run it, and watch the gap close.
Key takeaways
- Your number is driven by spending, not income.
- 25× annual spending is a solid first estimate.
- Subtract guaranteed income (pension, Social Security) before multiplying.
- Retiring early or facing pre-Medicare healthcare pushes the number up.