How Much Should I Save for Retirement? (A Simple Math Answer)

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 your gross income for ~30 years is the standard starting target. It’s a guideline, not a law — the real number depends on when you start, what you earn, and what you spend.
• The math: at a 7% after-inflation return, $7,500/year for 30 years grows to roughly $762,000 — and saving 15% of a typical income over a full career produces a portfolio large enough to withdraw ~4% per year in retirement.
• The 4% rule: in retirement, withdrawing 4% of your portfolio in year one (adjusted for inflation after) is a widely used planning guideline. It means a $1,000,000 portfolio supports roughly $40,000/year.
• The plan: figure your target → use the calculator for 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 the 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:

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. Over 30 years that’s roughly $281,000 of your own contributions — the other $719,000 is compounding doing the work.

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” research on historical withdrawal rates), not a guarantee — but it’s the most common starting framework.

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.

FAQ

Is 15% of income enough for retirement? For many people, yes — if you start in your 20s or 30s and invest in low-cost index funds. It’s a starting guideline; the calculator gives you your own number based on your target.

How much do I need to retire at 65? A rough rule: multiply the annual income you want from savings by 25 (the inverse of 4%). Want $40,000/year? Target ~$1,000,000. This ignores Social Security, which covers part of the gap for most people.

Should I include my employer match in the 15%? Yes — the match is part of your retirement savings. A 4% match means an 11% personal contribution gets you to 15% total.

What’s the difference between the 4% rule and the 15% rule? The 15% rule is about accumulation (how much to save while working). The 4% rule is about withdrawal (how much you can safely take in retirement). They work together: 15% in builds the portfolio, 4% out funds retirement.

Does a higher return change the monthly amount? Yes. At 7% the $1M/30yr example needs $753/month; at 5% it needs ~$1,148/month; at 9% it needs ~$466/month. The calculator recomputes instantly for your assumption.

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, and automate it into your 401(k) and IRA.

This article is education, not personalized financial advice. Figures verified August 2026. Returns are hypothetical and not guaranteed; past performance does not guarantee future results. Tax rules are complex and individual — verify current limits at irs.gov.