How Much Should I Save for Retirement — and When Can I Retire?

A Practical Guide to Building a Feasible, Flexible Retirement Plan

Retirement planning can feel overwhelming, but the core questions most people wrestle with are surprisingly consistent:

• How much money do I need to retire?

• How much should I be saving now?

• When can I realistically retire?

• What age should I aim for?

The good news: you don’t need perfect predictions or complex spreadsheets to map out a strong retirement plan. With a few clear rules-of-thumb and personalized adjustments, you can estimate how much to save and identify when retirement becomes financially feasible.

This guide walks you through the essentials.

1. How Much Money Do You Need to Retire?

Most financial planners use a version of the same idea:

You need a portfolio large enough to replace about 70–90% of your working income.

Why not 100%?
Because many major expenses drop in retirement—commuting, payroll taxes, retirement contributions, professional clothing, etc. But some expenses rise—healthcare, travel, hobbies—so the 70–90% range is a meaningful middle ground.

The 4% Rule (A Simple Starting Point)

A widely used guideline is the 4% rule, which says:

You can safely withdraw about 4% of your portfolio each year in retirement with low risk of running out of money over a 30-year retirement.

This rule lets you work backward:

Needed nest egg = annual retirement spending ÷ 0.04

For example:

• You want $50,000/year → $50,000 ÷ 0.04 = $1.25 million

• You want $70,000/year → $1.75 million

• You want $100,000/year → $2.5 million

These figures are rough, but they provide clarity.

What if markets underperform?

In volatile environments or for retirements longer than 30 years, many planners use a more conservative 3.5% or even 3% withdrawal rate.

2. How Much Should You Save Each Year?

This depends on three things:

1. Your age

2. How much you’ve saved so far

3. How much you want to spend in retirement

But you can use these general benchmarks.

Savings Benchmarks by Age

Fidelity’s commonly cited guideline:

• Age 30: 1× your annual salary saved

• Age 40: 3× salary

• Age 50: 6× salary

• Age 60: 8× salary

• Age 67: 10× salary

These are ballpark figures assuming an average retirement age of 65–67.

If you're behind these numbers, you're far from alone. The important part is adjusting your savings rate going forward.

Savings Rate Guidelines

A good general target is:

Save 15% of your gross income for retirement.

This includes:

• Your contributions

• Employer match

• Profit-sharing contributions

If you start in your early 20s, 15% is usually enough.
If you start in your mid-30s or later, you may need to increase that amount.

Approximate recommendations based on starting age:

These are rule-of-thumb numbers, but they illustrate the tradeoff:
the later you start, the more you need to save OR the later you need to retire.

3. When Is Retirement Financially Feasible?

You can retire when:

Your passive income + safe withdrawals cover your living expenses.

This means:

• Your investments

• Social Security or pension

• Rental income

• Part-time income (if desired)

Rather than thinking of retirement as a specific age, think of it as a math milestone.

The Retirement Feasibility Framework

You are financially ready to retire when:

• Your annual expenses × 25 = your investment portfolio
  (based on the 4% rule)

• You have stable healthcare coverage (Medicare at 65 or equivalent)

• You have minimal high-interest debt

• You have a cash reserve for emergencies (6–12 months is typical)

If you only remember one number, make it this:

25× your annual spending is your “freedom number.”

Not your income—your spending.
Someone who spends $40,000 a year needs less saved than someone who spends $120,000.

4. What Age Should You Aim to Retire?

There is no universal answer—only tradeoffs.

But here are the major anchors.

Common Retirement Age Targets

Age 62 (Early Social Security eligibility)

Pros:

• Retire “early”

• Access Social Security

Cons:

• Benefits permanently reduced by up to 30%

• Higher healthcare costs until Medicare at 65

• Portfolio must stretch longer (30+ years)

Best for:

• Those with substantial savings

• Those who dislike their job

• Those with health concerns affecting longevity

Age 65 (Medicare eligibility)

Pros:

• Healthcare becomes predictable and cheaper

• Good balance between early and traditional retirement

• Lower strain on investment portfolio

Cons:

• Still early enough that your working income stops sooner

This is now the most common "full retirement" target age.

Age 67 (Full Social Security Retirement Age for most people)

Pros:

• Full Social Security benefits

• More years to save

• Portfolio doesn’t need to last quite as long

Cons:

• Fewer retirement years on the front end

Popular among people who start saving later or expect a longer lifespan.

Age 70 (Maximum Social Security benefits)

Pros:

• Largest possible Social Security income (about 24–30% higher than at 67)

• Lower reliance on investment withdrawals

Cons:

• Requires working longer—or funding the gap if you stop earlier

This is optimal for people with good health and strong earning potential.

Early Retirement and FIRE (Financial Independence, Retire Early)

FIRE aims for:

Retirement in your 30s or 40s using ultra-high savings rates (40–70% of income).

This is possible but requires:

• High income

• Extremely low expenses

• Aggressive savings and investment strategy

• A willingness to live below traditional retirement budgets

5. How to Calculate Your Retirement Age

Here's a simple approach you can use today.

Step 1: Determine your ideal annual retirement spending

Include:

• Housing

• Food

• Healthcare

• Travel

• Hobbies

• Taxes

Say it's $60,000 per year.

Step 2: Multiply that number by 25

This gives your target retirement nest egg.

Example:

• $60,000 × 25 = $1.5 million

Step 3: Estimate your Social Security or pension

Subtract this from your needed portfolio withdrawals.

If Social Security gives you $20,000 per year, then your portfolio needs to cover only $40,000:

• $40,000 × 25 = $1 million

Step 4: Check your current savings and growth expectations

Let’s say:

• You have $300,000 saved

• You save $15,000 per year

• You expect 5–7% annual growth

A basic retirement calculator can project when you reach $1 million.

Most people reach this point between 60–67 depending on income, savings rate, and lifestyle.

6. Key Variables That Determine Your Retirement Age

Not all variables matter equally. The most important are:

1. Your annual spending

This has the largest impact. A $20,000 reduction in annual spending reduces required savings by $500,000.

2. Your savings rate

More than investment returns, your savings rate drives retirement timing.

3. Investment returns

Stocks historically return 7–10% annually over long periods, but volatility matters.

4. Healthcare costs

Especially if retiring before 65.

5. Longevity

If you expect a long life, plan for lower withdrawals (3–3.5%).

6. Location

Your retirement destination dramatically changes the feasibility—moving to a lower-cost area can cut the required nest egg by hundreds of thousands.

7. Example Retirement Scenarios

Scenario A: Age 65 Traditional Retirement

• Annual spending: $55,000

• Savings at 45: $250,000

• Savings rate: 15%

• Social Security: $22,000

You’re on track for a feasible retirement in your mid-60s.

Scenario B: Early Retirement at 55

• Annual spending: $40,000

• Savings at 35: $200,000

• Savings rate: 30%

• No intention to claim Social Security until 67–70

Possible with disciplined savings and low spending.

Scenario C: Retire at 70 for Maximum Benefits

• Savings lower than ideal

• High Social Security benefit at 70

• Wants to reduce reliance on investment withdrawals

This is often the most financially secure option.

8. How to Stay Flexible

Even if you’re behind, you can adjust your plan. Options include:

• Working part-time after retiring

• Downsizing your home

• Relocating to a lower-cost area

• Increasing savings rate

• Working 2–4 years longer

• Delaying Social Security

• Adjusting your investment mix

Retirement doesn't need to be a single event—it can happen in stages.

9. A Practical, Simple Formula You Can Use

Here’s a condensed formula that works for most households:

Your retirement age = The age when your savings reach 25× your annual spending minus Social Security/pension income.

This formula is simple but powerful.
It reflects your real lifestyle, not a generic number.

10. Final Thoughts

Retirement planning is both math and mindset.
The math determines what is feasible.
Your values determine what is desirable.

You can retire when:

• Your expected spending is low enough

• Your savings rate is high enough

• You reach your “25× spending” target

• You have sustainable healthcare coverage

• You feel secure, prepared, and ready

Whether that’s age 55, 65, or 70, the goal is the same:

Build financial independence so your time becomes your own.