How Much Do You Need to Retire? The 25× Rule Explained [2026]
How much do you need to retire? 25× annual expenses (4% rule). $50K spend = $1.25M. $80K = $2M. Real retirement math + free calculator [2026].
A retirement withdrawal guideline stating that withdrawing 4% of your portfolio in year one (then adjusting for inflation) historically sustained a 30-year retirement.
Example: A $1,000,000 portfolio supports $40,000 in year-one withdrawals, rising with inflation each year.
The corollary to the 4% rule: your retirement portfolio target is 25 times your annual expenses.
Example: Spending $50,000 per year requires a $1,250,000 portfolio to retire safely.
A movement focused on aggressive saving and investing to reach financial independence — typically 25× annual expenses — well before traditional retirement age.
Example: Saving 50% of a $80,000 income can reach FI in roughly 17 years, vs 40+ years at a 10% rate.
"How much do I need to retire?" is the single most googled financial question. Most answers are either scary ($5 million!) or vague (it depends). The real answer is a simple math formula.
The 4% rule
Three professors at Trinity University ran the math on historical market returns. The maximum safe withdrawal rate from a portfolio that lasts 30+ years is 4% per year, adjusted for inflation. Withdraw 4%, and you almost never run out — even through the Great Depression, 1970s stagflation, and the 2008 crash.
The 25× rule
If 4% is your safe withdrawal rate, your portfolio needs to be 25× your annual expenses. Spend $40,000/year? You need $1,000,000. Spend $80,000? $2,000,000. This is your "FI number" (financial independence). Reach it and work becomes optional. Run the 4% rule calculator on your number, or the FIRE calculator for early-retirement variants.
Calculating your number
Start with current annual spending (not income). Add/subtract expected changes: no more mortgage? Subtract $24,000. More travel? Add $10,000. Multiply by 25. That's your number.
The hidden cost of delay
Knowing your number is step one; starting the contributions is step two and the harder one. Per the Snowballr Cost-of-Waiting Index, at $500/month and 8% returns, every year a 25-year-old delays starting costs roughly $52,000 in final retirement balance at 65. By 40, the same 1-year delay still costs ~$28,000. The math punishes waiting more than it punishes contributing less.
Lean FIRE vs FAT FIRE
Lean FIRE targets minimal expenses ($25K-$40K/year = $625K-$1M portfolio). Regular FIRE targets middle-class retirement. Fat FIRE aims for luxury ($100K+ = $2.5M+).
Why 4% might be too high for early retirement
The 4% rule was calibrated for 30-year retirements. If you retire at 40 and live to 90, that's 50 years. Some researchers suggest 3.25-3.5% for very early retirees (28-30× expenses).
Plug in your own amounts with our free calculators.