Calculating Your Retirement Number

Updated September 2021

OK, hopefully I’ve convinced you by now that you may need to prioritize retirement savings.  But how much will you actually need?

One method is to multiply your current income by a factor of 10.  For someone with an income of $100,000, this equates to $1 million needed to retire.  However, this number can change drastically just based on where you are in your working career.  Coming straight out of school, the number will be much lower than it will be during peak income earning years.

Speaking of $1 million, some people just choose this number randomly with no regards to their income because it’s a nice, round number in the seven figure range.  This is a completely arbitrary way to come up with your retirement number.  It’s like saying that 150 lbs. is an ideal weight for an adult without taking into account their gender, height, muscle mass, general fitness, etc. 

So is there a better way to come up with this number?


To make this calculation work for YOU, we need to make it specific to your situation.  Retirement calculators run the gamut, and they can quickly get out of hand with the amount of information that they require.  Here are some basic numbers that you should have handy:

  1. Your current age
  2. Your projected retirement age
  3. Projected number of years in retirement
  4. Amount you currently have in retirement savings
  5. How much you are currently saving
  6. Your expected expenses in retirement

Taking a close look at these variables, it’s pretty clear that you have three numbers you can plug in right away: your current age, how much you currently have saved in your retirement account, and how much you are currently saving each month for retirement (you ARE saving, right? RIGHT??). 

The other variables are simply unknowns, and we just have to make some educated guesses.  Many people choose a number between 60-70 for their retirement age.  They hope to stay in retirement for about 30 years.  This brings us to the last variable: expected expenses.

I’m guessing that at this point, many people give up this exercise because they don’t even know what their CURRENT expenses are, let alone their expected expenses. A quick trick is to aim for replacing 85% of your income in retirement (more on this later).  For a veterinarian making $100,000, this would be $85,000.

Let me introduce Dr. Barkley.  She’s a 30 year old veterinarian who is earning a $100,000 salary at her job.  Her student loans take a big bite out of her monthly expenses, as well as her mortgage on her new house.  However, she’s managed to have a little money set aside for retirement.  Is she saving enough?  Let’s find out by using this online calculator.

Current age: 30

Current income: $100,000

Current retirement savings: $10,000

Currently saving: 10% of income


Amount saved for retirement: $1,871,021

Wow- this sounds like a good amount of money to retire on, right?  But according to this calculator, this amount will last Dr. B until the age of 83, less than 20 years into retirement. 

(Note: Social Security was not figured into this calculation, but as stated in a previous post, I would not rely heavily on Social Security, especially when we’re looking 30-40 years down the line.  You can probably expect some help from the government, but the younger you are, the riskier it would be to count on a program that will probably look quite different from its present state.)

Let’s remember that these numbers are based on many unknowns that are not easily controlled, such as actual age of retirement, age of death, future income, and rate of return.  Just changing one of these variables can have an enormous impact on your final retirement number.

Now Dr. B is slightly frustrated.  She went through this entire exercise and was basically told that none of this matters because we can’t predict the future.  Well, I would counter and say that this alone is not reason enough to give up.  We make plenty of decisions every day based on our assumptions about the future.  Anyone who has a long term goal knows that there will be future unknowns impacting your ability to achieve your goal.  Does that stop anyone from making long term goals?  I think not.  It is with this mindset that you got your veterinary degree, right? Retirement planning is another long term goal, a worthy goal in my opinion. 


Believe it or not, we actually have quite a bit of control over how we spend our money. If you gave 100 people $1 million, I guarantee you there will be 100 different ways that they will spend that money. Some will end up broke.  Others will leave a legacy.  Why so much variation?  Because each of us make very individual choices on what to do with that money.  Those that choose to spend it all will be on one end of the spectrum.  Those that decide to save a good portion of their money and invest it wisely will end up on the other end, despite keeping every other external variable constant.

Remember using 85% of your current income as a way to estimate your expenses in retirement? A better way to figure your expected expenses is to first calculate your current expenses.  You don’t know your current expenses?  This post will help you get started.  Once you have that information, you can easily deduct certain expenses that SHOULD be gone by the time you retire, such as a mortgage, student loans, credit card debt, life and disability insurance premiums, child related costs if you have children, among other expenses.  Other expenses will go up, most likely health, travel, and entertainment.

So Dr. B did her homework and decides that she would be quite comfortable spending $60,000 in retirement income, not the original $85,000.   The retirement calculator predicts that her retirement savings will easily last her until age 95, and she will actually have MORE at that age than what she started with! How is this possible?  Because the extra 15% that she’s no longer spending is still getting invested, and that’s where you can see the beauty of compound interest working in her favor.


If you have an idea of your expected expenses, you can use a very handy calculation that has becomes known as the 4% rule.  A 1994 paper by a financial planner named William Bengen became the basis of this often used tool.  He decided to look at historical data and figure out the ideal percentage that retirees can comfortably withdraw from their retirement portfolio without running out of money, assuming a 30 year retirement period.

The calculation is very simple: you take your expected annual expenses and divide it by 4%.  Or even easier, multiply your expected annual expenses by 25.

For Dr. B, her retirement number using the 4% rule is:

$60,000 x 25= $1.5 million

If she is on track to save $1.5 million, then she can feel relatively assured that this will last her for the entirety of her retirement as planned.  She just has to make sure that she has invested properly and withdraws somewhere in the ballpark of 4% each year in retirement, adjusting this percentage as needed.


As you can see, there are many different ways to come up with a retirement number.  I believe that having a good handle on how much you plan to spend (expected expenses) and using the 4% rule is a great place to start.  In fact, your current income really shouldn’t figure into the calculation; it’s how much you plan to spend from your retirement accounts.  Unfortunately, what many people do is to assume that the finances will work themselves out one way or the other.  The numbers are just too hard, there are too many financial obligations to deal with during your working career, and it is very difficult to plan for an event so far into the future.  

However, do you really want to be one of those people that hits retirement age and realizes that your retirement income is completely out of proportion with your current lifestyle?  This is the reality for many of those that enter this stage in life.  Retirement is supposed to be a time to finally enjoy the fruits of your labor, NOT a time to be pinching pennies and hoping that you don’t outlive your retirement savings.  Putting some effort in today can save you money woes and stress in the future.

Have you ever tried to calculate your retirement number? Surprised by what you got?  Comment below!


  1. steveark on May 3, 2018 at 10:41 am

    Having been living early retired for the last three years I was pleased to find that my wife’s estimate of what we were spending while working has matched what we’ve spent while retired almost to the penny. Even more pleased that my very part time side gigs have generated exactly what we’ve spent so we’ve been at zero withdrawal rate on our investments. I really like the idea of using your estimated spending in retirement to factor up to your needed savings. If, like me, you find you want to work a little on the side for entertainment then the number can be much smaller or you can just use the extra income for purely fun “unbudgeted” experiences!

    • admin on May 11, 2018 at 6:41 am

      I know that I replied to this but it appears to have been lost…
      First of all, thanks for commenting! I have also found that out of all the methods of estimating your retirement spending, using your expected expenses seems to make the most sense. I really like the idea of fun “unbudgeted” experiences!

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