Start with spending, not with a headline
Every few months a survey announces the number Americans “believe” they need to retire, and every few months the number is useless, because it is an average of other people’s guesses about other people’s lives.
Your number is built from one input: what a year of your retirement costs. Not your salary. Your spending. Salary includes taxes you may not pay later, savings you will stop making, and commuting you will stop doing. Spending is the real bill. Pull three months of statements, find the monthly figure, multiply by twelve, and adjust for what retirement changes: maybe no mortgage by then, probably more on health care, possibly more on travel in the early years.
That annual figure is the foundation. Everything else is multiplication.
Subtract Social Security, then multiply
You will not fund retirement alone. The Social Security Administration says benefits replace about 40% of pre-retirement earnings for average earners, and your personal estimate, based on your actual record, sits in your my Social Security account right now. Open it. The estimate is free and takes five minutes, and our Social Security basics guide explains how claiming age moves the figure.
Subtract your expected annual benefit from your annual spending. What remains is the gap your portfolio must cover, every year, for what could be thirty-plus years.
The standard yardstick for sizing that portfolio is 25 times the gap, which corresponds to drawing down about 4% in the first year. It is a planning rule of thumb, not physics: bad early markets, long lifespans, and big health costs can strain it, and plenty of retirements need less than the model assumes. But it converts a fog into a figure. Spending gap of $30,000 a year? Roughly a $750,000 target. Gap of $60,000? Roughly $1.5 million. Now you have something to aim at instead of a feeling.
Close the gap with time, not heroics
A target only matters next to two other numbers: what you have, and how long you have.
Run all three through the SEC’s compound interest calculator at Investor.gov. The exercise takes ten minutes and usually delivers two surprises. First, how much heavy lifting time does: a monthly contribution started at 30 can outgrow a much larger one started at 45, because the early dollars compound through more doublings. Second, how little heroism is required when you start now. The required monthly number is usually annoying, not impossible.
The tax-advantaged room is bigger than most people ever use. For 2026 the IRS allows $24,500 in a 401(k) and $7,500 in an IRA, with catch-ups of $8,000 and $1,100 from age 50. Most savers never brush those ceilings. The point is that the shelter exists for every raise you redirect before you get used to spending it.
If the calculator says you are behind, you have four honest levers: save a higher percentage, retire a little later, spend a little less in retirement, or earn more now. Every credible plan is some mix of the four. Anything promising a fifth lever is selling something.
Working longer deserves a special mention because it pulls three levers at once: more contributions in, more years of growth, and fewer retirement years to fund. One or two extra years can repair a surprising amount of a late start.
Do this week, not someday
Pull the spending number from your last three statements. Open your Social Security estimate. Run the gap through the compound calculator. Then set the contribution: capture your full employer match in your 401(k), automate the rest, and put the increase on autopilot by bumping it one point at every raise.
One last piece sits outside the market. The years just before and just after retirement are when a downturn hurts most, because selling investments into a slump to pay the bills locks the loss in permanently. The defense is cash: an emergency fund while you are working, and one to two years of near-term expenses as you approach the date, parked in a high-yield savings account where it earns real interest and cannot have a bad quarter. The portfolio handles the decades. The savings account handles the next eighteen months. Get both jobs assigned and the number stops being scary, because it finally has a plan attached.