How much do I need to retire?
Last updated August 2026
Short answer
Round numbers like a million dollars are memorable and useless, because they say nothing about what you spend or what income you already have coming.
Start with annual spending
Use what you actually spend now, then adjust: commuting and work costs fall, healthcare rises, and a paid-off mortgage removes a large line entirely.
Retirement spending is rarely flat. It tends to be higher in the early active years, lower in the middle, and higher again late if care is needed.
Rules of thumb that quote a percentage of pre-retirement income are a poor substitute, because two people on the same salary can spend very differently.
Subtract the income you will have
Social Security is inflation-adjusted income for life, and your statement gives an estimate at different claiming ages.
A pension covers part of the gap in the same way, though a fixed one loses purchasing power over a long retirement.
Rental income, part-time work and annuities all reduce what the portfolio has to produce, and each should be counted honestly rather than optimistically.
Size the portfolio against the gap
If you need $70,000 a year and Social Security provides $30,000, the portfolio has to cover $40,000.
At a 4% withdrawal rate that implies $1 million. At 3.5% it implies roughly $1.14 million, and at 3% it is $1.33 million.
The spread between those figures is the honest uncertainty in this exercise, and it is why the estimate should be revisited rather than treated as settled.
Try it in Walnut
Walnut connects to your brokerage and reads what you actually hold, which is the starting balance any retirement estimate has to be built on.
Where the 4% rule came from
It derives from research into historical US returns, testing whether a portfolio survived 30 years of inflation-adjusted withdrawals.
The assumption inside it is rigidity: the retiree never adjusts spending regardless of what markets do.
Real retirees are not rigid, which is why some researchers argue the rule is conservative and others argue that longer retirements and current valuations make it optimistic.
The variables that move the answer most
Healthcare before 65, which for an early retiree can be the largest single line and depends on income in ways you partly control.
Sequence of returns: a poor first decade damages a portfolio far more than the same returns arriving later.
Longevity, which is the risk that is genuinely uninsurable except by keeping the withdrawal rate low or annuitising part of the balance.
What to do with the number
Compare it against your current balance and savings rate to see whether the trajectory is roughly right.
Recalculate every few years, because spending estimates made decades out are guesses that improve as the date approaches.
Treat working one or two years longer as the strongest available lever, since it adds savings, shortens the retirement and can raise Social Security simultaneously.
Sources
Benefit estimates are available from the Social Security Administration, which also publishes the effect of claiming age. General retirement planning guidance and a savings calculator are at investor.gov. Walnut is informational and is not an investment adviser. This guide is educational and not personalized financial advice.
FAQ
How much do I need to retire?
+
Work out your annual spending in retirement, subtract Social Security and any pension, then multiply the remaining gap by 25 to 30 as a starting estimate. That reflects a withdrawal rate of 3.3% to 4%, and it is a starting point rather than an answer.
Where does the 4% figure come from?
+
Research into historical US market returns found that withdrawing 4% of a starting balance, adjusted for inflation, survived a 30-year retirement in nearly every historical period tested. It is a planning heuristic derived from history, not a rule of nature.
Is 4% still safe?
+
It is debated. Critics point to valuations, longer retirements and non-US evidence and argue for something closer to 3% to 3.5%. Defenders note it assumes no flexibility whatsoever, when in reality people adjust spending in bad years.
What about healthcare before Medicare?
+
It is the largest single variable for anyone retiring before 65. Marketplace coverage costs vary widely by income and state, and the subsidy depends on income you may partly control through which accounts you draw from.
Does the number change if I have a pension?
+
Considerably. A pension covers part of the gap in the same way Social Security does, so the portfolio only has to fund what remains. Check whether it is inflation-adjusted, because a fixed pension loses purchasing power every year.
How accurate can this be decades out?
+
Not very, and that is fine. The point of the estimate is to tell you whether you are saving at roughly the right rate, not to predict a balance in 2050. Recalculating every few years is more useful than precision now.
What if the number looks impossible?
+
Three levers exist: save more, spend less in retirement, or work longer. The third is the most powerful, because it adds contributions, shortens the retirement being funded and often increases Social Security at the same time.