If you’re in your 50s or early 60s and wondering whether you’ve saved enough for retirement, you’re not alone. One of the most searched questions by Americans over 50 is: “How much money do I actually need to retire?” And in 2025—with inflation, rising healthcare costs, and longer life expectancy—it’s more important than ever to get clarity.
Let’s break it down: what affects how much you need, how to calculate your number, and what to do if you’re behind.
Why Retirement Planning in 2025 Looks Different
In 2025, retirement planning is more than just saving a big number. It’s about understanding your lifestyle, health, and financial habits—and how long your money will last.
What’s changed:
- Healthcare costs are projected to rise steadily
- People are living longer, meaning you’ll need income for 25–30 years (or more)
- Social Security alone isn’t enough for most people
- Cost of living is higher in many regions than pre-2020 levels
So, how much do you really need?
The “Magic Number” Isn’t the Same for Everyone
Many experts suggest having 70–80% of your pre-retirement income per year once you stop working. But this rule of thumb doesn’t work for everyone.
Let’s explore how to figure out your number.
How to Calculate Your Retirement Needs
1. Estimate Your Annual Expenses
Think of your monthly and yearly living costs, including:
- Housing (mortgage or rent, maintenance, property taxes)
- Utilities and groceries
- Transportation
- Health insurance premiums and out-of-pocket costs
- Travel and hobbies
- Emergencies or gifts
Example:
If your monthly expenses are around $4,000, that’s $48,000 per year you’ll need in retirement.
2. Apply the 25x Rule
Multiply your annual expenses by 25 to get a basic retirement savings goal.
- $48,000 × 25 = $1.2 million
This assumes a 4% annual withdrawal rate, a standard guideline used to avoid outliving your money.
3. Use a Retirement Calculator
Online tools let you input your current age, savings, income, and retirement goals.
Try: NerdWallet Retirement Calculator for a user-friendly estimate.
How Social Security Fits In
In 2025, the average monthly Social Security check is around $1,900. But your amount depends on your earnings history and when you claim benefits.
If you expect:
- $1,900/month in Social Security
- $4,000/month in total expenses
Then you’ll still need $2,100/month from your savings or other income sources.
What If You’re Behind on Retirement Savings?
You’re not alone—and it’s not too late.
Steps to Catch Up:
Delay Retirement by 2–5 Years
Working longer lets you:
- Delay Social Security (which increases your benefits)
- Keep saving while avoiding withdrawals
Use Catch-Up Contributions
In 2025, if you’re 50+, you can contribute:
- Up to $30,000 to a 401(k)
- Up to $7,500 to an IRA
Cut Back and Downsize
Reducing your housing, travel, or car costs can stretch your savings.
Consider Part-Time Work or Freelancing
Many retirees earn $10,000–$30,000/year doing flexible, part-time work—taking pressure off their savings.
Frequently Asked Questions
Is $500,000 enough to retire in 2025?
It can be, especially if:
- You own your home
- You have low monthly expenses
- You supplement income with part-time work or Social Security
But you’ll need to budget carefully and avoid major financial surprises.
What’s the 4% rule?
It’s a guideline that says you can withdraw 4% of your retirement portfolio in your first year of retirement, then adjust for inflation.
Example: With $1 million saved, you’d withdraw $40,000 in Year 1.
Can I retire at 62 if I haven’t saved much?
It’s possible, but you’ll likely need to rely heavily on Social Security and/or reduce your expenses. Consider delaying retirement or boosting income if you can.
Bottom Line: Know Your Number—Not Someone Else’s
Don’t let flashy headlines or million-dollar myths throw you off track.
The real question is: What do you want your retirement to look like?
Then plan from there.
Next Step:
Use a retirement calculator to estimate your own number. Then review your expenses and savings to find your gap. From there, you can take realistic action—whether it’s working longer, saving more, or adjusting your vision of retirement.
Remember: It’s never too late to plan smart.