How Much to Save for Retirement
Published June 6, 2026
Nobody can hand you a single magic number, but a handful of well-tested rules get you close enough to start, and then you refine from there.
- Save roughly 15% of your gross income every year, including any employer match.
- Target a nest egg 25 times your expected annual spending (the flip side of the 4% withdrawal rule).
- Use salary multiples as checkpoints: 1x by 30, 3x by 40, 6x by 50, 10x by retirement.
- Capture the full employer match first. It's an instant 50% return on those dollars.
- Time beats amount. A dollar invested at 25 can outgrow several dollars invested at 45.
The 15% savings rate
The simplest target isn’t a lump sum at all. It’s a habit. Save about 15% of your gross income every year, including any employer match, starting in your twenties.
Fifteen percent sidesteps the hardest part of retirement planning: predicting the future. You don’t have to guess inflation, returns, or lifespan to act on it. If 15% feels out of reach, start lower and raise your rate by one percentage point each year. Most people never notice a 1% cut to take-home pay, but the compounding effect over decades is large.
The 25x rule and the 4% rule
To picture the finish line, the 25x rule is the cleanest shortcut: aim for a nest egg worth roughly 25 times your expected annual spending in retirement. If you plan to spend $60,000 a year beyond what Social Security covers, you’re targeting about $1.5 million.
The 25x rule is the flip side of the 4% rule, which comes from research suggesting that withdrawing about 4% of your portfolio in the first retirement year, then adjusting for inflation each year after, has historically given a high chance the money lasts 30 years. Withdraw 4% and your portfolio needs to be 25 times your spending (because 1 divided by 0.04 equals 25).
Both rules are deliberately rough. They assume a diversified stock-and-bond mix, a roughly 30-year retirement, and average historical returns. Retire much earlier, live longer, or hit a bad stretch of markets and 4% may be too aggressive. Many planners now treat it as an upper bound rather than a promise.
Age-based salary milestones
If retirement is decades away, “25 times spending” can feel abstract. Salary multiples give you checkpoints along the way.
Someone earning $80,000 would aim for roughly $80,000 saved by 30 and around $800,000 by retirement. These numbers bake in assumptions about raises, returns, and Social Security. Treat them as a dashboard light, not a verdict. Missing a milestone means it’s time to nudge your savings rate up, not panic.
Don’t leave the employer match on the table
A typical 401(k) match of 50% on contributions up to 6% of salary is an instant 50% return before the market does a thing. Contributing at least enough to capture the full match should come before almost any other savings goal.
Earns 50% on matched dollars instantly, then compounds for decades.
Best first move in personal finance.
Skips free money that can never be reclaimed for prior years.
One of the few genuinely irreversible mistakes.
The match counts toward your 15% target. For 2026, the IRS sets the employee 401(k) contribution limit at $24,500, with extra catch-up room once you turn 50 (IRS). IRA contributions cap at $7,500 for 2026, also with catch-up provisions at 50+ (IRS).
Why starting early is the real superpower
Because returns earn returns, a dollar invested in your twenties can outgrow several dollars invested in your forties. The U.S. Securities and Exchange Commission’s compound interest explainer is a good plain-language primer on why.
$300/mo for 10 years, then stops and lets it compound at 7% to age 65.
Total invested: $36,000
At 65: ~$367,000
$300/mo for 30 straight years at 7%, all the way to 65.
Total invested: $108,000
At 65: ~$340,000
The early saver invested a third as much and still finished ahead. The first dollars do the heaviest lifting. Run a modest monthly contribution through the Compound Interest Calculator at two different starting ages to see how much of the final balance comes from growth rather than deposits.
Two risks that can quietly derail a plan
Inflation means the same lifestyle costs more every year. Retirement math should always be done in inflation-adjusted terms. Leaving everything in cash feels safe but steadily loses purchasing power.
Sequence-of-returns risk is subtler. Two retirees can earn the identical average return yet one runs out of money and the other doesn’t, purely because of when the bad years hit. A market crash in the first few years of retirement, while you’re withdrawing, does far more damage than the same crash later because you’re selling assets at low prices before they recover. This is why advisors suggest holding a buffer of safer assets near retirement and staying flexible about spending in down years.
Use the Investment Return Calculator to see how different assumed rates reshape your projected balance. The percentage you assume does a lot of quiet work.
How to pressure-test your own number
Not your current income. Many costs fall in retirement; healthcare often rises.
Social Security replaces only about 40% of pre-retirement earnings for an average worker, and less for higher earners (Social Security Administration). Whatever it covers is money your portfolio doesn't have to generate.
Multiply the remaining annual spending gap by 25 to get a rough nest-egg target.
Plug in your age, current savings, contributions, and a return estimate to see whether you're on track.
Try a lower return, higher inflation, and a longer lifespan. If the plan survives pessimistic inputs, you can trust it. If it only works when everything goes right, build in more cushion now.
Your retirement savings checklist
This guide is for general education and isn’t personalized financial advice. Talk to a qualified financial professional about your specific situation.