Ask ten people for "the number" and you'll hear $1 million, because it's round and it's been the answer since the 1990s. The real number has nothing to do with millions and everything to do with one figure: what you'll spend per year. Multiply that by 25, subtract what Social Security will cover, and you've done more honest planning than most people ever do.
It's the inverse of the 4% rule from the 1994 Bengen study: a retiree who withdraws 4% of a diversified portfolio in year one, then adjusts that dollar amount for inflation each year, historically hasn't run out of money over a 30-year retirement. If 4% of your portfolio needs to equal a year's spending, your portfolio needs to be 25 times that spending. Spend $40,000 a year, need $1 million. Spend $80,000, need $2 million.
But that's before Social Security, and skipping that subtraction is how people end up with inflated targets. The average retirement benefit in 2025 is about $1,976 a month, or $23,712 a year. Your portfolio only has to cover the gap:
| Annual spending | Naive 25x target | Gap after avg. Social Security ($23,712) | Portfolio actually needed (25x gap) |
|---|---|---|---|
| $40,000 | $1,000,000 | $16,288 | $407,200 |
| $60,000 | $1,500,000 | $36,288 | $907,200 |
| $80,000 | $2,000,000 | $56,288 | $1,407,200 |
| $100,000 | $2,500,000 | $76,288 | $1,907,200 |
A couple with two benefits subtracts twice, which is why plenty of households retire well on portfolios that look "too small" next to magazine headlines. When you claim matters too: the checks range from 70% of your full benefit at 62 to 124% at 70, which we break down in our Social Security claiming guide.
Fidelity's widely used checkpoints say to aim for 1x your salary saved by 30, 3x by 40, 6x by 50, 8x by 60, and 10x by 67. On a $75,000 salary that's $75,000 at 30, $225,000 at 40, $450,000 at 50, $600,000 at 60, and $750,000 at 67.
Treat these as mile markers, not verdicts. They assume a roughly 15% savings rate and retirement at 67, and they're calibrated to replace about 45% of pre-retirement income from savings with Social Security covering much of the rest. Behind at 40? The gap is fixable with a higher savings rate. Behind at 60? The honest levers are working longer, spending less, or both.
Project your balance at retirement from your current age, savings, monthly contribution, and expected return.
Retirement Calculator →Because compounding is brutally back-loaded. Here's the same $500 a month, earning 7% annually, held until age 67 (see the compound interest calculator to run your own version):
| Start age | Total contributed by 67 | Balance at 67 |
|---|---|---|
| 25 | $252,000 | $1,521,854 |
| 35 | $192,000 | $714,206 |
| 45 | $132,000 | $312,323 |
| 55 | $72,000 | $112,347 |
The 25-year-old contributes just 3.5 times what the 55-year-old does but ends up with 13.5 times the money. At the 42-year mark, 83% of the final balance is growth rather than deposits. I find this table more motivating than any lecture: waiting ten years to start doesn't cost you ten years of deposits, it costs you the biggest compounding years at the end.
It's a planning tool, not a guarantee. Worth knowing what's under the hood:
Three steps, an evening of work. First, estimate retirement spending honestly; most people land near 70-80% of pre-retirement spending, less if the mortgage will be gone. Second, get your projected benefit from your Social Security statement or estimate it with our Social Security calculator, and subtract it. Third, multiply the gap by 25 and compare against your projected balance. If there's a shortfall, the fix is some mix of higher contributions, later retirement, and lower spending, and the earlier you pick one, the smaller the dose you need. A separate savings goal calculator can translate any gap into a required monthly deposit.
Your retirement number is 25 times the annual spending your portfolio must cover after Social Security, not a round million. For an average-benefit household spending $60,000, that's roughly $907,000, and noticeably less for couples. The multiplier you can't negotiate with is time: the same monthly contribution is worth 13 times more started at 25 than at 55. Whatever your age, the best available move is the same: find the gap, automate the contribution, and recheck yearly.
At a 4% withdrawal rate, $500,000 supports about $20,000 a year from the portfolio. Add an average Social Security benefit of roughly $23,700 and household income lands near $43,700. That works in a paid-off house in a lower-cost area; it's tight in an expensive city. The honest answer depends almost entirely on your spending, not the account balance.
Not by default, and that's the most common mistake made with it. You only need 25x the spending your portfolio must cover. Subtract expected Social Security (and any pension) from annual spending first, then multiply by 25. For a $60,000 spender with an average benefit, that drops the target from $1.5 million to roughly $907,000.
A common planning assumption is 6-7% annually for a diversified stock-heavy portfolio before inflation, or 4-5% after inflation. Assuming 10% because that's the S&P 500's long-run average is risky: your mix will likely include bonds, and sequence-of-returns luck matters. Better to plan at 6-7% and be pleasantly surprised.
By the 4% rule, $1 million generates $40,000 a year, about $63,700 with an average Social Security check on top. For the median American household that's a comfortable floor, especially with a paid-off home. It falls short for someone accustomed to spending $100,000 a year, who'd want closer to $1.9 million even after Social Security.