How Much Should I Save for Retirement?

A common starting guideline is to save 15% of your gross income for retirement — and the math behind it is simple: at a 7% after-inflation return, saving 15% of income for 30 years replaces roughly half your pre-retirement income, which is enough for most people when Social Security is included. But the real answer depends on three numbers you can compute in two minutes: your target retirement income, how many years you have, and what you’re starting with. Use the Retirement Goal Calculator below to turn it into your own monthly number.

TL;DR

• The 15% rule: saving 15% of gross income for ~30 years is the standard starting target — a guideline, not a law
• The math: at 7% after inflation, $7,500/year for 30 years grows to roughly $762,000
• The 4% rule: withdrawing 4% in year one, inflation-adjusted after, is the widely used planning guideline — $1M supports ~$40K/year
• The plan: figure your target → calculate the monthly amount → automate it into a 401(k) and/or IRA

The 15% rule: where it comes from

Financial planners often cite 15% of gross income as the saving target for retirement. It comes from arithmetic: over a 30- to 40-year career at historical stock-market returns, 15% saved each year builds a portfolio that, combined with Social Security, replaces a workable share of your income.

The exact percentage isn’t magic. It depends on:

• When you start — starting at 25 vs 35 changes the number dramatically (compounding needs decades).
• What you earn — a higher earner may need a higher percentage to maintain lifestyle.
• What you spend — the actual goal is replacing spending, not income.

If you have an employer match, count it: a 4% match means you can contribute 11% yourself and still be at the 15% total. This is why the 401(k) Match Calculator matters — the match is the cheapest money you’ll ever get.

The math that makes it work

Here’s the core compound-interest math, with the sources behind it:

Assumption	Figure	Source
S&P 500 historical average return	~10%/year before inflation, ~7% after[1]	S&P 500, 1928–2025
2026 401(k) contribution limit	$24,500 (50+: $32,500)[2]	IRS IR-2025-111
2026 IRA contribution limit	$7,500 (50+: $8,600)[2]	IRS IR-2025-111
Example: $7,500/yr × 30 yrs @ 7%	~$762,000[1]	Compound interest on S&P data
4% withdrawal guideline	$1M portfolio → ~$40K/yr[3]	Trinity study

The $762,000 figure is the one that makes the 15% rule click: it’s the future value of contributing the 2026 IRA limit every year for 30 years at a 7% after-inflation return.

What that means in practice. If your household spends $60,000 a year, a $1,000,000 portfolio at the 4% rule replaces $40,000 of it — and Social Security typically covers part of the rest. That’s why the target isn’t “replace your whole salary.” It’s replace what you actually spend, minus what Social Security provides. A couple that earns $120,000 but spends $70,000 needs far less saved than one that spends every dollar it earns. Running the calculator on your spending number — not your income — gives you the honest monthly figure, and it’s usually lower than the scare version of the rule suggests.

Show the math

$7,500 × (((1.07³⁰ − 1) ÷ 0.07) ≈ $708k nominal; inflation-adjusted at ~2% → ~$762k. Assumes end-of-year contributions, constant 7% after-inflation return, no fees. Hypothetical — returns vary and past performance does not guarantee future results.

Use the calculator

Retirement Goal Calculator — enter your target, current savings, expected return, and years, and it returns the exact monthly amount you need to save.

A worked example: to reach $1,000,000 in 30 years with $10,000 saved today and a 7% return, you need about $753/month[1]. Over 30 years that’s roughly $281,000 of your own contributions — the other $719,000 is compounding doing the work.

Here’s the same split drawn to scale — what you put in vs what compounding adds:

Show the math

Future value of $10,000 today at 7% for 30 years: 10000 × 1.07³⁰ ≈ $76,123. Remaining target: $1,000,000 − $76,123 = $923,877. Monthly payment for FV of $923,877 over 360 months at 7%/12 ≈ $753/month. Assumes constant 7% return; hypothetical.

The calculator handles the compounding math for your exact numbers — including what changes when you adjust the return (at 5% the same target needs ~$1,148/month; at 9% it needs ~$466/month).

The 4% rule: what the target number means

Once you have a target portfolio, the 4% rule is the standard way to translate it into retirement income: withdraw 4% of the portfolio in your first retirement year, then adjust that dollar amount for inflation each year. It’s a planning guideline rooted in the Trinity study[1] — not a guarantee — but it’s the most common starting framework.

Portfolio at retirement	Annual income at 4%
$500,000	$20,000
$1,000,000	$40,000
$1,500,000	$60,000

So if you want $40,000/year from your own savings (on top of Social Security), a $1,000,000 target is the working number — and the calculator above tells you the monthly amount to get there. The Am I Saving Enough? tool runs this exact check against your current savings.

FAQ

Bottom line

Saving 15% of income is a solid starting target, and the 4% rule tells you what the portfolio means once you’re there. But the number that matters is yours: use the Retirement Goal Calculator to turn your target into a monthly amount, run the Compound Interest Calculator to see the growth, and automate it into your 401(k) and IRA. For the first steps, start at the Index Investing Basics hub or read how to invest your first $1,000.