Retirement planning has a reputation for being complicated, and most financial guidance doesn’t help — it’s either vague (“save more!”) or so detailed that you need a finance degree to understand it. This guide cuts through the noise with clear numbers.
The core question: how much is enough?
Before you can know how much to save, you need to know how much you’ll need.
The most widely used starting point is the 25x rule: take the annual income you want in retirement, and multiply by 25. That’s your target nest egg.
The logic comes from the 4% rule — research from the Trinity Study that found a portfolio of 60% stocks / 40% bonds could sustain annual withdrawals of 4% for 30+ years with a very high success rate.
Example
You currently spend $70,000 per year. In retirement, you think you’ll need around $60,000 (maybe lower rent, no commuting costs, no saving contributions).
$60,000 × 25 = $1,500,000 is your target.
At a 4% withdrawal rate: $1,500,000 × 4% = $60,000 per year, or $5,000 per month.
How much should you save each month?
The answer depends on three variables: how much you’ve already saved, your expected rate of return, and years until retirement.
Here are some approximate monthly savings needed to reach a $1,000,000 nest egg, assuming 7% average annual return:
| Starting balance | Starting age (retire at 65) | Monthly saving needed |
|---|---|---|
| $0 | 25 | ~$380/month |
| $0 | 35 | ~$820/month |
| $0 | 45 | ~$2,100/month |
| $50,000 | 35 | ~$570/month |
| $100,000 | 35 | ~$330/month |
Starting earlier means dramatically lower monthly contributions. The difference between starting at 25 vs 35 is nearly $500/month for the same target.
Use the retirement calculator to model your exact scenario →
The “10–15% of income” rule of thumb
Many financial advisors suggest saving 10–15% of your gross income for retirement. This is a practical starting point, not a magical formula.
10% works well if:
- You start early (25–30)
- Your employer matches contributions
- You expect to have other income in retirement (pension, part-time work)
15%+ is better if:
- You’re starting later
- You have an aggressive retirement lifestyle in mind
- You want a larger safety margin
Maximise tax-advantaged accounts first
Before anything else, contribute to accounts that reduce your tax bill:
- 401(k) up to the employer match — this is free money. If your employer matches 4%, contribute at least 4%.
- IRA / Roth IRA — up to $7,000/year (2025 limit; $8,000 if you’re 50+). A Roth IRA grows tax-free.
- 401(k) beyond the match — up to $23,500/year (2025 limit).
The combination of employer matching, tax-deferred growth, and compound interest inside these accounts dramatically outperforms taxable investing.
The impact of fees
Investment fees are silent killers of retirement savings. A 1% annual management fee reduces your ending balance by roughly 20-25% over 30 years.
Example:
- $500/month for 30 years at 7%: $567,000 with no fees
- Same scenario with 1% annual fee: ~$440,000
The difference: $127,000 — purely from fees.
Low-cost index funds (expense ratios of 0.03–0.10%) beat high-fee actively managed funds over long periods in study after study.
Benchmarks by age
Use these as rough checkpoints, not strict rules. Based on saving 15% of income from age 22 with typical returns:
| Age | Savings target |
|---|---|
| 30 | 1× annual salary |
| 35 | 2× annual salary |
| 40 | 3× annual salary |
| 50 | 6× annual salary |
| 60 | 8× annual salary |
| 67 | 10× annual salary |
(Fidelity’s broadly cited benchmarks)
If you’re behind these benchmarks, don’t panic — catching up is possible. Increase your contribution rate, delay retirement slightly, or consider a part-time transition rather than a hard stop.
Don’t forget Social Security
For most US workers, Social Security will provide 20–40% of pre-retirement income. That meaningfully reduces the nest egg you need from investments.
You can check your estimated Social Security benefit at ssa.gov/myaccount. Factor it in when calculating your target withdrawal rate.
Get your numbers
Use our free retirement savings calculator to model your specific situation — current savings, monthly contributions, expected return rate, and years to retirement. You’ll see the projected nest egg, the monthly income it could provide, and a year-by-year growth chart.