Cover needs with guaranteed income
Social Security and guaranteed income sources can cover essentials, so a market drop does not change your groceries.
Retirement calculator
How much do you need to retire?
When you retire, your income should not retire with you. Find your Retirement Number with the 20 times rule, then see if your savings are on track.
The 20 times rule
Retirement funds needed = yearly income × 20
Retirement is every weekend, all week. To keep your lifestyle, plan for what your expenses will be when you retire, not what they are today.
Example: John, age 40, retiring at 65
- Monthly expenses today$5,000
- In 25 years at 3.5% inflationabout $11,800/mo
- Before tax (about 23%)about $15,300/mo
- Yearly pre-tax incomeabout $184,000
- × 20 = Retirement Numberabout $3.7 million
That sounds like a lot, but John has 25 years. Savings he already has, money growing at around 8%, Social Security, and other income all reduce what he still needs.
Plan for living longer
Life expectancy has risen from 72 to 79 since 1975. Your money has to last for a longer retirement.
Review every year or two
Income, family, and markets change. A regular review keeps the plan on track.
FAQs
Common questions
How much do I need to retire?
A simple guide is the 20 times rule: take the yearly pre-tax income you will need in retirement and multiply it by 20. Start from today's monthly expenses, grow them by inflation until your retirement date, and add enough for income taxes.
What is the 20 times rule?
It is a planning shortcut for people retiring around 60 to 65. Savings of about 20 times your yearly retirement income are designed to last through a long retirement. Retiring earlier usually needs a bigger multiple.
Why does inflation matter so much?
At 3.5% inflation, $5,000 of monthly expenses today becomes about $11,800 a month in 25 years. Planning with today's prices can leave a large shortfall.
Does this include Social Security?
Yes, if you enter it. Social Security and pensions reduce how much income your savings must provide, which lowers your Retirement Number. You can get your estimate at ssa.gov.
Is retirement a function of age?
It is a function of money. If you had enough saved, you could retire at 55 instead of 65. The calculator shows the earliest age your current savings plan reaches your number.