The short version
Multiply your annual retirement spending by 25 — after subtracting whatever Social Security and pensions will already cover. Spend $60,000 a year, get $24,000 from Social Security, and your number is ($60,000 − $24,000) × 25 = $900,000. That is the 25× rule: the fastest honest answer to "how much do I need to retire?" Type your own numbers into the retirement number calculator to see whether your current savings are on track.
Why 25 is the number
Twenty-five is the 4% rule wearing different clothes. The 4% rule — from a 1998 study of retirement portfolios, often called the Trinity study — found that a retiree could withdraw about 4% of a portfolio in year one, adjust for inflation afterward, and have the money last roughly 30 years. Flip that around: if you can safely spend 4% of your savings each year, your savings must be 1 ÷ 0.04 = 25 times your annual spending. It is a planning target, not a guarantee — markets, inflation, and longevity all get a vote — but it compresses a frightening question into napkin arithmetic.
How to calculate your number (the 3-step method)
- Pin down your annual spending.
Not your salary — your spending. Start with today's yearly expenses, then adjust: drop the mortgage if it will be paid off, drop retirement savings (you will not save for retirement in retirement), and add the things people forget — health care, travel in the early years, home repairs. Most people land at 70–80% of their working income, but run your number, not the average. - Subtract guaranteed income.
Estimate your Social Security benefit (the SSA's online estimator gives a personalized figure) and add any pension. Subtract the total from your spending. This step shrinks the number dramatically: every $1,000 a month of Social Security erases $300,000 from the target. - Multiply the gap by 25.
The result is your retirement number — the balance that funds the gap at a 4% withdrawal rate. If the gap is zero or negative, your number is $0: your savings are lifestyle money, not survival money.
Worked example: $60,000 spending, $24,000 Social Security
The spending gap is $60,000 − $24,000 = $36,000 a year. Times 25, the number is $900,000. Now the follow-up question — are you on track? With $150,000 saved today and $800 a month going in, 20 years of 7% growth turns the current balance into $580,452.67 and the monthly habit into $393,556.73, for $974,009.4 total — $74,009.4 ahead of the number:
The number: $36,000 × 25 = $900,000
The trajectory: $150,000 × 1.0720 + $9,600/yr compounded 20 years = $974,009.4
Answer: $74,009.40 ahead — on track. Run your own three inputs through the calculator to see your verdict.
When to adjust the multiple
The 25× rule assumes a roughly 30-year retirement starting around 65. Retiring early stretches the timeline to 35–40 years, so use 28–33× instead (a 3–3.5% withdrawal rate) — at 55, multiply your gap by 30 for the conservative answer. Health care before Medicare is the early retiree's hidden line item: private insurance at 60 can cost several times what Medicare costs at 65, so add a few years of premiums to your spending input. Taxes on withdrawals are the biggest real-world haircut — a $900,000 pre-tax 401(k) spends like a smaller after-tax balance, so aim 15–25% above the printed number if most of your savings are pre-tax. And inflation is already handled if you think in today's dollars on both sides: your spending input and your expected return should both be real (after-inflation) figures.
The pocket version: $300,000 per $1,000 a month
Memorize one conversion and you can do the rule in your head: every $1,000 a month of income your savings must produce needs $12,000 a year × 25 = $300,000 saved. Need $3,000 a month beyond Social Security? That is $900,000. It is the same rule, folded small enough to check anyone's "magic number" against your own spending in ten seconds.
Mistakes that shrink the number below reality
The most common is counting the house — home equity is not spendable unless you sell, so it does not fund groceries; treat the house as a reducer of housing costs, not a funding source. Next is using gross income instead of spending, which inflates the number for no reason. Then forgetting health care, the one retirement cost that reliably grows faster than inflation. Couples make a fourth mistake: running one person's number — a household needs one combined number with combined spending and both Social Security checks. And the subtlest: treating the number as a finish line. The target gets you to day one; how you draw the money down is a second problem the rule does not solve.
Frequently asked questions
How much do I need to retire at 60?
Run the same 3 steps, but consider a higher multiple: retiring at 60 means funding up to 35 years, so 28–30× the spending gap is the conservative figure. Also add several years of private health insurance to your spending — Medicare starts at 65, and the bridge years are expensive.
Is $1 million enough to retire?
It depends on the gap it must cover. At the 4% rule, $1 million funds $40,000 a year of spending beyond Social Security and pensions. If your gap is $40,000 or less, yes — if it is $80,000, you need closer to $2 million. The number is personal; the rule is universal.
Does the 25× rule include Social Security?
Yes — that is the subtraction in step 2. The ×25 applies only to the spending your savings must fund, after Social Security and pensions do their part. Skipping the subtraction overstates your number by hundreds of thousands of dollars.
What if I plan to keep working part-time in retirement?
Count it like a pension: subtract it from your spending before multiplying. Even $15,000 a year of bridge income erases $375,000 from the target. Just be honest about how many years the part-time work will realistically last.
How does delaying Social Security change my number?
Claiming at 70 instead of 62 can raise the monthly benefit by up to ~77%. A bigger benefit means a smaller gap and a smaller number — for many people the delay erases $200,000+ from the target.
Should I use 25× if I have a pension?
Yes — subtract the pension's annual payout in step 2 alongside Social Security. A $20,000-a-year pension covers $500,000 of the target by itself (20,000 × 25). People with real pensions often discover their number is far smaller than they feared.
Educational content, not financial advice. Taxes, inflation, market returns, and longevity will move the real finish line — consider a financial professional for your situation.