How much do you need to retire? A simple way to find your number

Ask ten people how much they need to retire and you'll get ten guesses, most of them a big round number that sounds scary. "A million?" "Two?" The truth is your number depends on one thing more than anything else: how much you'll spend each year. Once you know that, the rest is simple maths you can do on a napkin.

This guide shows a straightforward way to estimate your retirement number and turn it into a monthly saving figure. It's general education, not personal advice. Retirement rules, pensions and tax differ by country, so treat this as a starting point and check the details that apply to you.

Step 1: How Much Will You Spend Each Year in Retirement?

Start with spending, not income. Your retirement number is really about replacing the money you'll spend, not the salary you earn now.

A practical way to estimate it:

1. Add up what you spend today in a year. Twelve months of bank statements is ideal, but a careful estimate works.
2. Remove costs likely to end. A mortgage you'll have paid off, commuting, childcare, saving for retirement itself.
3. Add costs likely to grow. Travel, hobbies, healthcare and home repairs often rise in retirement.

Say you spend $52,000 a year now. Your $14,000 of yearly mortgage payments will be finished, and you'll stop putting $6,000 a year into retirement savings. But you'd like $8,000 more for travel and health. That's $52,000 minus $20,000 plus $8,000, so about $40,000 a year in today's money.

Step 2: Subtract Income You'll Already Have

Many people will have some retirement income that doesn't come from their own savings. That might be a state or government pension, a workplace pension that pays a set income, or rental income.

Suppose you expect $12,000 a year from a state pension. Your savings then only need to cover the gap: $40,000 minus $12,000 is $28,000 a year.

Step 3: What Is the 25x Rule for Retirement?

The 25x rule is a rule of thumb: multiply the yearly amount your savings need to provide by 25.

It comes from the idea often called the 4% rule. If you take out 4% of your savings in the first year, then adjust that amount for inflation each year, historical studies of US markets suggested the money had a good chance of lasting around 30 years. And 4% is the same as dividing by 25, since $700,000 times 4% is $28,000.

The caveats that matter

• It's based on the past. Future returns may be lower or higher, and different countries' markets have behaved differently.
• Timeframe matters. If you retire early and need money for 40 years or more, many people use a lower withdrawal rate, which means a bigger multiplier like 28 or 30.
• Bad timing hurts. A big market fall in the first few years of retirement can have an outsized effect.
• Taxes aren't included. Depending on the account, withdrawals may be taxed, so you may need a larger pot.
• Your spending won't be perfectly flat. Many people spend more early in retirement and less later, with healthcare as a wildcard.

Step 4: How Much Should You Save Each Month?

Now work backward. You need three things: your target, what you've saved already and how many years you have.

To keep the numbers in today's money, it helps to use a return after inflation. Here we'll assume 5% a year. That's an illustrative figure, not a prediction.

• Starting from $50,000 with 30 years to go: that $50,000 could grow to roughly $216,000. The remaining gap of about $484,000 means saving around $580 a month.
• Starting from zero with 30 years to go: you'd need to save around $840 a month to reach $700,000.

Notice how much the head start helps. That's compounding at work, and it's why starting early, even with small amounts, makes such a difference.

Your monthly figure can include employer contributions. In many workplace plans, like a 401(k) in the US or a workplace pension in the UK, an employer adds money too, which reduces what has to come from your pay.

What If the Number Feels Impossible?

It's common to see a figure like $840 a month and feel deflated. You have more levers than you think:

Review Your Number Once a Year

Your retirement number isn't something you work out once and forget. Once a year, check:

• Has your expected spending changed?
• How much have your retirement savings grown?
• Are you still on pace for your target date?
• Has anything changed with pensions or benefits where you live?

It pairs well with a regular money routine. The 4-week money reset is a good way to build one. And if your number feels overwhelming, these small steps can help.

Track Your Retirement Goal in Netvo

Netvo lets you add pensions, investments and savings in one place, then set a goal for your retirement number. As you update balances, the AI Coach projects when you're likely to reach it at your current pace, so your annual review takes minutes. More on how goal projections work.

It's private too: no bank login, no account, and your data stays on your device.

Frequently Asked Questions

Netvo is a private net worth tracker for iOS and Android. More from the blog.