How Much Money Do YOU Need To Retire?

There’s no universal formula for retirement planning—but asking the right questions can help you build a realistic and personalized roadmap.

If you're 20 to 30 years away from retirement, you might be able to lean on a general rule, like a 4% withdrawal rate, to run rough estimates. But as retirement approaches, precision becomes more important. Your plan should reflect your actual goals, lifestyle, and resources.

So how much money will you need to retire comfortably? The honest answer is: it depends.

Here are a few key questions to start working through your own unique number:

What will your spending look like in retirement? Begin by outlining your projected expenses. Essentials like housing, food, insurance, and utilities are usually predictable. Then think about flexible expenses—such as vacations, hobbies, and charitable giving. Knowing how much income you'll need each year is the foundation of a solid plan.

Retirement spending isn't always steady. In fact, 60% of new retirees experience more than 20% year-to-year volatility in the first three years. That variability doesn’t stop, either—over half of retirees aged 75–80 still face significant shifts in annual spending. Flexibility in your financial plan is key to navigating these ups and downs.

Where will that income come from? Social Security—what age will you begin taking benefits? Pensions—do you have the option between a lump sum or lifetime payments? Rental properties, annuities, or part-time work? The more reliable income sources you have, the less strain there will be on your investment portfolio.

Timing matters when claiming Social Security. Claiming before full retirement age (FRA) reduces your benefit—by about 6% per year—while delaying until age 70 increases it by around 8% per year. This trade-off has lifelong implications and should be coordinated with your other income sources to maximize long-term sustainability.

At what age do you want to retire, and how long should your money last? A retirement that starts at 50 could last four decades. One that begins at 70 might only need to stretch 20 years. The longer the retirement, the more cautious you should be with withdrawals. Here are some general guidelines:

• Retire at 50 → consider 3%

• Retire at 60 → consider 3.5%

• Retire at 70 → up to 4% might be reasonable

Now let’s crunch some numbers:

The basic formula goes like this: Estimated Retirement Spending – Expected Retirement Income = Portfolio Draw Requirement.

Take that annual draw and divide it by your target withdrawal rate to get your target nest egg. Let’s say your spending gap is $40,000 a year, and you plan to retire at 60 using a 3.5% withdrawal rate: $40,000 ÷ 0.035 = $1,142,857. That means you’d need just over $1.14 million invested to support that level of withdrawals.

Of course, this is just a starting point. A skilled financial advisor can run in-depth projections that factor in taxes, inflation, market volatility (Monte Carlo analysis), and more. If you're ready to build a retirement plan that's tailored to your life, contact us today—we’re here to help you plan with clarity and confidence.