How much do I need for retirement – My Retirement Number


What is your retirement number? I tried looking for an answer to that question a couple of yrs ago when I started working.  I dutifully read all the materials they gave for my 401k, went online and plugged some numbers into the online calculator. My heart sank when it showed my “number”. It was an exorbitant amount, which I probably won’t reach even if I put my entire income into the 401k. So I decided to give up and save whatever I could. The last couple weeks I came across a few people & articles that made be look like a fool for not knowing my number. I decided to revisit it one more time and this time instead of just freaking out, I decided to pay attention to what the online calculator was doing and try other ways to come up with my number as well.

Recommended Reading: Retirement Side Hustles for Extra Money

retirement number

What did I need for the calculators to figure out how much I need for my retirement?

It was not an easy start. I needed to know –

  1. Whether I am counting on social security
  2. How much I will spend during my retirement
  3. How long I will live
  4. How much rate of return I expect to receive over the next 30 yrs.

Well, if I knew answers to these 4 questions, I will probably retire today and open up a psychic shop. No. I don’t know these answers, so I decided to try different situations – what do I need if I end up getting social security and what is the number if I don’t; what do I need if I live till 85 and what do I need if I end up the oldest woman on the planet… you get the point.

Now onto to the question of how much I will spend during my retirement… I envision my retirement to be not so different from what I do now. I would like it to be more leisurely, not idle. I would still like to work but fewer hours. One big difference – I would like to travel more, a lot more than I do now (health permitting). So with this list I started to attack the calculators.

Which calculators did I try?

I tried 7 different methods and used the following as my input

  1. Our yearly income
  2. How much % of my pre-retirement income I will need? 90-100%. How did I decide this?
    1. I expect we will have a paid off a house but the mortgage will be replaced by health care.
    2. We don’t need to save for retirement any more at that point but will need extra money for travel.
    3. I am young, I am not in my prime earning age yet and also I would like to plan for the possibility of needing long term care.  So with that I decided to go with 90%-100% of my current income.
  3. Rate of return over the next 30 yrs: I assumed 6%
  4. How long do I expect my income to last? At least 23 yrs and may be 33 yrs. According to the longevity calculator from Vanguard there is a 95% chance that I will live until the age of 85 and a 40% chance I will live to the ripe old age of 95. I am 29 yrs now.
  5. Inflation : I assumed 3.5%
  6. I assumed I will not receive anything from Social Security.

Method 1 : FireCALC
This had a lot of options. So I might have to go back to it make sure I did it right. With my current portfolio and our rate of savings, it said we have 94.5% success rate of surviving. I guess that is good?

Method 2 & 3 : Fidelity & ING direct gave me around the same estimate.

Method 4 : Vanguard didn’t have a “how much you need” calculator, but it has a “how much income you can get from your portfolio” calculator.

Method 5 : Free Money Finance way of calculating the number

  1. I took the annual salary I would need to retire today. (Note: This was not figured as a percentage of my current salary or our living expenses. I simply determined what we would need to live on today based on actual expenses. I did not adjust downward — as many people recommend — since I like to be conservative and I assume any decrease in living costs at retirement will be eaten up by increased health care costs.)
  2. I adjusted for inflation (assuming 3.5% inflation per year) to get the amount I’d need to withdraw the first year I’m retired. In other words, I increased the number I got in step #1 by 3.5% per year for 23 years.
  3. I then divided this number by .04 (4% — you can also multiply by 25 — it gives the same result) and that was my retirement number estimate #5.

Method 6 : Based on my current monthly expenses. I did the same thing as the above method # 5, except I replaced my income with my current expenses + 25% extra of my current expense to account for health care and other things.

Method 7 : The free retirement calculator from

Based on my experience with the tools above, Fidelity is the easiest to use while FireCALC has the most flexibility.

How did I come up with my final retirement number : How much I really need for my retirement?

I removed the numbers that were too different and averaged the rest. So now I have my “Retirement Number”.  Turns out I need to grow my savings by 1.8 times my current annual income for the next 30 years to have a comfortable retirement!!  I guess I should start looking into post retirement job possibilities as well :).

The shock of looking at my number might reduce my lifespan, but at least I am not looking at it for the first time when I am in my 50s. There are several Social security strategies, but it will be only applicable if social security is still around when I retire.  If this amount ends up being an overestimate or  social security is still around in 35 years, I have plenty of good plans for the excess money :). Now if only the market helps me move things along… well, I do like dreaming…

Have you calculated your number? What calculator or method do you think work best? Is your number in line with what you expected you will need?

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