There is no single “right” retirement number. What you need to retire depends on your desired retirement lifestyle, retirement age, life expectancy, tax situation, and legacy goals—all of which can change over time. To estimate how much money you’ll need to retire, consider your expected retirement age, desired lifestyle, estimated expenses, and any other sources of income such as social security benefits.
At Godsey & Gibb Wealth Management, our role as a fiduciary advisor is to help people in or near retirement build and continually adjust a personalized retirement plan that reflects their unique circumstances.
All Paths Start with Your Desired Retirement Lifestyle
Lifestyle decisions are usually the single biggest driver of how much income you’ll need. Your retirement lifestyle choices can significantly affect your expenses, with some retirees needing only 75% of their preretirement income if they downsize, while others may require 120% or more if they plan to travel extensively or maintain a luxurious lifestyle.
Consider these different scenarios:
- Downsizing in Greenville, SC: A household that pays off their mortgage and simplifies living expenses might find $140,000–$150,000 annually sufficient
- Maintaining a riverfront lifestyle in Richmond, VA: Higher property taxes and potential HOA fees could push annual needs closer to $180,000
- Frequent international travel from Chandler, AZ: Adding $20,000–$30,000 in airfare and lodging could mean $220,000+ yearly
Retirement expenses can vary widely based on individual lifestyle choices, with some retirees living comfortably on as little as $3,500 per month if their housing costs are low and they have no debt, while others may spend $6,000 to $7,000 per month for a more active lifestyle.
Many financial planners use the 70%–80% of pre retirement annual income rule as a quick benchmark (more about this in the next section), but some households may need closer to 60% and others 100%+ depending on housing, debt, and discretionary spending. Fixed expenses like housing, insurance, healthcare costs, and utilities tend to be less flexible than discretionary categories like travel, hobbies, and dining out. Listing these in today’s dollars can provide clarity.
At Godsey & Gibb, we help clients translate their desired retirement lifestyle into a detailed spending plan, including multi-generational and charitable goals, rather than relying only on generic percentages.
Popular Rules of Thumb and Why They May Not Apply to You
Rules of thumb provide quick, directional answers but are not personalized investment advice and can be too aggressive or too conservative for a specific family—especially if a family is affluent with unique planning goals.
The 70%–80% Income Replacement Rule
A common guideline suggests that retirees should aim for a retirement income that replaces 70-80% of their pre-retirement income, as many people find they need less in retirement due to reduced expenses. For example, someone with $200,000 annual income might target $140,000–$160,000 in retirement.
This concept emerged from actuarial and financial planning industry research over decades, based on observations that retirees often eliminate payroll taxes, retirement contributions, and commuting costs. However, taxes, mortgage status, and healthcare can push needs higher or lower than these averages suggest.
The 4% Withdrawal Guideline
The 4% rule is a guideline that suggests retirees withdraw approximately 4% of their retirement savings each year, adjusted annually for inflation, with the expectation that their savings will last for at least 30 years. Financial planner William Bengen created this concept through his own research in the early 1990s, backtesting historical U.S. market data from 1926 onward.
Since this rule is based on historical averages, it likely does not perfectly fit any one retiree’s unique needs. Inflation historically averages around 3%, significantly eroding purchasing power over time—and your actual experience may differ substantially.
The 25x Rule
The 25 times rule states that individuals should aim to save an amount equal to 25 times their planned annual expenses in order to withdraw 4% each year for 30 years or more. For example, $80,000 in annual spending suggests roughly $2,000,000 in retirement savings accounts and other investments. This is simply the mathematical inverse of the 4% rule.
Key Limitations:
- Rules assume stable market conditions, average inflation, and a 30-year horizon
- They typically ignore taxes, sequence-of-returns risk, and personal financial goals like leaving a large inheritance
- Past performance does not reflect actual investment results in the future
A fiduciary financial planner can stress-test different sustainable withdrawal rates under various market and tax scenarios instead of relying on one static percentage.
Retirement Age, Life Expectancy, and How Long Your Money Must Last
When you retire and how long you live can shift your required retirement savings by hundreds of thousands of dollars—sometimes more than investment returns do. Life expectancy and health status are critical factors to consider when estimating how long savings must last.
The age at which you plan to retire can impact how much you need to save; delaying retirement can reduce the total amount needed due to fewer years in retirement and increased social security retirement benefits. Choosing early retirement at 60 versus 67 both shortens saving years and lengthens spending years—potentially requiring more retirement funds, lower withdrawals, or part-time work.
Using a “cautious” life expectancy (planning to at least age 90 or 95 for a couple) may help reduce the risk of outliving your money, while acknowledging no projection is certain. At Godsey & Gibb Wealth Management, we use planning software that models multiple life-expectancy scenarios for couples, including the impact of one spouse living significantly longer than the other.
Factoring in Social Security, Pensions, and Fixed Income Sources
Treating social security, pensions, and other fixed income sources as the foundation of a retirement income plan can help clarify how much money must come from retirement portfolio withdrawals.
Social security benefits are based on your highest 35 years of earnings and your claiming age. Delaying social security from 62 to 70 can increase monthly benefits by roughly 77%. The average monthly Social Security income for retired workers in January 2026 was about $2,071, but benefits may be reduced in the future if the Old-Age and Survivors Insurance (OASI) Trust Fund is depleted. The Social Security Administration estimated in 2025 that the OASI will be depleted by the year 2033, leaving the future of Social Security benefits uncertain.
Social Security benefits tends to replace about 40% of the average American’s pre-retirement earnings, indicating it’s potentially ill-advised to rely upon it as your sole source of retirement income. The Social Security Administration provides benefit estimates, but rules and projected trust fund shortfalls are subject to legislative change—planning under multiple policy scenarios is prudent.
Traditional defined benefit pension plans (if available) provide predictable monthly payments that may reduce how much one must withdraw from invested assets. Fixed income can refer to both dependable cash flows (Social Security, pensions) and fixed income securities that may generate regular income, both of which can play a valuable role in deciding when to retire.
Godsey & Gibb can help clients evaluate claiming strategies for Social Security, coordinate pension plan elections with survivor needs, and build bond and dividend-paying portfolios that support retirement goals when such a strategy best aligns to your goals.
