How much money do I need to retire?
Multiply your yearly spending by 25. Add up everything you spend in a full year, then multiply that total by 25 — that's roughly the amount you need invested to retire, because withdrawing about 4% a year covers your spending. Spend €30,000 yearly and you'd aim for €750,000; spend less and the target drops.
How to do it
- Add up your true yearly spendingTotal everything you actually spend across a full year — housing, food, bills, travel, the lot. Use real figures, not an optimistic budget.
- Multiply that number by 25Your yearly spending × 25 is your retirement number. For €30,000 a year, that's €750,000.
- Understand why 25It assumes a roughly 4% annual withdrawal from an invested pot. Spending is 4% of the pot, so the pot is spending × 25.
- Test a lower spending figureRe-run with less spending to see the target fall fast — cutting €6,000 a year lowers the pot by €150,000.
Questions that come up
Does this include a pension or state benefits?
Only for spending those don't already cover. Subtract any reliable pension or state income from your yearly spending first, then multiply the remainder by 25. You only need to self-fund the gap, so guaranteed income lowers your number directly.
What about inflation?
The 4% rule already assumes you raise withdrawals with inflation each year, and it's based on a portfolio invested for growth. Keep your spending figure in today's money and recheck it every few years, since your real spending is what drives the target.
Is 4% actually safe?
It's a widely-cited rule of thumb from historical US market data, not a guarantee. Many people use a more cautious 3.5%, which means multiplying by about 29 instead of 25. Treat the result as a target to aim at, not a precise finish line.
Full transcript
Multiply your yearly spending by twenty-five — that's your retirement number. Track what you truly spend in a year, then multiply by twenty-five. Spend thirty thousand a year, and your target is seven hundred fifty thousand. Trim to twenty-four thousand, and it drops to six hundred thousand — one number to aim at. Do your own math before payday, and write it down.