The Quick Answer: The 4% Rule
The 4% rule is the most popular retirement planning guideline:
Annual expenses × 25 = Your retirement number
If you need $50,000/year to live comfortably:
- $50,000 × 25 = $1,250,000
This assumes you can withdraw 4% per year and your portfolio will last 30+ years (based on historical stock/bond returns).
Retirement Savings Benchmarks by Age
Fidelity recommends these milestones based on your salary:
| Age | Savings Target |
|---|---|
| 30 | 1× your salary |
| 35 | 2× your salary |
| 40 | 3× your salary |
| 45 | 4× your salary |
| 50 | 6× your salary |
| 55 | 7× your salary |
| 60 | 8× your salary |
| 67 | 10× your salary |
Earning $80,000? By 40, aim for $240,000 in retirement savings.
How to Estimate Your Retirement Expenses
Most people need 70-80% of their pre-retirement income. But this varies:
Expenses That Decrease
- Commuting costs
- Work clothes
- Payroll taxes
- Retirement contributions (obviously)
Expenses That Increase
- Healthcare (the big one)
- Travel and hobbies
- Home maintenance
Expenses That Stay Similar
- Housing (if mortgage is paid off, costs drop significantly)
- Food
- Insurance
- Utilities
The Real Math: A Detailed Example
Current situation:
- Age: 35
- Salary: $80,000
- Current savings: $50,000
- Monthly contribution: $500
- Expected return: 7% (stock market average)
- Target retirement age: 65
Result: At these numbers, you'd have approximately $781,000 by 65.
Need $1.25M? Bump contributions to $800/month and you'll hit the target.
How to Catch Up If You're Behind
In Your 30s
- Max out employer 401(k) match (it's free money)
- Open a Roth IRA ($7,000/year limit in 2026)
- Automate contributions — pay yourself first
In Your 40s
- Increase contributions with every raise
- Consider more aggressive investment allocation
- Pay off high-interest debt to free up cash for saving
In Your 50s
- Use catch-up contributions ($7,500 extra in 401(k), $1,000 extra in IRA)
- Consider delaying retirement even 2-3 years (huge impact)
- Start planning your Social Security strategy
Common Retirement Planning Mistakes
- Not starting early enough — Waiting 10 years can cost you hundreds of thousands
- Being too conservative — All bonds won't beat inflation over decades
- Forgetting inflation — $1M in 30 years is worth ~$500K in today's dollars
- Ignoring healthcare costs — The average couple needs ~$315,000 for healthcare in retirement
- Taking Social Security too early — Waiting from 62 to 70 increases your benefit by 77%
Plan Your Retirement
Use our [retirement calculator](/retirement-calculator) to get a personalized estimate based on your age, savings, and goals. See exactly how much you need to save each month.