7 April 2026

By Barry A. Cothran

(information presented is for educational purposes only)

It’s an age-old question that dates back almost 100 years – “How much do I need to retire?” The answer to that influences a follow-on question – “When can I retire?” For most people, employment spans forty years or more. After two, three and especially four decades of toiling to make a living, a little rest is well deserved and much desired, and retirement is synonymous with rest and relaxation. But you’ll need money to live that R&R lifestyle.

It wasn’t always that way. Prior to the Social Security Act of 1935, most able-bodied adults worked until physically or mentally (or both) they just couldn’t produce or else they worked until they died. The concept of “retiring” from work emerged in 1889 when Otto von Bismarck introduced one of the first national pension systems in Germany. Retirement age was set at 70, and most people didn’t live that long. So, it was kind of a moot point. Otto probably didn’t lose much money through his “generous” pension. Then came the United States Social Security Act which was originally designed as a financial safety net for the economically disadvantaged, not as full replacement income as it is today for countless retirees. With it, workers saw a way of “escape” – a way to leave the workforce and not be destitute.

Back to the question – “How much do I need to retire?” The answer, unfortunately, is not simple because it’s based on numerous factors – desired lifestyle, primarily. Healthcare also can play a major role. No one wants to “run out of money” in their golden years, yet more than half of adults have basically zero dollars saved for retirement. For them, the answer to how much they “need” is “whatever their Social Security benefit is”.

For those who do have a “nest egg” saved, let’s start with a basic question, “Do you want to maintain your pre-retirement lifestyle?” Let’s assume you do and work from that. Will you need 100% of your preretirement income? Surprisingly, you probably won’t. Surveys show that most retirees are happy and even comfortable living off 60-70% of their pre-retirement income. That might seem surprising, so let’s take a look at it.

Assume you’re saving 10% of your income. Your paycheck is also reduced 7.65% for Social Security and Medicare tax – deductions you won’t have in retirement. Combining medical and life insurance deductions could equal another 5-6% of your paycheck. In retirement, you won’t be driving/riding back and forth to work, you won’t need to replace clothes as often, and your lunchtime/dining out expense may go down – let’s assume a 10% reduction for all of those. 10+7.65+5+10=32.7%. Let’s round down to 30%. That’s 30% of your paycheck you won’t need. Retirees happily living off 70% of their pre-retirement income have already figured this out.

So, how much do you need? What’s your number? Take your income, multiple by 0.7, subtract your anticipated Social Security (SS) benefit and any other source of income such as a pension and then multiply by 25. Example: household income of $100,000 x 0.7 = $70,000. Subtract $40,000 total SS benefit from $70,000 equals $30,000. Multiplying 30,000 by 25 equals 750,000. This person/couple would need approximately $750,000 saved when they retire.

Another example. Household income of $80,000, SS benefit of $32,000, Pension of $10,000. 80,000 x .7 = 56,000 -32,000 – 10,000 = 14,000 x 25 = 350,000. This person/couple would need approximately $350K saved to supplement their other income in retirement.

These examples are for education purposes only. This formula provides an estimate and does not replace sound financial planning. Your own medical costs, Social Security benefit and desired retirement lifestyle may significantly increase or decrease your actual retirement expenses.

The point is you don’t need to guess, and you certainly don’t need to just hope you’re going to be okay. You need to start with a retirement goal, and then you need to run the math. Lucky for you, the formulas and math have already been done. You just need a plan. The Vision and Hope™ Financial Planner is great place to start. It’s an easy-to-use Microsoft Excel-based comprehensive personal financial planning package you use right on your own computer.

How much do you need to retire?

What’s your number?

The Vision and Hope™ Financial Planner may have your answer.

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