Only 3 Numbers Really Matter for Retirement — Do You Know Yours?

Deciding whether you are ready to retire can feel overwhelming, but the question ultimately comes down to three concrete numbers. Get a clear handle on all three and the answer becomes much easier to see.

Here’s what they are.

1. Investment account balance

The first number you need to know is your total investment account balance: the combined value of your 401(k), IRA, and any taxable brokerage accounts. These savings will supplement your Social Security income once you stop working, which makes knowing the precise figure essential. You should also think about the tax-adjusted value of each account. A dollar sitting in a traditional 401(k) will eventually be reduced by income taxes when withdrawn, while money in a Roth IRA comes out entirely tax-free.

Once you know your total balance, a safe withdrawal rate tells you how much annual income those savings can reliably provide. Morningstar’s 2025 retirement income research sets the base-case safe starting withdrawal rate at 3.9% for a portfolio holding 30% to 50% in equities, up from 3.7% the prior year and assuming a 30-year retirement with a 90% probability of success. For a retiree with $850,000 saved, that rate translates to roughly $33,150 in first-year income from savings alone. The classic 4% rule remains a useful benchmark, but retirees who want the greatest margin of safety may prefer a slightly more conservative figure, while those willing to adjust withdrawals dynamically in down markets can stretch their rate higher.

2. Social Security benefit

The second number is your projected Social Security benefit. This monthly payment is a uniquely valuable income source because, unlike your portfolio, it is guaranteed to last for life and automatically adjusts for inflation each year. For 2026, the Social Security Administration announced a 2.8% cost-of-living adjustment, bringing the average retired worker’s monthly benefit to approximately $2,071.

Social Security is designed to replace roughly 40% of pre-retirement income, though the actual share varies by earner. The formula is progressive, so higher earners see a smaller percentage replaced. Timing matters just as much as the formula itself. Claiming benefits before your full retirement age permanently reduces each monthly check, while waiting past full retirement age earns delayed retirement credits that increase benefits by roughly 8% for every year you hold off, up to age 70. If you expect a long life or need to maximize the survivor benefit your spouse would receive, delaying almost always pays off. Calculating your personal “breakeven point” for waiting until 70 can show whether the larger monthly checks eventually outweigh the years of missed payments.

The bottom line is that the size of this benefit directly shapes how much your savings need to provide. You can find your personalized estimate through your online Social Security account, which projects your monthly payment at different claiming ages.

3. Annual expenditures

The third number is your projected annual spending. Your combined income from Social Security and savings must cover everything you plan to spend in retirement, including costs that many people underestimate. Healthcare deserves particular attention: Fidelity’s 2025 Retiree Health Care Cost Estimate puts lifetime medical expenses for a 65-year-old individual at $172,500, a figure that has risen more than 4% in a single year and does not include long-term care. The 2026 Medicare Part B premium alone is $202.90 per month, up nearly $18 from 2025, and that baseline cost tends to grow every year.

A useful starting point for setting your retirement spending target is to aim for enough income to replace about 80% of your pre-retirement earnings. Keep in mind that many retirees follow what researchers call a “spending smile” pattern: outlays are highest in the active early years, ease off in the quieter middle stretch, and then climb again as medical costs rise later in life. Building a budget that reflects this arc gives a more accurate picture than assuming flat annual spending throughout retirement.

Once you have all three numbers in hand, the final step is to stress-test them against sequence-of-returns risk, the threat that a severe market decline in the first few years of retirement could permanently deplete a portfolio before it has a chance to recover. Retirees who account for that risk alongside their balance, their benefit, and their budget are far better positioned to leave work on their own terms and without regret.

Editor’s note: This version updates the safe withdrawal rate from 3.7% to 3.9% based on Morningstar’s December 2025 research, recalculates the $850,000 example income accordingly, adds the SSA’s 2.8% COLA figure and the resulting average 2026 retired worker benefit of approximately $2,071 per month, and incorporates Fidelity’s 2025 estimate of $172,500 in lifetime individual healthcare costs alongside the 2026 Medicare Part B premium of $202.90 per month.