Only 39% of Americans Have Ever Tried to Figure Out How Much They Need for Retirement. Here’s the Five-Minute Version of the Math

Most Americans have never worked out how much money they’d need to stop working. In the FINRA Foundation’s 2024 National Financial Capability Study, 39% of respondents said they’ve tried to figure out how much they need to save for retirement, while another 57% said they haven’t. We look at who has run the numbers, then walk through a simple version of the math in about five minutes.

Income Shapes Who Has Run the Numbers

In the FINRA data, the share who’ve tried rises steadily with income:

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

Even so, 57% of non-retired respondents have some kind of retirement account. That means plenty of people are putting money away without a target to measure it against.

Retirement Math in Four Simple Steps

The steps below follow one worked example built from published national averages. Anyone’s personal numbers will look different, and swapping them in changes the result.

Step One: Estimate Yearly Spending

Today’s spending is a reasonable place to start. 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 costs, like commuting, may shrink after leaving work. Health costs stick around, 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 benefit estimate, 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 where both spouses receive benefits is $3,208 in 2026, after a 2.8% cost-of-living adjustment. That’s $38,496 a year.

Future benefits depend on Congress, especially considering the 2026 Trustees Report projects the combined Social Security trust funds will run out in 2034. After that, lawmakers would still pay 83% of scheduled benefits if they don’t step in.

Step Three: Turn the Gap Into a Savings Target

Subtracting that Social Security income from spending leaves an annual gap of $40,039, which savings would have to cover. A common rule of thumb, the 4% rule, says a retiree can withdraw about 4% of a portfolio in the first year and then increase that amount with inflation. Dividing the gap by 0.04 gives a target of $1,000,975.

That 4% guideline comes from studies of past U.S. market returns, so it can’t promise anything about the future. It also leaves out taxes on withdrawals, investment fees, and the chance that retirement lasts longer than expected (we made the case against leaning on the 4% rule, and what to run instead, in a free report).

Step Four: Compare With What’s Already Saved

The last step is to compare that target with current retirement balances and annual contributions, including any employer match. Being short with decades to go is a different situation from being short close to retirement, because time and compound growth contribute more to a balance over longer periods.

Ways to Shrink a Number That Looks Too Big

Small savings increases add up, especially when they start early. For 2026, workplace plans like 401(k)s allow $24,500 in employee contributions. Workers 50 and older can add an $8,000 catch-up, and those aged 60 to 63 can add $11,250.

IRAs have separate limits: $7,500 in 2026 for those under 50, or $8,600 for people 50 and older. There’s also a new rule this year. Workers 50 and up who make more than $150,000 in 2025 must now put their workplace catch-up money into a Roth account, so those contributions no longer reduce this year’s taxable income.

Working a little longer means fewer years for savings to cover and more years of contributions. Delaying a Social Security claim also raises the monthly benefit. For people retiring today, 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 affects step one. Once the mortgage payment is gone, annual spending drops, and so does the savings target it built.

One Number That Ties the Retirement Math Together

The annual gap from step three is expected spending minus expected Social Security. You can check it against your savings and update it each year as pay, plans, and benefit estimates change. For the 57% of respondents who haven’t tried the math yet, that figure is the calculation’s first output.

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