How Much Do You Need to Retire?
The most common guideline is the 25x Rule: save 25 times your annual expenses. If you spend $50,000/year, you need $1.25 million. This is based on the 4% rule — withdrawing 4% of your portfolio annually, which historically lasts 30+ years.
Savings Targets by Age
| Age | Savings Target | Dollar Range |
|---|---|---|
| 30 | 1x salary saved | $50,000 – $80,000 |
| 35 | 2x salary saved | $100,000 – $160,000 |
| 40 | 3x salary saved | $150,000 – $240,000 |
| 45 | 4x salary saved | $200,000 – $320,000 |
| 50 | 6x salary saved | $300,000 – $480,000 |
| 55 | 7x salary saved | $350,000 – $560,000 |
| 60 | 8x salary saved | $400,000 – $640,000 |
| 67 | 10x salary saved | $500,000 – $800,000 |
Retirement Account Types
401(k) / 403(b)
- Through your employer
- 2025 limit: $23,500 ($31,000 if 50+)
- Traditional: tax-deductible now, taxed later
- Roth: taxed now, tax-free later
- Always get the full employer match
Traditional IRA
- Open on your own at any brokerage
- 2025 limit: $7,000 ($8,000 if 50+)
- Contributions may be tax-deductible
- Withdrawals taxed as income in retirement
Roth IRA (Gold Standard)
- Best for younger workers
- 2025 limit: $7,000 ($8,000 if 50+)
- Contributions NOT tax-deductible
- All growth & withdrawals tax-free
- Income limits: $161K single / $240K married
SEP IRA / Solo 401(k)
- For self-employed & small business owners
- SEP: up to 25% of net earnings (max $70,000)
- Solo 401(k): employee + employer contributions
The Retirement Savings Priority Order
- 401(k) up to employer match — Free money, always do this first
- Pay off high-interest debt — Credit cards, personal loans
- Build emergency fund — 3-6 months of expenses (emergency fund guide)
- Max out Roth IRA — $7,000/year of tax-free growth
- Max out 401(k) — $23,500/year
- Taxable brokerage — Index funds after maxing retirement accounts
Retirement Strategies by Age
In Your 20s
Start Now
Time is your biggest advantage. $200/month at age 25 grows to over $500,000 by age 65 (8% return). Invest aggressively — you have decades to recover from downturns.
In Your 30s
Accelerate
Increase contributions with every raise. If married, both partners should max retirement accounts. Target 15-20% of income toward retirement.
In Your 40s
Catch Up
If behind, increase contributions aggressively. At 50, you get catch-up limits ($31,000 for 401k, $8,000 for IRA). Reduce expenses to free up savings.
In Your 50s-60s
Protect and Plan
Gradually shift to a more conservative portfolio. At 55, access 401(k) penalty-free if you leave your employer. At 59.5, access IRA penalty-free. Plan Social Security timing.
The 4% Rule Explained
The 4% rule says you can withdraw 4% of your retirement savings in the first year, then adjust for inflation each year. Historically, this strategy has a 95%+ success rate over 30-year periods.
$500K
$20,000/yr
$1,667/mo
$1M
$40,000/yr
$3,333/mo
$2M
$80,000/yr
$6,667/mo