How Much Do I Need to Retire?

One of the most common — and important — financial questions people ask is:
“How much do I actually need to retire?”

The answer? It depends. Retirement isn’t one-size-fits-all. The right number for you is based on your lifestyle, location, healthcare needs, and how long you plan to live in retirement.

Here’s a breakdown of key factors to consider:

1. Estimate Your Annual Expenses

Think about your desired lifestyle: housing, groceries, travel, insurance, hobbies, and more. A common guideline suggests retirees spend 70–80% of their pre-retirement income annually, but your number may differ.

2. Consider Your Retirement Timeline

Are you retiring at 60 or 70? Earlier retirement means more years of income to cover. Life expectancy also plays a role — living longer requires planning for more decades of spending.

3. Identify Your Income Sources

Include things like:

• Social Security benefits

• Pensions

• Investment or rental income

• Retirement accounts (401(k), IRA, etc.)

Knowing where your money will come from helps clarify how much you’ll need saved.

4. Understand the “4% Rule” (As a Guideline)

Some retirees use the 4% rule as a rough estimate. This means withdrawing 4% of your retirement savings each year.
For example:

• $1 million saved = ~$40,000/year
  This rule isn’t perfect — but it can help frame your goals.

5. Plan for Inflation and Healthcare Costs

Prices rise over time. A retirement plan should include a buffer for inflation, as well as rising healthcare costs, which tend to increase with age.

Final Thought

There’s no magic number, but there is a plan that works for you. The earlier you start thinking about your goals, the more options you’ll have.

Not sure where you stand? A quick conversation with a licensed financial advisor can help you build a retirement strategy based on your unique situation.