Start Here: The Rule of 25
The Rule of 25 is the simplest back-of-napkin retirement number. Take the annual spending you'll need in retirement and multiply by 25. That's roughly how much you need saved, assuming a 4% withdrawal rate.
Quick Targets by Spending Level
| Annual Spending | Rule of 25 Target | Monthly Withdrawal |
|---|---|---|
| $40,000 | $1,000,000 | $3,333 |
| $60,000 | $1,500,000 | $5,000 |
| $80,000 | $2,000,000 | $6,667 |
| $100,000 | $2,500,000 | $8,333 |
Why the Rule of 25 is just a starting point
The Rule of 25 doesn't account for Social Security, pensions, rental income, or other income sources. It also assumes a flat spending rate — in reality, most retirees spend more in early retirement (travel, projects) and less later. A year-by-year projection gives you a much clearer picture.
The 4% Rule: What It Really Means
The “4% rule” comes from the Trinity Study (1998, updated since): withdraw 4% of your portfolio in year one, adjust for inflation each year, and historically your money lasts 30 years with high probability.
What the 4% rule gets right
- • Simple, well-researched starting point
- • Accounts for inflation
- • Based on actual historical market returns
- • 30-year success rate is very high
What it doesn't capture
- • Doesn't model Social Security or other income
- • Assumes flat spending (most people don't)
- • 30 years may not be enough if you retire early
- • Doesn't consider sequence-of-returns risk
The 4% rule tells you roughly whether you're in the ballpark. A year-by-year projection with Monte Carlo simulation tells you how confident you can be.
The Retirement Readiness Checklist
Having enough money is only part of it. Here are the 10 boxes to check before you pull the trigger.
Your savings cover your spending gap
Subtract guaranteed income (Social Security, pensions) from your expected spending. Your portfolio needs to reliably cover the difference for 25-35 years.
Healthcare is covered
If you're retiring before 65, you need a plan to bridge to Medicare — ACA marketplace, COBRA, or spouse's plan. After 65, factor in Medicare premiums, Medigap, and out-of-pocket costs.
High-interest debt is gone
Credit card debt and high-interest loans eat into your fixed income. Pay these off before retirement. A manageable mortgage at a low rate is generally fine.
You have an emergency cushion
1-2 years of expenses in cash or stable, liquid assets. This prevents selling investments during a market downturn to cover unexpected costs.
You know your Social Security strategy
Claiming at 62 vs 70 can mean a 77% difference in your monthly check. Make sure your claiming age is a deliberate decision, not a default.
You have a draw-down plan
Which accounts do you pull from first? Traditional (taxable), Roth (tax-free), or brokerage? The order matters for taxes and longevity.
You've stress-tested the plan
What happens if the market drops 30% in year two? Monte Carlo simulation runs thousands of scenarios to show how likely your plan is to survive bad timing.
Your spending estimate is realistic
Track your actual spending for 3-6 months. Most people underestimate healthcare, home maintenance, travel in early retirement, and gifts/helping family.
You've considered inflation
At 3% inflation, $60,000 of spending today costs $108,000 in 20 years. Your plan needs to account for this — not just your first year.
You have something to retire TO
Often overlooked: retirees who struggle most aren't the ones who ran out of money — they're the ones who ran out of purpose. Have a plan for your time.
2026 Contribution Limits (Last-Minute Catch-Up)
If you're close but not quite there, maximizing contributions in your final working years makes a meaningful difference.
| Account Type | 2026 Limit | Catch-Up (50+) | Catch-Up (60-63) |
|---|---|---|---|
| 401(k) / 403(b) / TSP | $24,500 | +$8,000 | +$11,250 |
| IRA (Traditional / Roth) | $7,500 | +$1,100 | +$1,100 |
The new “super catch-up” for ages 60-63 lets you contribute up to $35,750 to a workplace plan in 2026. That's meaningful if you're in your final working years.
Test Your Number
Rules of thumb get you in the ballpark. A year-by-year projection answers the actual question: “Does my money last?”
Evernest's free tier includes the full projection engine. Enter your savings, spending, Social Security, and any other income. Set your inflation rate and tax rate. See a year-by-year cash flow chart showing exactly when (or if) your money runs out — and how changes to any input shift the picture.
What you can test:
- • Different retirement ages — see how working one more year changes everything
- • Different spending levels — find your personal floor
- • Social Security timing — 62 vs 67 vs 70 in context
- • Part-time work scenarios — bridge income in early retirement
- • Rental income, self-employment, ACA subsidies
Try Evernest's Free Standalone Calculators
Quick answers to specific questions — no account required:
Find Out If You Have Enough
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