3 Ways To Calculate Your Retirement Number

I like to start with the simplest method and work up to the most detailed. Each one below has a worked example using the same person, so you can see how far apart the answers land.

Method 1: Multiply Your Final Salary By 10 To 12

This is by far the easiest way to estimate your retirement needs. Take the salary you expect to earn just before you retire and multiply it by 12. If you plan to be earning $75,000, that's $900,000.

This method assumes you'll also get Social Security and that you'll follow a 4% withdrawal rate. Fidelity uses a similar rule of thumb, suggesting savings of 10 times your salary by age 67, which would be $750,000 for the same person, according to Fidelity's retirement guidelines.

The weakness is that salary isn't spending. Someone who saves 25% of a $75,000 salary lives on far less than someone who spends it all, and both get the same answer.

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Method 2: Multiply Your Expected Expenses By 25

I like this one better. It's hard for me to guess what my final salary will be, and even harder to know whether it'll match what I need in retirement. With the expense method, I feel more in control.

Take your expected yearly expenses in retirement and multiply by 25. Your spending will probably be lower than it is now, because you won't be saving for retirement anymore and you may be debt-free.

I think I could live comfortably on $4,000 a month, or $48,000 a year, in retirement. If that holds, I'd need $1.2 million. I didn't subtract Social Security from that number, because I'd rather be safe than sorry.

Why 25? The 4% Rule

Multiplying by 25 is the same as planning to withdraw 4% of your savings in the first year, then raising that dollar amount with inflation. Financial planner William Bengen found in 1994 that this rate would have lasted at least 30 years in every historical period he tested. Bengen has since said 4.7% held up in his updated research, and Morningstar's latest estimate, published in December 2025, is 3.9% for a 30-year retirement with a 90% chance of the money lasting.

Source: Morningstar, Bengen. Cult of Money calculation.

Subtract Social Security And Any Pension

Guaranteed income reduces how much your savings have to cover. Subtract it from your yearly spending first, then multiply what's left by 25.

The average retired worker's Social Security benefit is about $2,071 a month after the 2.8% cost-of-living increase for 2026, according to the Social Security Administration's 2026 COLA fact sheet. That's $24,852 a year.

Source: SSA, Cult of Money calculation.

A pension can cut the number by more than half. Check whether yours rises with inflation, because a fixed pension buys less each year. Your own Social Security estimate, based on your actual earnings record, is in your my Social Security account.

Method 3: Use A Retirement Calculator

So much goes into a retirement number that a calculator may be the safest way to go. You enter your current savings, how much you'll add each year, an expected return and the age you want to retire, and it shows whether your money is likely to last.

Two free tools from government agencies, with no sales pitch:

• SSA's estimators. Your my Social Security account shows your projected benefit at each claiming age from 62 to 70.
• The SEC's compound interest calculator. Investor.gov's calculator shows what your current savings and monthly deposits could grow to.

Here's how that plays out. A 35-year-old with $50,000 saved who adds $800 a month would have about $994,000 at 67, in today's dollars, assuming a 5% return after inflation. That's above the $879,000 target from Method 2, so this person is on track.

All Three Methods Compared

Here's the same person, earning $75,000 and expecting to spend $60,000 a year, run through each method.

Source: Cult of Money calculation.

What Else Changes Your Number

• Health care. A single 65-year-old retiring in 2026 may need about $185,500 for medical costs in retirement, not counting long-term care, according to Fidelity's 2026 estimate. Retiring before 65 means paying for coverage until Medicare starts.
• Taxes. Withdrawals from traditional 401(k)s and IRAs are taxed as income, and Roth withdrawals generally aren't. Required minimum distributions start at 73.
• Social Security's funding. The Social Security Trustees project the retirement trust fund can pay full benefits until late 2032, then about 78% of scheduled benefits unless Congress acts, according to the 2026 Trustees Report. Planning with a reduced benefit adds a cushion.
• Claiming age. Full retirement age is 67 for anyone born in 1960 or later. Claiming at 62 cuts your benefit by up to 30%, and waiting until 70 raises it by 24%.

How To Count Crypto In Your Retirement Number

Crypto belongs in your net worth, but it doesn't behave like a bond or a pension. Bitcoin dropped about 77% from its November 2021 high to its November 2022 low, and smaller coins fell further. A 4% withdrawal plan assumes a diversified portfolio, and a large crypto holding can swing your number by hundreds of thousands of dollars in a year.

A conservative way to plan is to count crypto at a discount, such as half its current value, when you check whether you're on track, and to update the number once a year instead of with every price move. Our pages on calculating net worth and crypto in a portfolio show how to track it, and you can hold crypto in a tax-advantaged retirement account.

Readers Outside The US

The math is the same everywhere: subtract guaranteed income, then multiply the rest by 21 to 26. The guaranteed income changes.

• United Kingdom: The full new State Pension is £241.30 a week for 2026/27, or about £12,548 a year, from State Pension age. Check your forecast on gov.uk.
• Canada: Canada Pension Plan benefits depend on your contributions, and Old Age Security is paid from 65 based on how long you've lived in Canada.
• Australia: Most workers have super, which you can generally access from 60 once retired, and the means-tested Age Pension starts at 67.

What To Watch Out For

• Using today's dollars and tomorrow's dollars together. Keep everything in today's dollars and use a return after inflation.
• Assuming high returns. Planning with 10% to 12% returns produces a number that's too small. Our look at Dave Ramsey's 12% assumption shows the difference.
• Forgetting taxes. $1.5 million in a traditional IRA buys less than $1.5 million in a Roth IRA.
• Retiring early. A 40-year retirement needs a lower withdrawal rate than a 30-year one.

Update From The Cult Of Money Editors

Alexa's advice to be conservative still stands, and the tools have improved since she wrote this. We added Social Security and pension offsets, the latest withdrawal-rate research and a worked example that runs all three methods. Readers who arrived from our older posts on retiring with a pension will find that math in Method 2.

FAQ

How Do I Calculate How Much I Need To Retire?

Estimate your yearly retirement spending, subtract Social Security and any pension, and multiply what's left by 25. A calculator that uses your own savings and benefit estimate gives a more detailed answer.

What Is The 4% Rule?

It says you can withdraw 4% of your savings in the first year of retirement and raise that amount with inflation each year, with a high chance the money lasts 30 years. It's the reason the expense method multiplies by 25.

Is $1 Million Enough To Retire?

At a 4% withdrawal rate, $1 million supports about $40,000 a year, plus Social Security. Whether that's enough depends on your spending, where you live and when you retire.

Should I Include Social Security In My Retirement Number?

Yes, for a realistic target. Subtract your estimated benefit from your spending before multiplying, or leave it out entirely if you want an extra cushion, as Alexa does.

Should I Count Crypto Toward My Retirement Savings?

Count it in your net worth, but its price swings make it risky to rely on at full value. Counting it at a discount and updating once a year keeps your plan from rising and falling with the market.