Can I Afford to Retire?
8 Things to Know Before You Decide How Much You Need to Retire
“How much do I need to retire?” sounds like a question with one dollar answer. It usually is not.
A retirement target depends on what you expect to spend, when you stop working, when you claim Social Security, how long you want the plan to cover, what other income you will have, and how much of your spending must come from your portfolio.
That is why a useful retirement calculator should do more than multiply your salary or spending by a fixed number. It should show both sides of the equation: what you may need and what you are currently on track to have.
Quick Answer
- Start with expected retirement spending, not a universal savings target such as $1 million.
- Subtract reliable income such as your estimated Social Security benefit and pension before calculating how much your investments need to provide.
- Treat the age you stop working and the age you claim Social Security as two separate decisions.
- Include health care, taxes, housing and large irregular expenses instead of assuming retirement spending will automatically fall.
- Compare your estimated amount needed at retirement with your projected savings at retirement. The gap is often more useful than either number by itself.
- Stress-test the result for a longer life, higher inflation, lower returns or an earlier retirement.
Retirement Needs Calculator
Open the Retirement Needs Calculator →
Use the calculator below to answer four practical questions:
- How much might I need when I retire?
- How much am I on track to have?
- Is there a projected gap?
- Roughly how much more would I need to save each month to close it?
Basic inputs
- Current age
- Planned retirement age
- Planning age, such as 90 or 95
- Current retirement savings
- Current monthly retirement contributions, including employer contributions
- Current annual household spending
- Expected retirement spending as a percentage of current spending
- Estimated monthly Social Security benefit
- Social Security claiming age
- Pension or other dependable retirement income
Advanced assumptions
- Inflation
- Investment return before retirement
- Investment return during retirement
- Estimated taxes
- Health care spending
- Housing costs
- Large planned expenses
- Other retirement income
For Social Security, use the personalized estimate from your my Social Security account rather than asking a generic calculator to guess from your current salary. The Social Security Administration says its personalized estimates use your earnings record and can show different claiming-age scenarios.
1. Your Retirement Number Starts With Spending, Not Salary
A common shortcut says you need a certain multiple of your salary by a certain age. That can be useful as a rough benchmark, but salary is not the bill you have to pay in retirement.
Spending is closer to the real question.
Someone earning $150,000 who lives on $70,000 may need a very different portfolio from someone earning the same amount who spends $130,000. Housing, debt, travel, family support, taxes and health care can widen the difference further.
A better starting point is:
Expected retirement spending − dependable retirement income = amount your portfolio must support
The calculator should therefore ask about spending separately from income.
The most useful retirement question may not be “How big should my nest egg be?” It is “How much of my annual spending will my investments actually have to provide?”
2. $1 Million Is Not a Universal Retirement Finish Line
The same portfolio can support two households very differently.
Imagine two retirees who each reach retirement with $1 million. One owns a home without a mortgage, receives a pension and has relatively low annual expenses. The other rents in a high-cost area, has no pension and expects substantial travel and health expenses.
Their account balances match. Their retirement plans do not.
This is why a calculator should avoid declaring a fixed balance “enough.” Instead, it should produce an estimate based on the user’s own cash-flow assumptions and clearly label the result as a planning estimate rather than a guarantee.
The result should also show the assumptions used. A $1.5 million estimate based on a 5% return and retirement through age 90 means something different from the same number produced using different assumptions.
3. Stopping Work and Claiming Social Security Are Different Decisions
You might retire at 65 and wait until 67 or 70 to claim Social Security. Or you might claim while still working.
The Social Security Administration explicitly notes that the age you stop working can differ from the age you start retirement benefits. It calculates retirement benefits using your highest 35 years of earnings and your claiming age. If you stop work with fewer than 35 years of earnings, years without earnings can count as zeros in the calculation.
For people born in 1960 or later, full retirement age is 67. Retirement benefits can generally begin at 62, but claiming at 62 can reduce a worker’s benefit by as much as 30% compared with claiming at full retirement age. Delaying beyond full retirement age increases the benefit up to age 70; for someone born in 1960 or later, SSA’s table shows 124% of the full-retirement-age benefit at 70.
Those percentages do not mean everyone should wait until 70. Claiming decisions depend on personal circumstances. They do mean that a retirement calculator should not treat “retirement age” and “Social Security age” as the same field.
Before using the calculator, sign in to your my Social Security account and copy the estimate that matches the claiming age you want to test. Then run the calculator again with a different claiming age to see how the rest of your plan changes.
4. Medicare Does Not Make Retirement Health Care Free
Turning 65 does not eliminate health care costs.
For 2026, the standard Medicare Part B premium is $202.90 per month and the Part B deductible is $283. Higher-income beneficiaries can pay a higher premium. These amounts can change annually.
Original Medicare also does not cover everything. Medicare lists items and services that can remain out of pocket, including most routine dental care, hearing aids and exams for fitting them, and long-term care. Medicare also states that it does not pay for long-term custodial care.
That matters because a calculator that simply reduces spending after age 65 can create false confidence.
Do not enter $0 for retirement health care just because you expect to have Medicare. Premiums, deductibles, coinsurance, drugs, supplemental coverage and services Medicare does not cover can still affect your budget.
A useful calculator should let health care be entered separately or make it clear that it must already be included in the user’s annual retirement spending.
5. Taxes Can Change How Far the Same Account Balance Goes
A $1 million account is not automatically $1 million of spendable retirement money.
Traditional 401(k) and traditional IRA withdrawals can have different tax consequences from qualified Roth withdrawals or money taken from a taxable brokerage account. Social Security benefits may also be taxable depending on a household’s circumstances.
For a consumer calculator, pretending to calculate an exact future tax bill decades in advance would create false precision. A better approach is to let users include an estimated tax amount in retirement spending and remind them that account type matters.
The calculator should also keep annual contribution limits out of its core math. Those limits change. For 2026, the IRS says the employee elective-deferral limit for most 401(k), 403(b) and governmental 457 plans is $24,500, while the IRA contribution limit is $7,500. Catch-up rules can allow additional contributions for eligible savers.
If you are testing a higher monthly savings amount, check the current IRS limit and your specific plan rules before assuming the entire amount can go into one tax-advantaged account.
6. Averages Can Hide the Risk of Living Longer Than Planned
No calculator knows how long you will live.
That is why “life expectancy” should not be treated as a prediction. For planning, it is more useful as a planning horizon: the age through which you want the model to test your money.
Try more than one.
For example, run the calculation through age 90, then again through 95. If a five-year change creates a large shortfall, that tells you the plan is sensitive to longevity.
The same principle applies to a spouse or partner. A household plan may need to support the longer-lived person, not merely an average life expectancy.
7. The Most Important Result May Be Your Gap
Many calculators end with a large number: “You need $1.8 million.”
That number is incomplete by itself.
Suppose the calculator estimates you may need $1.8 million at retirement but projects your current savings and contributions to grow to $1.55 million. Your planning problem is not “find $1.8 million.” It is a projected $250,000 gap under the assumptions you entered.
A useful result screen should show:
Result What it tells you
Estimated amount needed Target generated from your spending and income assumptions
Projected savings at retirement What current assets and planned contributions may grow to
Estimated gap or surplus Difference between the two
Additional monthly savings Approximate contribution needed to close a projected gap
Portfolio-supported annual spending How much spending must come from investments
Planning horizon How many retirement years the model is testing
From there, the user can test realistic levers: save more, retire later, spend less, change the Social Security claiming age, or revise assumptions.
8. Stress-Test the Plan Instead of Trusting One Forecast
Investment returns and inflation do not arrive as smooth lines every year. A calculator can make a plan look more certain than it is simply because the math produces a precise dollar figure.
The answer is not to stop calculating. It is to calculate more than one scenario.
Try these four tests:
- Live longer: extend the planning age from 90 to 95.
- Higher inflation: increase the inflation assumption.
- Lower returns: reduce expected investment returns.
- Earlier retirement: move retirement forward by two or three years.
Then look at what happens to the gap.
A retirement plan that works only when every assumption goes right is giving you useful information: the plan has little room for error.
The calculator should therefore show assumptions prominently and make scenario changes easy rather than burying them behind a single “Calculate” button.
Before You Set Your Retirement Number Checklist
- Estimate your current annual household spending.
- Decide what expenses are likely to disappear, stay or increase in retirement.
- Check your personalized Social Security estimate.
- Choose a retirement age separately from your Social Security claiming age.
- Add pension and other dependable retirement income.
- Include health care rather than assuming Medicare makes it free.
- Include taxes in your spending estimate.
- Add major planned expenses such as travel, home repairs or helping family.
- Test at least two planning ages, such as 90 and 95.
- Run a lower-return or higher-inflation scenario.
- Compare your amount needed with your projected savings.
- Focus on the gap and the actions that can change it.
FAQ
How much money do I need to retire?
There is no single amount that works for everyone. A useful estimate starts with expected retirement spending, subtracts Social Security, pensions and other dependable income, and then estimates how much your investments need to provide over your planning horizon.
Is $1 million enough to retire?
It can be enough for some households and insufficient for others. Spending, housing, taxes, health care, Social Security, pensions, retirement age and longevity can all change the answer.
Should I use my current salary to estimate retirement needs?
Salary can provide context, but expected spending is usually more directly connected to how much retirement income you will need.
Should I include my house in retirement savings?
Only if your plan actually uses home equity to fund retirement, such as through a future sale, downsizing or another deliberate strategy. A home you plan to continue living in is not the same as a liquid retirement account.
What Social Security amount should I enter?
Use a personalized estimate from your my Social Security account for the claiming age you want to test. SSA says its personalized estimate is based on your earnings record.
Does Medicare cover long-term care?
Medicare says it does not pay for long-term custodial care. Limited skilled nursing coverage is different from ongoing custodial care.
Why does the calculator ask how long I want the plan to last?
Because the number of retirement years materially affects how much a portfolio may need to support. The planning age is a scenario, not a prediction of your lifespan.
Want to see what your current savings may actually provide each month? Use the Retirement Income Calculator → and read How Much Retirement Income Will I Have?
The Bottom Line
The goal is not to discover a magic retirement number. It is to understand the relationship between what you expect to spend, what dependable income will cover, what your investments must provide, and what you are on track to save.
Run the calculator once with your best estimates. Then change the assumptions that matter most: retirement age, Social Security claiming age, longevity, inflation and returns.
The difference between those scenarios is often more informative than the first dollar figure the calculator gives you.
Sources
- Social Security Administration --- Get a benefits estimate
- Social Security Administration --- Retirement age and when you stop working
- Social Security Administration --- Starting retirement benefits early
- Social Security Administration --- Delayed retirement for people born in 1960 or later
- Medicare --- 2026 Medicare costs
- Medicare --- What’s not covered
- Medicare --- Long-term care coverage
- IRS --- 401(k) and profit-sharing plan contribution limits
- IRS --- IRA contribution limits