How much do I need to retire?
It sounds like an impossible question, but there's a surprisingly simple starting answer: about 25 times what you spend in a year. Here's where that comes from and how to use it.
Skip the math — the free fire retirement calculator runs this from your own figures.
Open the free calculator →Start from spending, not income
The amount you need to retire depends on what you spend, not what you earn. Two people on the same salary can need very different nest eggs if one lives on half of it and the other on all of it.
So the first step is an honest annual spending number for the life you want in retirement. Everything else builds on it.
The 25x rule
A widely used rule of thumb is that you need about 25 times your annual spending invested to retire. Spend $40,000 a year and the target is roughly $1,000,000; spend $60,000 and it's about $1,500,000.
This 25x figure isn't arbitrary — it's the flip side of the '4% rule', which we'll unpack next.
Where the 4% rule comes from
The 4% rule says you can withdraw about 4% of your portfolio in the first year of retirement, adjust for inflation each year after, and have a low historical risk of running out over a long retirement.
Since 4% is one twenty-fifth, needing your spending to be 4% of your portfolio is the same as needing a portfolio of 25 times your spending. The two rules are the same idea from two directions.
Know its limits
The 4% rule comes from historical market studies and is a planning guide, not a guarantee. Real outcomes depend on returns, inflation, how long you live, taxes, and how flexible you can be with spending in bad years.
Many people treat it as a target to aim for, then stay flexible — trimming withdrawals in downturns, or using a slightly lower rate for a very long retirement. Use it to set direction, not as a promise.
Turn the target into a timeline
Once you know your number, the next question is when you'll reach it. That depends on what you've already invested, how much you add each year, and your return. Small increases in savings rate can pull the date in dramatically.
The free calculator below computes your target from your spending and projects the year you reach it, so you can test different savings rates and returns against your own goal.
Questions
Does the 25x rule include my home or pension?
The 25x figure applies to the investments you'll draw an income from — typically brokerage and retirement accounts. A home you live in doesn't produce income (though downsizing can free some), and guaranteed pensions or benefits reduce the portfolio you need, because they cover part of your spending directly. Subtract any reliable income from your spending before applying the multiple.
Is 4% too aggressive for early retirement?
Possibly. The original studies looked at roughly 30-year retirements; a much longer horizon raises the odds of running short, so some early retirers plan around a lower rate (say 3.25–3.5%), which means a larger target. It's a trade-off between working longer to save more and retiring sooner with more flexibility in spending.