📋 Table of Contents
Your Retirement Number
Your retirement number is the portfolio size you need to sustain your lifestyle indefinitely without running out. The formula is simple: Retirement Number = Annual Expenses × 25. This is derived from the 4% rule — the inverse of 4% is 25.
| Annual Expenses | Retirement Number (25×) | Monthly Portfolio Withdrawal |
|---|---|---|
| $30,000 | $750,000 | $2,500 |
| $40,000 | $1,000,000 | $3,333 |
| $50,000 | $1,250,000 | $4,167 |
| $60,000 | $1,500,000 | $5,000 |
| $75,000 | $1,875,000 | $6,250 |
| $100,000 | $2,500,000 | $8,333 |
Note: Social Security or pension income reduces the portfolio you need. If you'll receive $18,000/year in Social Security, subtract that from expenses before calculating: $60,000 − $18,000 = $42,000 × 25 = $1,050,000.
The 4% Rule Explained
The 4% rule emerged from the 1994 Trinity Study, which analyzed historical stock/bond portfolio returns. It found that withdrawing 4% in year 1, then adjusting for inflation annually, resulted in portfolio survival in 95%+ of historical 30-year periods with a 50/50 stock-bond split.
What the 4% Rule Assumes
- Portfolio: 50% stocks / 50% bonds (or similar)
- 30-year retirement period
- Annual inflation adjustments to withdrawals
- Investment in broadly diversified, low-cost index funds
- No additional income (Social Security not assumed)
Savings Benchmarks by Age
Fidelity's widely cited benchmarks use a multiplier of your current salary:
| Age | Savings Target (Fidelity) | Example: $75k Salary | Example: $50k Salary |
|---|---|---|---|
| 30 | 1× salary | $75,000 | $50,000 |
| 35 | 2× salary | $150,000 | $100,000 |
| 40 | 3× salary | $225,000 | $150,000 |
| 45 | 4× salary | $300,000 | $200,000 |
| 50 | 6× salary | $450,000 | $300,000 |
| 55 | 7× salary | $525,000 | $350,000 |
| 60 | 8× salary | $600,000 | $400,000 |
| 67 | 10× salary | $750,000 | $500,000 |
These benchmarks assume you'll spend roughly 80% of your pre-retirement income per year in retirement, and that Social Security replaces ~20% of that. Adjust lower if you plan to live more frugally or have significant pension/SS income.
Best Accounts for Retirement Savings
Account choice significantly affects your final balance through tax efficiency:
| Account | 2026 Limit | Tax Treatment | Best For |
|---|---|---|---|
| 401(k) / 403(b) | $23,500 ($31,000 if 50+) | Pre-tax now, taxed in retirement | High earners, employer match |
| Roth IRA | $7,000 ($8,000 if 50+) | After-tax now, tax-free forever | Lower earners, young investors |
| Traditional IRA | $7,000 ($8,000 if 50+) | Deductible contributions, taxed later | No workplace plan access |
| HSA | $4,300 (single) | Triple tax-advantaged | High-deductible health plans |
| Taxable Brokerage | Unlimited | Capital gains tax on growth | After maxing above accounts |
Optimal order: 401(k) up to the employer match ➜ Roth IRA (max) ➜ 401(k) to the max ➜ HSA ➜ Taxable brokerage.
Catch-Up Strategies (Behind on Savings?)
If you're behind on the Fidelity benchmarks, here are the highest-leverage moves:
- Maximize catch-up contributions — At 50+, you get extra contribution room: $7,500 more in 401(k), $1,000 more in IRA
- Delay retirement by 2–3 years — This has compound benefits: more contributions, longer growth, fewer withdrawal years, higher Social Security benefit
- Reduce planned retirement expenses — Downsizing, relocating to a lower cost-of-living area, paying off the mortgage before retiring all reduce your required number dramatically
- Part-time income in early retirement — Even $15,000–$20,000/year in part-time income cuts your withdrawal rate significantly and extends portfolio life by many years
- Delay Social Security — Every year you delay past 62 (up to 70) increases your monthly benefit by ~8%. Delaying from 62 to 70 can nearly double your monthly payment