How much should I save for retirement?

A common guide is ~15% of gross income a year, aiming for about 25 times your annual spending.

You can withdraw about 4% of your pot a year, which is why the target is roughly 25× annual spending.

Is it too late to start saving in my 40s?

No, but you'll need to save a higher share; starting now still beats waiting.

How Much Should You Save for Retirement?

Published 10/7/2025 · 3 min read · Finance calculators

Camille Laurent — Finance writer at Allin

Tax · Personal finance

Checked against 2 sources

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In short

A common target is to save around 15% of your gross income each year from your mid-20s, and to aim for a pot of roughly 25 times your expected annual spending. If you'll need $30,000 a year, that's about $750,000. The exact figure depends on your age, when you start and expected returns — the earlier you begin, the less you need to save each month, thanks to compounding.

Save around 15% a year and aim for roughly 25 times your annual spending. Here's the rules of thumb, why starting early matters, and how to find your monthly number.

The two rules of thumb

Two simple rules frame the whole question. The first is a saving rate: putting away around 15% of your gross pay each year, including any employer match, keeps most people on track. The second is a target: aim for a pot of roughly 25 times the annual spending you'll need, which comes from the '4% rule' — the idea that you can withdraw about 4% of your savings a year and have it last. Together they turn a vague worry into two numbers you can act on.

Why starting early matters most

Time is the single biggest lever, because compound growth builds on itself. Money invested in your twenties has decades to double and double again, so a modest amount then outweighs a much larger amount later. Someone saving $200 a month from age 25 can end up with more than someone saving $400 a month from 40, despite paying in far less overall. The lesson is blunt: the best time to start was years ago, and the second-best is now.

Account for pensions and inflation

Your savings don't have to cover everything. Subtract any state pension and workplace scheme from your target — they may fund a meaningful slice of your needs, shrinking the pot you must build yourself. Then remember inflation: a target set in today's money must keep growing, both while you save and after you retire, or its buying power quietly erodes. Working in 'today's euros' and revisiting the plan yearly keeps the number honest.

Turn the target into a monthly number

A big target only becomes real as a monthly habit. Take the gap between your target pot and what pensions will provide, spread it over the years to your retirement age, and let assumed growth do part of the lifting — a calculator makes this easy. The resulting figure is what to automate out of each paycheck. Recheck it once a year and after big life changes; a plan you adjust is worth far more than a perfect one you never start.

Worked with our own calculator

Savings Goal Calculator

Given

Goal amount: $10,000.00
Current savings: $1,000.00
Monthly contribution: $200.00
Annual return: 1%

Result

Months to goal: 44
Years to goal: 3.668

These figures are produced by the calculator below, not typed in by hand — they are recomputed whenever the tool changes.

Run it on your own figures →

Frequently asked questions

How much should I save for retirement?: A common guide is ~15% of gross income a year, aiming for about 25 times your annual spending.
What is the 4% rule?: You can withdraw about 4% of your pot a year, which is why the target is roughly 25× annual spending.
Is it too late to start saving in my 40s?: No, but you'll need to save a higher share; starting now still beats waiting.

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This is general information, not financial advice. Retirement planning depends on your situation; consult a qualified adviser.

Sources

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