What is your retirement number?
Your retirement number is the total amount of money you need saved before you can stop working. The most common way to estimate it is the 25× rule: multiply your expected annual spending in retirement by 25. That's your target.
If you expect to spend $4,000 a month ($48,000 a year) in retirement, your target is $48,000 × 25 = $1,200,000.
Where does the 25× rule come from?
The 25× rule is the inverse of the 4% safe withdrawal rate, which comes from the "Trinity Study" — research showing that a portfolio of stocks and bonds historically survived 30-year retirements when retirees withdrew 4% per year. Withdrawing 4% of $1,200,000 = $48,000 per year. Simple.
What counts as "monthly expenses"?
Use your expected retirement spending, not your current spending. Common adjustments:
- Your mortgage may be paid off — subtract that payment.
- Healthcare costs often increase — especially before Medicare at 65.
- Work-related costs (commuting, clothing, lunches out) go down.
- Travel and hobbies may go up — especially in early retirement.
About the monthly savings calculation
Once you know your target and how many years you have, this calculator uses the future value of a monthly annuity formula to tell you how much to save each month, accounting for investment growth at your chosen rate of return.
Where FV is your savings goal (minus projected growth of current savings), PMT is the monthly contribution, r is the monthly return, and n is the number of months.
This calculator is for educational purposes. It doesn't account for inflation, taxes, Social Security, or variable returns. Talk to a fee-only financial planner for personalized advice.