How Much Do I Need to Retire? Here's How to Calculate Your Number
Figuring out how much money you need to retire is one of the most important financial questions you'll ever answer — and one of the most personal. There's no single correct number, but there are proven frameworks that can get you to a realistic target.
This guide covers the key factors that determine your retirement number, the rules of thumb financial planners use, and how to stress-test your plan before you stop working.
Why There's No "Magic Number"
Americans believe they'll need $1.26 million to retire comfortably, according to Northwestern Mutual's 2025 Planning and Progress study. But that's an average across millions of very different households.
The goal isn't to hit an arbitrary round number. What matters is whether you'll generate enough income to support your desired quality of life — for as long as you live.
The Key Factors That Shape Your Retirement Number
1. How Much You Plan to Spend
Start with spending, not savings. The widely used "80% rule" suggests retirees need about 80% of their pre-retirement income to maintain a comparable standard of living. On a $100,000 salary, that means targeting $80,000 per year in today's dollars.
That said, the 80% rule is a starting point, not a rule. Some people spend more in early retirement traveling and pursuing long-deferred hobbies; others spend less. Build a budget based on your actual plans, not a generic multiplier.
2. Healthcare Costs
Healthcare is one of the most underestimated line items in retirement. The average couple will need $345,000 after taxes to cover medical expenses in retirement, excluding long-term care, according to Fidelity's 2025 Retiree Health Care Cost Estimate. Healthcare inflation also moves faster than general inflation — and most of those forces sit outside an individual's control.
Someone turning 65 today has nearly a 70% chance of needing some form of long-term care in their lifetime. Long-term care is expensive and not covered by Medicare. Budget for it explicitly.
3. Retirement Age and Longevity
The longer you live, the more capital you need. Retiring at 55 instead of 65 means funding 35 or more years of expenses rather than 25, plus a decade less of portfolio contributions. Both effects compound quickly and can represent several hundred thousand dollars in required savings.
4. Where You Live
Location has an outsized impact on your retirement number. In California, Hawaii, and Massachusetts, retirees often need between $1.5 million and $2.2 million to maintain their lifestyle. Relocating to a lower cost-of-living state can extend your portfolio's runway by years.