Rule of 25 Calculator
Estimate the retirement nest egg you need with the Rule of 25 — annual spending times 25, the mirror of the 4% withdrawal rule.
How it works
Net need = spending − other income · Nest egg = net need × (100 ÷ withdrawal rate) · At 4% that is net need × 25
The Rule of 25 says you can retire once you have saved about 25 times your annual expenses. It is the mirror image of the 4% rule: withdrawing 4% a year is the same as needing 25× (because 100 ÷ 4 = 25). Subtracting income from pensions or Social Security first means your portfolio only has to cover the gap, which can dramatically lower the target. Both rules come from the Trinity study on historically safe withdrawal rates and are planning rules of thumb, not guarantees — market sequence, inflation and a long retirement can all shift the safe number.
Worked example
Spending $50,000 a year with $15,000 from other sources leaves $35,000 for the portfolio to cover. At a 4% withdrawal rate that needs $35,000 × 25 = $875,000. With $120,000 already invested, you are about 14% of the way there.
Frequently asked questions
Why is it 25 times expenses?
Because 25× is the inverse of a 4% withdrawal rate: taking out 4% of a portfolio each year is the same as needing a portfolio 25 times your annual spending (100 ÷ 4 = 25). Choose a more conservative 3.5% rate and the multiple rises to about 28.6×.
Should I subtract Social Security and pensions?
Yes — your investment portfolio only needs to cover the spending that other guaranteed income does not. Netting out pensions and Social Security can cut the required nest egg substantially, which is why this calculator asks for it.
Is the 4% rule still safe?
It is a useful planning benchmark, not a guarantee. It came from historical US market data, and some researchers now suggest 3.3–3.5% for longer retirements or lower expected returns. Treat the result as a target range and revisit it as your situation and markets change.
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Educational estimate, not financial advice.