How much do I need to retire?
A common starting estimate is 25 times your expected annual spending from your portfolio. If you plan to draw $40,000 a year, that points to roughly $1,000,000. This is the Rule of 25, the mirror image of the 4% rule. It is a useful baseline, but your real number depends on your time horizon, other income like Social Security, and how markets behave in your first retirement years.
The 25x rule, in one line
Multiply the amount you expect to withdraw from savings each year by 25. That is your rough target portfolio. Spending $40,000 a year suggests about $1 million; $60,000 a year suggests about $1.5 million. It is quick and directional, and it deliberately ignores the ups and downs of real markets, which is exactly where it breaks down.
Where the 4% rule comes from
The Rule of 25 is just the 4% rule turned around: withdrawing 4% of your starting balance each year, adjusted for inflation, historically lasted about 30 years. That original study assumed a roughly 30-year retirement. For a longer retirement the safe rate is lower; analyses of very long horizons suggest a withdrawal rate closer to the low-2% range for someone retiring young and living into their nineties.
Savings benchmarks by age
If you want checkpoints on the way there, a widely cited set of benchmarks is roughly:
- About 1x your salary saved by age 30
- About 3x by age 40
- About 6x by age 50
- About 10x by age 67
These assume you save around 15% of income each year and retire near 67. They are guideposts, not promises, and your own number can be higher or lower depending on your spending and pension or Social Security income.
Why one number isn't enough
A single target hides the biggest risk in retirement: the order in which returns arrive. Two retirees with the same average return and the same withdrawals can end up in very different places if one hits a bad market early. That is why planners increasingly look at a probability of success across thousands of possible market paths rather than a single fixed rate.
A more honest answer: your odds
Instead of asking "what is my number," you can ask "what are the odds my money lasts." A Monte Carlo simulation runs your savings, spending, and time horizon through thousands of market scenarios and reports how often the money survives. Most planners aim for an 85 to 95 percent success rate. That single percentage tells you far more than a round-number target ever could.