How Much Do I Need to Retire?

The 25x rule: where it comes from

The "25x rule" is shorthand for the 4% safe withdrawal rate, first published by financial planner William Bengen in 1994 and validated by the Trinity Study (Cooley, Hubbard, Walz, 1998). The finding: a portfolio allocated 50–75% to stocks and the rest to bonds could sustain a 4% initial withdrawal, adjusted for inflation each year, over a 30-year retirement with a historically high success rate (~95%). The inverse — 1 ÷ 0.04 = 25 — tells you the portfolio size you need to support a given spending level.

Example: If you plan to spend $160,000/year in retirement, the 4% rule says you need $4,000,000 in investment assets ($160,000 × 25 = $4,000,000).

Spending-to-portfolio reference table

These are gross portfolio targets — before adjusting for Social Security. At this wealth level, you likely have SS income coming, which reduces the portfolio you actually need (see the section below on the SS offset).

How Social Security reduces your required portfolio

Social Security income substitutes directly for portfolio withdrawals. A $4,000/month SS benefit ($48,000/year per person, $96,000 for a couple) means you don't need to pull $96,000/year from your portfolio. At a 4% withdrawal rate, $96,000 in guaranteed income is the equivalent of having $2.4 million in additional portfolio assets.

The formula: Adjusted portfolio target = (Annual spending − annual SS income) × 25

Example: Couple planning to spend $200,000/year. Both delay SS to 70. Combined benefit: $8,000–$10,000/month ($96,000–$120,000/year) at 2026 max rates.²

• Without SS offset: $200,000 × 25 = $5,000,000 required
• With $8,000/mo combined SS: ($200,000 − $96,000) × 25 = $2,600,000 required
• SS offset reduces the required portfolio by $2.4 million

Retirement Number Calculator

Five factors that change your retirement number

1. Retirement age (time horizon)

The most underappreciated input. Retiring at 55 instead of 65 adds 10 years of spending AND 10 years of portfolio uncertainty — your portfolio must survive 40 years rather than 30. The required withdrawal rate drops from 4% to around 3%: a $150,000 spending goal requires $3.75M at 65 but $5M at 55. It also means 10 additional years of healthcare before Medicare and a longer window where the market can go against you in early retirement.

2. Social Security timing

This is the highest-leverage decision for most households in the $2M–$10M range. SS timing changes your income floor for life. The difference between a couple claiming at 62 vs. delaying both to 70 can be $30,000–$50,000/year in guaranteed income. At 4% SWR, that's $750K–$1.25M of portfolio equivalence — often worth more than a year of additional savings.

3. Healthcare costs before Medicare

If you retire before 65, you face a healthcare gap. An uninsured couple can pay $34,000–$50,000/year in premiums and out-of-pocket costs on the open market at ages 55–64.³ ACA subsidies can reduce this substantially if you manage MAGI below 400% of the federal poverty level ($84,600 for a two-person household in 2026),⁴ but that requires careful Roth conversion and income planning. Factor $20,000–$40,000/year of healthcare cost into your pre-Medicare spending number if you retire early — it's one of the biggest surprises for early retirees.

4. Tax efficiency of your retirement income

Not all $1 of retirement spending costs the same. If your spending comes from:

• Taxable brokerage account — qualified dividends and long-term gains at 0%–23.8%; often very tax-efficient
• Traditional IRA / 401(k) distributions — fully taxable as ordinary income at marginal rates (22%–37%)
• Roth IRA distributions — tax-free; no IRMAA impact

A $200,000 spending goal funded entirely from a traditional IRA at 32% marginal rate requires $294,000 in gross withdrawals to net $200,000 after federal tax. The same spending from a well-structured taxable + Roth mix might require only $220,000 in gross withdrawals. Your effective retirement number rises significantly if most of your savings are in pre-tax accounts — another reason to run Roth conversions in the window between retirement and RMDs. See our withdrawal order guide and Roth conversion strategy for the mechanics.

5. IRMAA and the Medicare premium trap

At income above $212,000 MFJ, Medicare Part B premiums jump above the $202.90/month base rate.⁵ At $750,000+ income, the surcharge adds $1,379.80/month per person on top of base — an $18,742/year couple surcharge. For households retiring with $5M–$10M, IRMAA is often a permanent fixture of retirement income. Factor this into your spending plan — or model Roth conversions and account structure to manage income tiers. See our IRMAA planning guide for the full 2026 bracket table.

What "enough" looks like at different wealth levels

For the $2M–$20M household, the retirement number conversation is less about whether you can retire and more about how to optimize the structure of what you've already accumulated.

Common mistakes wealthy households make calculating their number

1. Using a 30-year SWR for a 40-year retirement. If you retire at 55, 4% may fail in more historical scenarios than 95%. The 3.0–3.3% range is more robust for 40-year horizons — which means your number is 33% higher than the 25x rule suggests.
2. Underestimating retirement spending. Healthcare, travel (typically peaks ages 65–75), and taxes on traditional IRA distributions are frequently left out of initial spending estimates. A comprehensive spending number for this audience — including taxes and healthcare — often runs $30,000–$60,000/year higher than the intuitive guess.
3. Not accounting for RMD income forcing a higher tax bracket. A $3M traditional IRA that grows to $5M by age 75 triggers $182,000+ in mandatory distributions per year (using the Uniform Lifetime Table divisor of 27.4).⁶ This is taxable income whether you want it or not, and it can push you into higher IRMAA tiers. See our RMD planning guide.
4. Treating all assets as equally liquid. A $5M "portfolio" with $1.5M in real estate equity, $1M in a business, and $2.5M in retirement accounts is not the same as $5M in a brokerage account. Illiquid assets and the 10% penalty window on pre-59½ accounts change the practical draw-down math significantly.
5. Ignoring the SS decision during accumulation. The planning question for households in their 50s often isn't "how much more do I need to save" — it's "how do I maximize SS income as a guaranteed income floor." Optimizing SS can reduce the portfolio you actually need to draw down by $1M–$2M+ in present-value terms.

Get matched with a fee-only advisor who specializes in retirement planning for wealthy families

The retirement number question is just the beginning. Once you know your number, the planning work — tax-efficient withdrawal sequencing, RMD mitigation, SS timing optimization, IRMAA management, estate coordination — is where a specialist earns their fee. We match you with fee-only fiduciary advisors who focus on the $2M–$20M range and charge flat retainers, not AUM percentages.

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Sources

1. Kitces: Safe Withdrawal Rates, Revisited. Research summary of Bengen (1994), Trinity Study (1998), and Pfau's updates for longer horizons. 4% is appropriate for 30-year retirements; 3.5% for 35 years; 3.0–3.3% for 40+ year horizons based on historical portfolio survival rates.
2. SSA: Retirement Earnings Test and Benefit Amounts. 2026 maximum Social Security benefit at FRA (age 67): $4,152/month; at age 70: $5,181/month; at age 62: $2,906/month. Values as published in SSA COLA 2026 adjustments.
3. KFF: Health Benefits Survey 2025. Individual market and ACA exchange premium benchmarks for 55–64 age bracket. Unsubsidized premiums for a couple in this age range typically $24,000–$44,000/year depending on state and plan tier, before out-of-pocket costs.
4. HHS 2025 Federal Poverty Level: healthcare.gov. 2026 ACA subsidy cliff: 400% FPL for a 2-person household = $84,600 MAGI. Households below this threshold qualify for premium tax credits; above the cliff, full unsubsidized premiums apply. (The ARP cliff elimination expired; the cliff returned in 2026 absent further congressional action.)
5. Medicare.gov: Part B Costs 2026. Base Part B premium: $202.90/month (2026 per CMS). IRMAA surcharges begin at $212,000 MAGI for MFJ filers and top out at $689.90/month per person at $750,000+ MAGI.
6. IRS: Uniform Lifetime Table (Publication 590-B). RMD divisor at age 75: 27.4. A $5M traditional IRA at age 75 requires a minimum distribution of $5,000,000 ÷ 27.4 = $182,481/year. SECURE 2.0 Act raised the RMD starting age to 73 for those born 1951–1959 and 75 for those born 1960 or later.

Safe withdrawal rate assumptions are based on historical research (Bengen 1994, Trinity Study 1998, Kitces 2012–2024) and are illustrative, not guarantees of portfolio survival. Social Security figures verified against 2026 SSA COLA adjustments. Medicare figures verified against CMS 2026 rate announcements. ACA FPL threshold verified against HHS 2025 poverty guidelines applied to 2026 ACA marketplace. Content verified June 2026. Consult a qualified financial advisor and CPA for your specific situation.