How Much Do I Need to Retire?

How to Calculate Your Retirement Number

Your "retirement number" or "FIRE number" is the total portfolio size you need to fund your retirement. The formula is straightforward:

For example, if you spend $60,000/year, expect $24,000/year from Social Security, and use a 3.5% withdrawal rate:

Why Social Security Changes Everything

Most online "how much to retire" articles ignore Social Security entirely and just multiply your annual spending by 25. That's the old "4% rule" shortcut — and it vastly overestimates what you actually need.

For most retirees, Social Security covers 30-50% of retirement expenses. That means your portfolio only needs to cover the gap, not your total spending.

What Withdrawal Rate Should You Use?

The withdrawal rate is the percentage of your portfolio you take out each year. It depends on three things:

1. How Long Your Retirement Needs to Last

• 25 years (retire at 65): 3.7-4.0% is generally safe
• 30 years (retire at 60): 3.5-3.7% is safer
• 40+ years (retire at 50): 3.0-3.3% is conservative

2. Your Portfolio Mix

• 80% stocks: Higher growth, more volatility → slightly higher SWR possible
• 60/40 balanced: The classic split → standard SWR
• 40% stocks: Less growth, less volatility → lower SWR needed

3. Current Market Conditions

In 2026, with elevated stock valuations (CAPE ~25x) and moderate bond yields (~4.5%), most researchers suggest starting at 3.3-3.7% rather than the historical 4%.

The 25x Rule vs. Reality

You've probably heard "save 25 times your annual expenses." That's the 4% rule in reverse. But here's why it's often wrong:

5 Factors That Reduce Your Number

1. Social Security. Every $1,000/month in SS reduces your needed portfolio by ~$340,000.
2. Pension income. Same math as SS — guaranteed income shrinks the gap.
3. Paid-off home. No mortgage dramatically reduces monthly expenses.
4. Spending flexibility. If you can cut 10% in bad years, you can use a slightly higher withdrawal rate.
5. Part-time income. Even $1,000/month of freelance work for the first 5 years provides a huge safety buffer.

5 Factors That Increase Your Number

1. Early retirement (before 65). No Medicare until 65 means $12-20K/year in healthcare costs.
2. Long retirement (40+ years). Lower withdrawal rate needed.
3. High-cost area. NYC, SF, Boston = $80-100K/year minimum for many.
4. No Social Security. Self-employed or short US work history? Portfolio covers everything.
5. Inflation risk. 3% inflation doubles your costs over 24 years.