Just 39% of Americans Have Calculated Their Retirement Goal. Here’s the Math in Five Minutes

Quick Read

• Just 39% of Americans say they have worked out a retirement savings target, while 57% of non-retirees already have some form of retirement account.

• Using the 4% rule, average household spending of $78,535 minus $38,496 in Social Security points to a nest egg of roughly $1 million.

• Waiting until after full retirement age to claim Social Security increases benefits by 8% a year until age 70, which can significantly lower the amount you need to save.

Many Americans have never calculated how much money they would need to quit working. In the FINRA Foundation’s 2024 National Financial Capability Study, 39% of respondents said they had tried to figure out how much they need to save for retirement, while 57% said they had not. Here’s a simple five-minute version of the math, along with a look at who has already done it.

Income Plays a Big Role in Whether People Have Done the Math

The FINRA data shows the share of people who have tried rises with income:

• Under $25,000: 17%

• $25,000 to $75,000: 33%

• $75,000 or more: 58%

Even so, 57% of non-retired respondents said they already have a retirement account of some kind. In other words, many people are saving without a clear target in mind.

Retirement Math in Four Easy Steps

The example below uses published national averages. Your own numbers will likely differ, and changing them will change the result.

Step One: Estimate Annual Spending

A good starting point is current spending. The Bureau of Labor Statistics’ Consumer Expenditure Survey showed average annual household spending at $78,535 in 2024, while a later figure put it at $81,905 in 2025. Some expenses, such as commuting, may fall after you stop working. Health care costs continue, and Medicare’s standard Part B premium is $202.90 a month in 2026.

Learn 13 Major Retirement Mistakes and Ways To Avoid Them

One investment mistake could put your retirement at risk. Many investors make the same serious errors: staying too conservative, making large bets on supposed certainties, or paying too much in fees. Any of those mistakes can threaten the savings you worked hard to build.

You can learn about the mistakes even experienced investors make, and how to avoid them, with this new guide: 13 Retirement Mistakes and How to Avoid Them from Fisher Investments. Access your complimentary copy here (sponsor).

Step Two: Subtract Social Security

Your benefits statement gives you an estimate of your own benefit, and you can view, save, and print it anytime through a free my Social Security account at ssa.gov. For example, the average monthly benefit for an aged couple in which both spouses receive benefits is $3,208 in 2026, after a 2.8% cost-of-living adjustment. That comes to $38,496 a year.

Future benefits still depend on lawmakers, especially since the 2026 Trustees Report projects the combined Social Security trust funds will run out in 2034. If Congress does nothing, benefits would still be paid at 83% of scheduled levels after that.

Step Three: Turn the Shortfall Into a Savings Target

Subtracting Social Security from annual spending leaves a gap of $40,039 that savings would need to cover. A widely used guideline, the 4% rule, says a retiree can withdraw about 4% of a portfolio in the first year and then raise that amount with inflation each year after. Divide the gap by 0.04 and the target comes out to $1,000,975.

That rule is based on historical U.S. market returns, so it cannot predict the future. It also does not account for taxes on withdrawals, investment fees, or the possibility of a longer-than-expected retirement.

Step Four: Compare the Target With What You Already Have

The final step is to compare that number with your current retirement balances and yearly contributions, including any employer match. Falling short with decades left is very different from falling short near retirement, because time and compounding matter much more over a longer horizon.

Ways to Shrink a Retirement Number That Looks Too Large

Even small increases in savings can add up, especially when they begin early. In 2026, workplace plans such as 401(k)s allow employee contributions of up to $24,500. People age 50 and older can make an additional $8,000 catch-up contribution, and those ages 60 to 63 can add $11,250.

IRAs have separate limits: $7,500 in 2026 for people under 50, or $8,600 for those 50 and older. There is also a newer rule: workers 50 and up who earn more than $150,000 in 2025 must direct their workplace catch-up contributions into a Roth account, which means those dollars no longer lower taxable income for the year.

Working a bit longer can also help, since it reduces the number of years savings must cover and gives contributions more time to grow. Delaying Social Security can raise monthly benefits as well. For people retiring now, benefits increase 8% for each year they wait past full retirement age, up to age 70. Full retirement age is 67 for anyone born in 1960 or later.

Paying off a mortgage before retirement can also change the calculation. Once the house payment disappears, annual spending falls, and the savings target does too.

The One Number That Pulls the Retirement Plan Together

The key figure is the annual gap: expected spending minus expected Social Security. That number can be compared with your savings and updated each year as pay, plans, and benefit estimates change. For the 57% of respondents who have not yet done the math, that is the first result they need.

Help Avoid These 13 Retirement Mistakes Before They Derail Your Future

One investment mistake could create big risks for your retirement. Many investors make the same critical errors: being too conservative, making big bets on “sure things,” or paying excessive fees. Any of those blunders can endanger your hard-earned savings.

You can learn the mistakes even experienced investors make, and ways to avoid them before it is too late, with this new guide: 13 Retirement Mistakes and How to Avoid Them from Fisher Investments. (sponsor)