The simplest honest answer is the 25x rule: take what you expect to spend in a year in retirement and multiply it by 25. Spend $50,000 a year? You're aiming for roughly $1.25 million. That number isn't magic — it's just the flip side of the famous 4% rule (25 × 4% = 100%). It's a great starting target, but your real number bends with when you retire, what other income you'll have, and how you actually want to live.
Key takeaways
- The 25x rule: your annual retirement spending × 25 ≈ the nest egg you need. It's the inverse of the 4% rule.
- Start from spending, not income. What you'll spend in retirement drives the number — not what you earn now.
- Quick age check (Fidelity): ~1x your salary saved by 30, 3x by 40, 6x by 50, 8x by 60, 10x by 67.
- Retire earlier and you need more (30–40x) because the money must last longer.
- See if you're on track for your number →
"How much do I need to retire?" feels like it should have a scary, complicated answer. It has a simple one — and then a personal one. Start with the simple one.
The 25x rule, in one line
Multiply your expected annual spending in retirement by 25. That's your target nest egg.
- Spend $40,000/year → aim for $1,000,000
- Spend $60,000/year → aim for $1,500,000
- Spend $100,000/year → aim for $2,500,000
Why 25? Because it's the mirror image of the 4% rule, the most-studied idea in retirement planning: if you withdraw about 4% of your savings in year one and adjust for inflation after that, a portfolio has historically lasted ~30 years. And 4% of your money equals your spending exactly when your money is 25× your spending. So "save 25× spending" and "withdraw 4%" are the same rule, seen from opposite ends.
Start from spending, not income
The single biggest mistake is anchoring on your income. Your number is driven by what you'll spend, and retirement spending is often quite different from today's:
- Some costs fall — commuting, mortgage (if paid off), saving for retirement itself, raising kids.
- Some costs rise — healthcare, travel and hobbies early on, help at home later.
So the first real task isn't a calculator — it's an honest estimate of your future annual spending. Get that roughly right and the 25x rule does the rest. Anchor on your salary and you'll chase a number that has little to do with the life you'll actually fund.
A quick check by age
If "×25 of a number I can't picture yet" feels abstract, there's a rougher shortcut for staying on track. Fidelity's widely used milestones suggest having roughly:
- 1× your salary saved by age 30
- 3× by 40
- 6× by 50
- 8× by 60
- 10× by 67
These assume you save around 15% a year from age 25, keep more than half in stocks, and retire at 67 (Fidelity). They're a sanity check, not a law — but if you're wildly below the line, that's useful to know now, while you still have time to adjust.
Why your number is personal
The 25x rule is the frame; four things move your actual number:
- When you retire. Retire at 65 and 25x (a ~30-year horizon) is reasonable. Retire at 55 or 45 and your money must stretch 35–45 years, so you need more — closer to 30–40x spending. Time is the biggest variable.
- Other income. Social Security, a pension, an annuity, or rental income all reduce what your portfolio has to cover. If guaranteed income covers half your spending, your portfolio only needs to fund the other half — a much smaller number. (Fidelity's rule of thumb is that savings need to replace roughly 45% of pre-retirement income, with the rest coming from Social Security.)
- Your real spending, not the average. A paid-off home and modest tastes shrink the number; frequent travel and a mortgage grow it. Yours is yours.
- Flexibility. The 4%/25x math assumes rigid, inflation-adjusted spending. Real retirees adjust — trimming a little in bad markets — which makes the plan far more durable than the rule's worst-case assumptions imply.
What to actually do
- Estimate your annual retirement spending — honestly, in today's dollars. This is the number that matters.
- Multiply by 25 (or 30+ if you'll retire early). That's your ballpark target.
- Subtract guaranteed income. Only the spending not covered by Social Security/pension/annuity needs to come from your portfolio.
- Check against the age milestones to see if your current pace lands you there.
- Re-run it every few years — the number moves as your life does.
The read that makes it real
The reason "how much do I need to retire" feels overwhelming is that it hides a dozen personal inputs — your real spending, your other income, your timeline, your risk tolerance. A generic number can't see any of that.
That's exactly where Ed helps. Ed won't hand you a scary one-size number — it reads your whole picture and shows you your target, where you stand against it, and whether your current saving pace actually gets you there. A free Money Diagnosis turns "am I on track?" from an anxious guess into a clear read.
Your retirement number isn't a mystery. It's your spending, times 25, adjusted for your life. Start with the spending — the rest follows.
Money at peace. Wealth in motion.
See if you're on track for your number → · Ed is on the App Store and Google Play.
Ed: Wealth is a research and self-reflection tool, not a registered investment advisor. Nothing here is financial, investment, or tax advice. The decision is always yours.
Sources
- Fidelity, Retirement guidelines (age-based savings milestones; 45% replacement) — https://www.fidelity.com/viewpoints/retirement/retirement-guidelines
- Fidelity, How much do I need to retire? — https://www.fidelity.com/viewpoints/retirement/how-much-do-i-need-to-retire
- Bengen / Trinity Study, 4% rule (basis of the 25x rule) — https://www.financialplanningassociation.org/article/journal/JAN23-safe-withdrawal-rates
