Retirement planning feels overwhelming partly because the numbers are large and partly because the advice you find online ranges from overly simplistic ("save 15% of your income") to paralysingly complex. This guide gives you the practical framework to figure out your personal number — and a realistic sense of where most people stand.
The single most important input in retirement planning isn't how much you've saved — it's how much you plan to spend. Many people make the mistake of reverse-engineering from a savings number without first figuring out the spending side.
A useful starting point: most people spend 70–80% of their pre-retirement income in retirement. The logic — no more mortgage (hopefully), no commuting costs, no need to save for retirement anymore — holds for many people. But healthcare costs often rise, travel spending tends to increase in early retirement, and spending patterns vary enormously. Better to build from a realistic monthly budget than from a percentage rule.
The 4% rule (from the 1994 Trinity Study) says you can withdraw 4% of your portfolio in year one of retirement, then adjust for inflation each year, and have a high probability of your money lasting 30 years across historical market conditions.
The math: if you need $50,000/year from your portfolio, you need 25× that amount — $1,250,000. If you need $40,000/year, you need $1,000,000. This is the simplest way to translate annual spending into a savings target.
| Annual spending need | Portfolio needed (4% rule) |
|---|---|
| $30,000/year | $750,000 |
| $40,000/year | $1,000,000 |
| $50,000/year | $1,250,000 |
| $60,000/year | $1,500,000 |
| $80,000/year | $2,000,000 |
Important caveats: the 4% rule was designed for a 30-year retirement. If you retire at 55, you may need money to last 40+ years, which pushes toward a safer 3–3.5% withdrawal rate. Social Security reduces the portfolio needed by covering part of expenses — subtract your expected Social Security benefit from your spending need before applying the 4% rule.
Fidelity's retirement savings benchmarks are widely cited and useful as a gut-check:
These benchmarks assume you want to maintain your current lifestyle and retire at a traditional age. They're not targets that apply to everyone — but they're useful for knowing roughly where you stand relative to others at your age and income.
If you're behind the benchmarks above, the levers are:
For most American workers, Social Security provides meaningful retirement income — the average benefit in 2026 is around $1,900/month. That's $22,800/year, which represents a portfolio equivalent of $570,000 at a 4% withdrawal rate. Including Social Security in your retirement plan meaningfully reduces the portfolio you need to accumulate yourself.
Check your Social Security statement at ssa.gov to see your projected benefit at 62, 67, and 70. Claiming at 70 instead of 62 increases benefits by roughly 77% — a significant consideration for those in good health who can afford to wait.
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