How Much Do You Need to Retire?
The most widely used benchmark is the 4% Rule: you can safely withdraw 4% of your portfolio in year one of retirement, then adjust that amount for inflation each subsequent year. Based on decades of historical market data, this rule has a very high success rate for 30-year retirement horizons. To use it: divide your desired annual retirement income by 4% (or multiply by 25).
Example: You want $60,000/year in retirement income. You need $60,000 ÷ 0.04 = $1,500,000 in savings. Social Security benefits reduce this requirement — the average Social Security benefit in 2026 is approximately $1,800/month ($21,600/year). With Social Security, you'd need to fund $60,000 − $21,600 = $38,400/year from savings, requiring $960,000.
The Power of Employer Matching
Employer 401k matching is the only guaranteed 50%–100% instant return available anywhere. If your employer matches 50% up to 6% of your $80,000 salary, and you contribute 6% ($4,800), your employer adds $2,400 — that's $2,400 in free money annually. Over 30 years at 7% return, that $2,400/year of free employer contributions alone grows to $241,000. Always contribute at least enough to capture the full match.
Understanding the Accumulation vs. Distribution Phases
The chart shows two distinct phases. The accumulation phase (before retirement) is when your savings grow through contributions and investment returns. The distribution phase (after retirement) is when you draw down your portfolio for income. The goal is to accumulate a large enough nest egg that withdrawals plus investment returns keep the portfolio growing, or at least lasting, throughout your retirement.
Catch-Up Contributions After 50
The IRS allows workers 50 and older to contribute an additional $7,500/year to their 401k (total $31,000 in 2026) and an extra $1,000 to IRAs (total $8,000). If you are behind on retirement savings, these catch-up provisions are significant — contributing the maximum catch-up from age 50–65 at 7% return adds approximately $320,000 to your retirement savings.
Frequently Asked Questions
The common rule is to save 25× your annual expenses (the 4% rule). To replace $60,000/year in income, you need $1.5 million in savings. Our calculator projects your specific nest egg based on your savings rate and timeline.
The 4% rule suggests you can safely withdraw 4% of your portfolio per year in retirement without running out of money over a 30-year retirement. Based on historical returns, this rate allows your portfolio to last through market cycles.
Most advisors recommend contributing at least enough to get the full employer match (typically 3%–6% of salary), then increasing to 10%–15% of gross income total. If starting late, aim for 20%+.
Common employer matches include 50% or 100% of your contributions up to 3%–6% of salary. Always contribute at least enough to get the full match — it is a 50%–100% guaranteed instant return.
The 2026 401k contribution limit is $23,500 for employees under 50. Catch-up contributions allow those 50+ to contribute up to $31,000 total. The IRS adjusts these limits annually for inflation.
Inflation erodes purchasing power over time. $1 million in 30 years is worth significantly less than $1 million today. Our calculator shows both nominal (current dollars) and inflation-adjusted (real) retirement values.
If you expect higher taxes in retirement (younger workers with income growth potential), Roth 401k is advantageous — you pay taxes now at a lower rate. If you expect lower taxes in retirement, traditional 401k defers taxes to a presumably lower rate.
You can withdraw without the 10% early withdrawal penalty after age 59½. Required Minimum Distributions (RMDs) begin at age 73. Some exceptions exist for disability, substantially equal periodic payments, and certain hardships.
You can leave the money in your former employer's plan, roll it into your new employer's 401k, roll it into an IRA, or cash out (not recommended — subject to taxes and 10% penalty if under 59½).
Social Security replaces about 40% of pre-retirement income for average earners. Full retirement age is 67 for those born after 1960. Our calculator focuses on personal savings; add your estimated Social Security benefit for a complete picture.