How much do you need to retire? A practical way to estimate it
9 min read · Updated 2026-10-11 · MoneyCalc
Retirement planning is often presented as a single intimidating number. It is better understood as a relationship: the amount you spend each year, multiplied by how long you need it to last, adjusted for the returns you expect. Change any of those and the target moves — which is good news, because spending is the lever you control today.
Start from spending, not income
The common 'you need 70-80% of your income' rule is a proxy for something more precise: you need enough to fund your actual retirement spending. Working life carries costs that retirement does not — commuting, a professional wardrobe, saving itself — so post-work spending is often lower, but healthcare and leisure spending can rise.
Build the number from categories: housing, food, utilities, transport, insurance, healthcare, travel, hobbies and taxes. That total, not your salary, is the figure you are trying to replace.
The 4% rule, and what it is really saying
The 4% rule came from historical back-testing: withdrawing 4% of your starting portfolio in year one, then adjusting that dollar amount for inflation each year, historically lasted at least thirty years in most periods studied. It implies a target of roughly 25 times your annual spending.
It is a planning heuristic, not a guarantee. It was derived for a specific historical market and horizon, and a longer retirement, high early returns followed by a crash, or high fees can all break it. Many planners now use 3.5% for very long retirements, which implies about 28-29 times spending.
The savings rate decides the date
The most under-appreciated insight in personal finance is that your savings rate, not your income or your returns, dominates how soon you can stop working. Someone saving 10% of income faces decades; someone saving 50% can get there in roughly half the time, because a high savings rate simultaneously builds the portfolio faster and lowers the spending it has to support.
That is why a modest income with a high savings rate beats a large income with a low one. The two effects reinforce each other in a way that income alone cannot.
Do not ignore the state pension, but do not rely on it
Social security, state pensions and any employer pension form a guaranteed income floor that reduces what your own portfolio has to cover. Find out your projected entitlement and subtract it from your target spending before converting the remainder into a portfolio number.
Treat that floor as valuable but uncertain. Benefit rules change, and claiming ages and payout levels evolve, so treat government income as a cushion rather than the foundation.
Stress-test the plan
Run your number with a lower return, a longer horizon and higher spending, and see whether it still holds. If it only works under optimistic assumptions, it is not a plan, it is a hope.
The most useful exercise is to see how much one more year of saving, or one fewer year of spending at the same level, moves the answer. Retirement planning is rarely about finding the exact number — it is about understanding which levers actually change the outcome.
Run your own numbers
Free calculators that answer the “how much” version of this question. They run entirely in your browser — nothing you type is uploaded or stored.
Common questions
Is 25 times spending a safe target?
It corresponds to the 4% rule and is a reasonable planning starting point for a 30-year retirement. For longer retirements many planners use 28-29 times spending, equivalent to about 3.5%.
What if I started saving late?
The levers that remain are cutting spending, raising savings rate and working longer. Working even two or three years past your target date has an outsized effect, because it adds contributions and shortens the period the portfolio must cover.
MoneyCalc provides general information only and is not financial, investment, tax or legal advice. Figures are illustrative and depend on your own circumstances. See our full disclaimer.