Use the 25x rule: Save 25 times your annual expenses (the inverse of the 4% rule). For $50,000/year expenses, you need $1.25 million. For $80,000/year, you need $2 million. Add more for healthcare costs, which average $315,000 per couple in retirement.
- Calculate based on expenses, not income (you won't have work costs)
- Factor in paid-off mortgage to reduce expenses
- Healthcare costs average $315,000 for couples in retirement
- Social Security covers roughly 40% of pre-retirement income
- Adjust for desired lifestyle (travel, hobbies)
| Annual Expenses | Retirement Savings Needed (25x) | Monthly @ 4% Withdrawal |
|---|---|---|
| $40,000 | $1,000,000 | $3,333 |
| $50,000 | $1,250,000 | $4,167 |
| $60,000 | $1,500,000 | $5,000 |
| $80,000 | $2,000,000 | $6,667 |
| $100,000 | $2,500,000 | $8,333 |
The 25x rule provides a starting point, but individual circumstances vary. If you plan early retirement (before 60), use 30-33x rule. If you have a pension, Social Security, or rental income, you may need less in savings. Always plan for healthcare inflation, which rises faster than general inflation.