How Much Do You Need to Retire?
The most common framework is the 4% rule: save 25 times your desired annual retirement income. If you want $60,000/year in retirement, you need $1.5 million saved. This assumes a 4% annual withdrawal rate that historically sustains a portfolio for 30+ years.
However, your actual number depends on your lifestyle, location, health care needs, Social Security benefits, and other income sources. Use our retirement calculator for a personalized estimate.
Retirement Accounts Explained
401(k) / 403(b)
Employer-sponsored retirement plan. 2026 contribution limit: $23,500 ($31,000 if 50+). Many employers match contributions — this is free money. Traditional 401(k) reduces taxable income now; Roth 401(k) provides tax-free withdrawals in retirement.
Traditional IRA
Individual retirement account with $7,000 annual limit ($8,000 if 50+). Contributions may be tax-deductible depending on income and employer plan participation. Withdrawals taxed as ordinary income in retirement.
Roth IRA
Contribute after-tax dollars, but all growth and withdrawals are tax-free in retirement. Same $7,000 limit. Income limits apply ($161,000 single, $240,000 married for full contribution). Ideal for younger investors expecting higher future tax rates.
HSA (Health Savings Account)
Triple tax advantage: tax-deductible contributions, tax-free growth, tax-free withdrawals for medical expenses. After 65, can withdraw for any purpose (taxed like traditional IRA). 2026 limit: $4,300 individual, $8,550 family.
Retirement Savings Priority Order
- 401(k) up to employer match — Always capture the full match first. It's an instant 50-100% return.
- Pay off high-interest debt — Eliminate credit cards and high-rate loans.
- Max out Roth IRA — Tax-free growth is incredibly valuable over decades.
- Max out 401(k) — Fill up the remaining 401(k) space for tax-deferred growth.
- HSA (if eligible) — Triple tax advantage makes this the most tax-efficient account.
- Taxable brokerage — After maxing tax-advantaged accounts, invest in a regular brokerage.
Social Security Benefits
Social Security provides a foundation of retirement income based on your highest 35 years of earnings. Key facts for 2026:
- Full retirement age: 67 for those born 1960 or later
- Early claiming (age 62): Permanently reduces benefits by ~30%
- Delayed claiming (age 70): Increases benefits by ~24% above full retirement amount
- Average benefit (2026): ~$1,900/month
- Maximum benefit (age 67): ~$3,900/month
Plan Your Retirement
Use our retirement calculator to see if you're on track and how much you need to save each month.
Try Retirement Calculator →