Only 39% of Americans Have Calculated Their Retirement Needs. Here’s a Quick Way to Do the Math

More than half of Americans who are saving for retirement have never set a target, leaving them unable to tell whether they are on track. Four steps and about five minutes can solve that.

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Most Americans have not figured out how much money they would need to stop working. In the FINRA Foundation’s 2024 National Financial Capability Study, 39% of respondents said they have tried to calculate how much they need for retirement, while 57% said they have not. Below, we look at who has done the math and break down a simple version of it in roughly five minutes.

Income and Retirement Planning

The FINRA data show a clear pattern: the higher the income, the more likely people are to have tried estimating their retirement needs.

• Under $25,000: 17%
• $25,000 to $75,000: 33%
• $75,000 or more: 58%

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

A Simple Four-Step Retirement Calculation

The example below uses published national averages. Personal results will differ, and replacing the assumptions with your own numbers will change the outcome.

Step One: Estimate Annual Spending

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

Step Two: Subtract Social Security

Your benefits statement shows a personal estimate, and you can view, save, and print it anytime through a free my Social Security account at ssa.gov. As an 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 depend on Congress, especially since the 2026 Trustees Report projects that the combined Social Security trust funds will run out in 2034. If lawmakers do nothing, benefits could still be paid at 83% of the scheduled level after that point.

Step Three: Convert the Shortfall Into a Savings Goal

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

That guideline is based on historical U.S. market returns, so it cannot guarantee future results. It also does not account for taxes on withdrawals, investment fees, or the possibility that retirement lasts longer than expected.

Step Four: Compare the Goal With Existing Savings

The final step is to compare the target with current retirement balances and annual contributions, including any employer match. Being short with decades left is very different from being short near retirement, because time and compound growth matter much more over a longer period.

Ways to Bring Down a Large Number

Even small increases in savings can make a difference, especially when they begin early. For 2026, workplace plans such as 401(k)s allow $24,500 in employee contributions. Workers age 50 and older can add an $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 new rule this year. Workers 50 and up who earn more than $150,000 in 2025 must now make workplace catch-up contributions to a Roth account, which means those contributions no longer reduce this year’s taxable income.

Working a little longer reduces the number of years savings must support and adds more years of contributions. Delaying Social Security also increases the monthly benefit. For people retiring now, benefits grow 8% for each year past full retirement age, up to age 70. Full retirement age is 67 for anyone born in 1960 or later.

Paying off a home before retirement also changes the calculation. Once the mortgage payment disappears, annual spending falls, and so does the savings target built from it.

The Key Number Behind the Retirement Math

The annual gap from step three is simply expected spending minus expected Social Security. That number can be compared with existing savings and updated each year as pay, plans, and benefit estimates change. For the 57% of respondents who have not yet done the calculation, it is the first figure they need.