Find out if you're on track for retirement. See how much you'll have and whether it's enough.
The most widely used retirement benchmark is the 25x rule: you need 25 times your annual expenses saved to retire comfortably. This is derived from the 4% safe withdrawal rate — the percentage of your portfolio you can withdraw each year without running out of money over a 30-year retirement. If you need $60,000 per year in retirement, you need $1.5 million saved.
The 4% rule was established by financial planner William Bengen in 1994 and has been validated by the Trinity Study. It assumes a portfolio of 50–75% stocks and 25–50% bonds, rebalanced annually. In practice, many financial planners now recommend a 3–3.5% withdrawal rate to account for longer life expectancies and lower expected future returns.
The single most powerful factor in retirement savings is time. A person who invests $500/month starting at age 25 will have approximately $1.4 million at age 65 (assuming 7% annual returns). A person who starts at age 35 with the same $500/month will have only $610,000 — less than half, despite contributing for only 10 fewer years. This is the power of compound interest.
| Start Age | Monthly Contribution | Total Contributed | Balance at 65 |
|---|---|---|---|
| 25 | $500 | $240,000 | $1,396,000 |
| 30 | $500 | $210,000 | $985,000 |
| 35 | $500 | $180,000 | $681,000 |
| 40 | $500 | $150,000 | $456,000 |
| 45 | $500 | $120,000 | $292,000 |
Assumes 7% annual return, compounded monthly.
The most tax-advantaged way to save for retirement in the United States is through employer-sponsored and individual retirement accounts. A 401(k) allows you to contribute up to $23,000 per year (2024 limit) pre-tax, reducing your taxable income today. Many employers match contributions up to 3–6% of salary — this is free money that should always be captured first. A Roth IRA allows after-tax contributions of up to $7,000 per year, with tax-free withdrawals in retirement — ideal if you expect to be in a higher tax bracket later.
The optimal strategy for most people is: (1) contribute to 401(k) up to the employer match, (2) max out a Roth IRA, (3) return to 401(k) to max the annual limit, (4) invest any remaining savings in a taxable brokerage account.