Retire · 4 min read · Updated November 10, 2026

How much do you need to retire?

Illustrative examples, education not advice.

In plain words

You have probably heard rules like “save 10 times your salary” or “you’ll need 80% of your income.” They are rough starting points. Your real number depends on four things:

What you will spend each year in retirement.
What income you will receive for life, such as Social Security and any pension.
The gap between the two, which your savings must fill.
How long the money has to last, which could be 30 years or more.

The simple formula: yearly gap × a multiple = savings target. A common multiple is 25, which comes from the 4% guideline (1 ÷ 0.04 = 25). Many planners now use 25 to 33 to allow for longer lives and lower returns.

How it helps real people

A clear number replaces worry with a plan. It tells you whether to save more, work a little longer, spend less, or relax. The wealthy rarely guess; they build a cash flow plan for retirement and test it against bad markets. You can do the same with a page of honest numbers.

Step by step

Step 1: estimate spending. Start with today’s spending and adjust. Work costs such as commuting and retirement saving stop. Health costs, travel and home repairs often rise. Include taxes. Many people end up between 70% and 100% of their pre-retirement spending, but your own budget beats any rule.

Step 2: add health care. At 65 most people join Medicare. In 2026 the standard Part B premium is $202.90 a month per person, plus drug plan and supplement premiums, deductibles and dental, vision and hearing costs. Higher earners pay more because of income-related surcharges. If you retire before 65, budget for private cover until Medicare starts.

Step 3: list lifetime income. Get your Social Security estimate from your my Social Security account. Benefits rise with inflation each year; the 2026 cost-of-living increase was 2.8%. Add any pension.

Step 4: find the gap and multiply. Subtract income from spending to get the yearly gap. Multiply by 25 for a middle estimate, or by 30 to 33 for a cautious one.

Step 5: add one-off needs. A new roof, a car, help for a child, and a reserve for long-term care.

A worked example

Illustrative. Not a projection.

Tomás and Elena, both 58, plan to retire at 65.

	Illustrative yearly amount (today’s dollars)
Expected spending, including taxes and health care	$78,000
Social Security, both claiming at 67	$46,000
Bridge years 65 to 67	paid from savings
Gap from 67 on	$32,000
Savings target at 25 times the gap	$800,000
Cautious target at 30 times	$960,000
Two bridge years of full spending	about $156,000
One-off reserve (car, roof, care buffer)	$75,000

Their range is roughly $1.03 million to $1.19 million. They have $650,000 today. A plan to save $30,000 a year for seven years, plus modest growth, could get them into the range. If it falls short, they can work one more year, cut the gap with part-time income, or delay Social Security to 70 to raise their lifetime income.

Who it’s for

Anyone over 40 who wants a target instead of a guess.
People thinking about retiring early or late.
Couples who need to plan for two lifespans.

Who it’s not for

People already retired who need a withdrawal plan more than a target. See the retirement paycheck and bucket strategies.
People with a pension that covers all spending; their question is more about inflation and legacy.

Risks and trade-offs

Longevity. A 65-year-old couple has a meaningful chance that one of them lives into their 90s. Plan for the longer life, not the average.
Inflation. Prices can double over a long retirement at moderate inflation.
Market timing. A crash early in retirement does more damage than one later. This is sequence-of-returns risk.
Health costs. These often rise faster than general inflation.
Too cautious is also a risk. Over-saving means working longer than needed or spending too little in your healthiest years.

Common mistakes

Using salary instead of spending. Two people with the same salary can need very different amounts.
Forgetting taxes. Withdrawals from traditional 401(k)s and IRAs are taxable income.
Ignoring the bridge years between retirement and Social Security.
Leaving out the surviving spouse. When one partner dies, one Social Security check stops, but many costs do not halve.
Never updating the number. Recalculate every year or after big changes.

FAQs

Is $1 million enough to retire?

It depends on spending and other income. With $40,000 a year from Social Security and $80,000 of spending, a $1 million portfolio covering a $40,000 gap is near the common 4% guideline. With higher spending, it may not be.

What if I can’t reach my number?

Common levers are working longer, saving more, spending less, part-time work in retirement, delaying Social Security and using home equity.

Should I plan in today’s dollars?

Yes, for simplicity. Then assume your savings must grow faster than inflation, or use a planning tool that adds inflation.

How long should I plan for?

Many planners use age 95, or longer if your family lives long. Shorter plans risk running out.

Does my home count?

Usually not as income, unless you plan to downsize or use a reverse mortgage. Treat it as a reserve.

Your next step

Take the Wealth Strategy Score at /score/ to see how close you are to your retirement number.

Education, not advice. Examples are illustrative. VeraLife.ai is not a registered investment adviser, broker-dealer or insurance agency.