How much money do I need to retire? The formulas, and what they miss.

Everyone wants the magic number, and the internet is happy to supply three of them. The trouble is that the popular formulas measure different things, and none of them measures the thing that actually determines whether you will be okay.

The three formulas, honestly explained

1. The 80 percent rule: plan to need about 80 percent of your pre retirement income to keep your lifestyle.
2. The 4 percent rule: divide the annual income you want from savings by four percent, so $40,000 a year suggests roughly a million dollar portfolio.
3. The multiplier: common guidance lands around 10 to 12 times your income saved by retirement age.

All three are useful starting points. All three miss the same thing: composition. Two people with the same million dollars can have completely different security depending on how much of their essential spending is guaranteed versus riding the market.

A better question than "what is my number"

Start with your real expenses. Subtract the income you will receive no matter what: Social Security, any pension, any guaranteed income. The gap that remains is the job your savings actually has to do. For some people that gap is small and the formulas overstate the anxiety. For others it is bigger than any multiplier suggested, and better to know now.

Our free "Will my money last?" check maps this in about 30 seconds. It is the same arithmetic a good planning conversation starts with, minus the conference room. Bring the result to a real conversation whenever you are ready. We will be here, and we will not rush you.