How Much Do I Need to Retire? Two Methods to Find Your Number.

If you've searched for a "how much do I need to retire calculator," here's the formula most of them run under the hood. Take your expected annual expenses in retirement, subtract your dependable income like Social Security and any pension, and divide that gap by a safe withdrawal rate, usually 4%. That gives you a baseline savings target. Then you adjust it for three things the simple math ignores: taxes on your withdrawals, spending that changes as you age, and the chance of a big healthcare bill.

The baseline gets you a number in about five minutes. The three factors are what separate a rough guess from a plan you can actually retire on. The video below walks through both methods, and the sections after it show every step with the math worked out and updated for 2026.

▶ Video: youtube.com/watch?v=fdTY-tfFvXU, “How Much Do I REALLY Need to Retire? 2 Simple Methods Revealed”

Watch: Patrick Shope on the two methods for calculating your retirement number.

Method 1: the back-of-the-napkin retirement calculator (4 steps)

This is the estimate you can do on a sticky note. I'll carry one composite example through it, a man we'll call Curt, so you can see what you end up holding after each step.

Step 1: find your retirement income gap

Start with what you expect to spend each year in retirement. Then subtract the income that shows up no matter what the market does, mainly Social Security and any pension. What's left is the gap your savings have to cover.

Curt expects to spend $120,000 a year. He'll collect $36,000 a year from Social Security. His gap is $84,000. That's the number his portfolio has to produce every year. What you have now: your annual portfolio job.

Step 2: divide the gap by a safe withdrawal rate

Turn that annual number into a total savings target by dividing it by a withdrawal rate. The 4% rule comes from William Bengen's 1994 research, which found that a 4% first-year withdrawal, adjusted for inflation, survived every 30-year stretch he tested (Source: William Bengen, “Determining Withdrawal Rates Using Historical Data,” Journal of Financial Planning, October 1994). Bengen has since revised his own number upward, but I still start most people at 4% because it leaves room for the years that don't cooperate.

Curt's math: $84,000 divided by 4% is $2.1 million. What you have now: your total savings target.

Step 3: project what you already have

Figure out what your current accounts might grow to by the time you retire, even if you never add another dollar. Use a return you can live with, not a hopeful one.

Curt has $800,000 today and assumes 6% a year for 10 years. That grows to about $1.43 million ($800,000 times 1.06 to the tenth power). What you have now: your projected balance at retirement.

Step 4: subtract to find the shortfall

Compare your target from Step 2 with your projection from Step 3. The difference is what you still have to build through contributions and growth.

Curt needs $2.1 million and is on track for $1.43 million, so his gap is about $670,000, call it $700,000. What you have now: a baseline number and the size of the hole.

That's a real, useful starting point. If you want the plain-English version of the target itself, I go deeper on it in how much money you actually need to retire. But here's the thing: this number is incomplete, and the ways it's incomplete all point in the same direction. They make the real target bigger.

Method 2: the three factors a calculator leaves out

Method 1 assumes your withdrawals are tax-free, your spending is flat for 30 years, and your health stays boringly predictable. None of those are true. Here are the three adjustments that matter most.

Factor 1: taxes on your withdrawals

This is the one that trips people up the most, and it's the biggest of the three. There's a real difference between pulling $80,000 out of a traditional 401(k) and pulling $80,000 out of a Roth IRA. The Roth dollars come out tax-free. The traditional dollars are taxed as ordinary income.

Keeping the math simple, if Curt needs $80,000 to spend and he's in the 22% bracket (which in 2026 runs up to $211,400 of taxable income for a married couple), he has to withdraw about $102,600 to net $80,000 after tax. That extra $22,600 a year, grossed back up through the same withdrawal-rate math, adds a lot to the target. Most retirees hold a mix of pre-tax and Roth money, so your real number depends on which buckets you're drawing from and in what order.

Factor 2: spending doesn't stay flat

The old assumption is that you spend the same amount every year for three decades. In practice, spending usually moves through three phases people call the go-go, slow-go, and no-go years. Early on you're healthy and active, so travel and hobbies push spending up. In the middle years you slow down and spending tends to drift lower. Late in retirement it can climb again, this time on healthcare.

A flat-line calculator misses all of that. Building in a higher number for the early active years, in particular, tends to raise the target above what the napkin math suggested.

Factor 3: a healthcare or long-term-care shock

This isn't about routine costs Medicare already covers. It's the outlier event. The video puts a major health event or a stretch of long-term care at somewhere between $100,000 and $300,000 or more, and that's a fair way to think about it. It's rare, it's hard to predict, and it can undo an otherwise solid plan in a hurry. So you carry a buffer for it rather than pretend it won't happen.

Rebuilding the number with all three factors

Now put Curt back through the machine. His napkin target was $2.1 million. Once you account for the fact that most of his money is in a traditional 401(k), so his withdrawals are taxed, then layer in higher early-retirement spending and a buffer for a health event, his real target lands closer to $2.6 million.

That's a $500,000 swing from the simple estimate. In my experience, that's the number that quietly ruins retirements, not the market. Get the target 20% to 40% too low and you either run short later or you never saw the gap coming. Get it too high and you work years longer than you needed to, living below your means for no reason. I've watched both happen, and the second one bothers me more, because those are years you don't get back.

Rough estimate vs. real plan: your next step

Method 1 is the right place to start. It gives you a framework and a ballpark in a few minutes. But your confidence comes from Method 2, from sizing the target to your actual tax buckets, your real spending pattern, and a buffer for the year that goes sideways. It's also worth knowing where you stand relative to other savers so you don't panic (or relax) for the wrong reasons, which is what I dig into in why the average retirement balance says almost nothing about your number.

If you'd rather not guess at the tax and spending adjustments on your own, that's the conversation to have. Start a conversation with our team and we'll run your baseline and then the three factors against your real accounts, so you're working with a number instead of a hope.

Retirement planning was never about finding the perfect number. It's about finding your number, the one that lets you sleep at night knowing you've balanced living well today with taking care of tomorrow.

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