The general guideline is to save 25 times your expected annual expenses. This is based on the 4% rule — you can withdraw 4% of your portfolio annually with a high probability of not running out of money over 30 years. If you need $50,000/year in retirement, aim for $1.25 million.

This target adjusts based on several factors. If you retire early and need funds for 40+ years, use a more conservative 3.3% withdrawal rate, requiring 30x expenses. If you have other income sources like Social Security or pensions, your portfolio can be smaller.

Expected expenses in retirement often differ from working years. You won't have commuting costs or work wardrobes, but healthcare costs typically increase. Many people spend more on travel early in retirement. Model your specific expected expenses rather than using rules of thumb.

The 4% rule comes from the Trinity Study, which analyzed historical market data to find sustainable withdrawal rates. It found that withdrawing 4% of your initial portfolio, adjusted for inflation annually, had a 95% success rate over 30 years.

For example, with a $1 million portfolio, you withdraw $40,000 in year one. If inflation is 3%, year two's withdrawal is $41,200, regardless of portfolio performance. This provides predictable income while allowing the portfolio to potentially grow.

Critics note the study used historical US data during favorable conditions. Future returns may differ. More conservative planners suggest 3-3.5% for extra safety, especially for early retirees or those with significant longevity in their family. Flexible withdrawal strategies — reducing withdrawals during market downturns — can also improve success rates.

The earlier you start saving, the less you need to save monthly due to compound growth. Starting at 25 and saving $500/month until 65 (with 7% returns) yields $1.2 million. Starting at 35 requires $1,000/month to reach the same amount. Starting at 45 requires $2,200/month.

Maximize tax-advantaged accounts: 401(k) contributions reduce taxable income and often come with employer matching (free money). IRAs provide additional tax benefits. Roth accounts grow tax-free, ideal if you expect higher future tax rates.

Asset allocation matters. When young, favor stocks for growth potential despite volatility — you have time to recover from downturns. As you near retirement, shift toward bonds for stability. Target-date funds automatically adjust allocation over time. Use this calculator to project your retirement savings and see if you're on track.