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How much money do you need to retire in the US?

USPublished 6 October 2026 · Written by BuyMeWhiskey Editorial Team · How we check facts

There is no single retirement number for everyone. Start with the annual spending you expect, subtract dependable income such as your Social Security estimate, then plan for the remaining gap using savings and investments. Revisit the calculation as your spending, work and retirement date change.

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Check your Social Security benefit estimate, then build a retirement spending and income gap around that number.

Check your Social Security estimate

Run your own numbers: Compound interest and savings calculator.

Start with the spending you actually expect

“How much do I need?” is really two questions: how much will retirement cost, and how much of that cost will be covered by dependable income? Start with a realistic annual spending budget rather than picking a large round portfolio target.

Separate essentials from flexible spending. Housing, food, insurance, utilities and healthcare may behave differently from travel, gifts or hobbies. Include taxes and irregular costs. A retirement plan that only works in a perfect year is not a strong plan.

Subtract Social Security and other dependable income

The Social Security Administration lets you view a personalized estimate based on your earnings and the age at which you claim. In 2026, SSA says covered work earnings count toward benefits only up to $184,500. Your account can show different estimates based on when you apply.

Then add other dependable income, such as a pension or an annuity if you have one. The remaining amount is the annual gap that your retirement savings and investments must help cover.

The income gap is more useful than a headline number

Suppose your projected retirement spending is $60,000 a year and expected Social Security and other dependable income total $36,000. Your gap is $24,000 a year. That gap is the part your portfolio, cash savings or later work income has to cover.

This approach is better than copying a “you need $1 million” rule because two households with the same portfolio can have completely different spending needs. One may have a paid-off home and a pension; another may rent and face higher healthcare or family-support costs.

Savings, investments and retirement accounts each have a job

Emergency cash is there for near-term shocks. Long-term retirement money is normally invested so it has a chance to grow, but investments fluctuate and can lose value. Investor.gov says asset allocation should reflect your time horizon and risk tolerance, and diversification can reduce concentration risk.

US retirement accounts can also provide tax advantages. For 2026, the employee deferral limit for most 401(k), 403(b) and governmental 457 plans is $24,500. The 2026 IRA contribution limit is $7,500, or $8,600 for someone age 50 or older, subject to the IRA rules and available compensation.

Do not forget employer contributions and catch-up rules

If your workplace retirement plan provides an employer match, the match can be an important part of your retirement-income plan. Investor.gov also highlights taking advantage of employer matching funds where available.

For 2026, the IRS says most 401(k)-type plans allow an additional $8,000 catch-up contribution for employees age 50 or older when the plan permits it. A higher catch-up limit of $11,250 applies for participants aged 60 through 63 in plans covered by the special SECURE 2.0 provision.

Retirement timing changes the calculation

Retiring earlier creates a longer period in which savings may need to provide income, and it can also change the timing of Social Security and employer benefits. Working longer can increase the number of years you contribute while reducing the number of years you draw from savings.

That does not mean “work longer” is automatically the answer. It means the retirement date is one of the strongest levers in the model and should be tested rather than assumed.

Healthcare, taxes and surprises matter

Healthcare costs can be difficult to predict. So can taxes, home repairs, family support and long-term care. Build a reserve for irregular costs and model a higher-spending year rather than relying only on average spending.

Also remember that a tax-advantaged account is not automatically tax-free. Traditional retirement-account withdrawals can be taxable, and the tax treatment of Roth accounts differs. The amount you need to spend is therefore not identical to the account balance shown on a statement.

Review the gap each year

Update your spending, Social Security estimate, retirement date, debt and account balances at least annually. A change in housing costs can matter more than a small change in investment returns. Keeping the model current makes the result more useful than a single retirement-number calculation made once.

Illustrative annual retirement income gap

Worked example

Illustrative retirement-income gap: suppose a household expects retirement spending of $60,000 a year. Its Social Security estimate is $28,000 a year and another dependable pension pays $8,000.

Dependable income: $28,000 + $8,000 = $36,000.
Annual retirement gap: $60,000 − $36,000 = $24,000.
Monthly equivalent of the gap: $24,000 ÷ 12 = $2,000.

The $24,000 is not a magic withdrawal target or a promise that investments will supply it. It is simply the amount the household needs its savings, investments or other income to help cover under the stated assumptions. The household should also stress-test higher healthcare, housing or other irregular costs.

This is a planning illustration, not a forecast, and real retirement outcomes depend on taxes, inflation, investment returns, longevity and the timing of withdrawals.

How much should I have saved by retirement?#

There is no universal balance that works for every household. Start with expected spending, subtract Social Security and other dependable income, and then examine the remaining gap. The result depends heavily on retirement age, housing, healthcare, taxes, debt and how much flexibility you have in spending.

How do I calculate my retirement income gap?#

Estimate annual retirement spending and subtract reliable income such as Social Security, pensions or annuity payments. What remains is the annual gap your savings and investments may need to cover. Recalculate when your retirement date or spending assumptions change. Before changing the mix, also consider emergency savings and near-term spending needs.

Use the personalized estimate in your SSA account rather than a generic national average. SSA lets you see estimates for different claiming ages and adjust expected future earnings. In 2026, covered earnings above $184,500 do not increase your Social Security benefit calculation.

How much can I contribute to a 401(k) in 2026?#

The IRS says the 2026 employee elective-deferral limit for most 401(k), 403(b) and governmental 457 plans is $24,500. Separate catch-up rules can allow more for eligible older workers. Your particular plan can impose lower limits or other conditions.

What is the 2026 IRA limit?#

The IRS says total contributions to your traditional and Roth IRAs generally cannot exceed $7,500 in 2026, or $8,600 if you are age 50 or older, or your taxable compensation if lower. Income and other rules can affect whether contributions are deductible or available.

Should retirement money be in cash or investments?#

Cash is useful for near-term spending and emergencies, while long-term retirement money often needs some investment exposure to pursue growth. Investor.gov says asset allocation should reflect your time horizon and risk tolerance, and diversification can reduce concentration risk without eliminating losses.

Does working longer reduce the amount I need to retire?#

It can. A later retirement can mean more years of saving and fewer years of portfolio withdrawals, while also changing the timing of Social Security and pension income. The effect should be modelled with your own spending and benefit estimates rather than assumed.

What expenses do people forget in retirement planning?#

Common omissions include property repairs, insurance, healthcare, taxes, travel, gifts and support for family members. Irregular spending can make an average monthly budget look safer than it is, so include a separate reserve or test a higher-spending year. Those concepts should be considered alongside Social Security timing and other dependable income.

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Sources

Figures were checked against these sources before publication. If a rule changes, we update the page and show the new date.

General information, not personal financial advice. Rules depend on your circumstances; check the official source or speak to a regulated adviser before acting.