The traditional retirement age of 65 was set in 1935 when average life expectancy was 61. Today, the average 65-year-old will live to 84–87. That’s 20+ years of retirement to fund — and the rules have changed dramatically.
Here are the new retirement planning rules for 2026 and beyond.
Rule 1: The 25x Rule (Your Retirement Number)
Multiply your annual retirement spending by 25. That’s your target portfolio. Planning to spend $60,000/year? You need $1.5 million.
| Annual Spending | Portfolio Needed (25x) | With Social Security Offset |
|---|---|---|
| $40,000 | $1,000,000 | $550,000 |
| $60,000 | $1,500,000 | $1,050,000 |
| $80,000 | $2,000,000 | $1,550,000 |
| $100,000 | $2,500,000 | $2,050,000 |
| $120,000 | $3,000,000 | $2,550,000 |
Social Security offset assumes ~$18,000/year average benefit. Use Richify’s FIRE Calculator for your personalized number.
Rule 2: Save 15–20% of Gross Income
The old rule was 10%. With longer retirements and Social Security uncertainty, 15–20% is the new minimum for a comfortable retirement. This includes employer matches.
| Start Age | Savings Rate | $100K Income → Portfolio at 65 |
|---|---|---|
| 25 | 15% | $2,400,000 |
| 30 | 15% | $1,680,000 |
| 35 | 15% | $1,140,000 |
| 40 | 15% | $750,000 |
| 45 | 15% | $475,000 |
Starting at 25 vs. 35 results in 2x the retirement wealth. Time is the most powerful variable.
Rule 3: Healthcare Will Be Your Biggest Expense
A 65-year-old couple retiring in 2026 should expect to spend $315,000–$415,000 on healthcare throughout retirement (Fidelity estimate). This includes Medicare premiums, supplemental insurance, prescriptions, dental, vision, and potential long-term care.
An HSA (Health Savings Account) is the best tool to prepare for these costs — triple tax advantage and can be used tax-free for medical expenses at any age.
Rule 4: Sequence of Returns Risk
The biggest risk in retirement isn’t a bear market — it’s a bear market in the first 5 years of retirement. Withdrawing from a declining portfolio accelerates depletion. Solution: keep 2–3 years of expenses in cash/bonds as a buffer so you never sell stocks in a downturn.
Rule 5: Plan for 30+ Years
If you retire at 60, plan for your money to last 35+ years. At 65, plan for 30+. One in three 65-year-olds will live past 90. One in seven will live past 95. Running out of money at 88 is a catastrophe you can prevent with conservative planning.
Rule 6: Tax Diversification Matters
Having money in Traditional (taxed on withdrawal), Roth (tax-free), and taxable accounts (capital gains rates) gives you the flexibility to minimize taxes in any economic environment. Aim for all three buckets.
Rule 7: Don’t Count on Inheritance or Windfalls
Plan as if you’ll receive nothing beyond what you save. An inheritance is a bonus, not a retirement plan. Long-term care costs can consume an entire estate before it’s passed down.
Frequently Asked Questions
Can I retire early?
Yes, with aggressive saving. The FIRE movement targets 50–70% savings rates to retire in 10–15 years. Use Richify’s FIRE Calculator to see your timeline.
Is $1 million enough to retire?
At a 4% withdrawal rate, $1M provides $40,000/year. With Social Security adding ~$18,000, that’s $58,000/year. In a low-cost area, that’s comfortable. In a high-cost city, it’s tight. Adjust for your specific expenses and location.
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Disclaimer: This article is for educational purposes only. Retirement needs vary significantly by individual.
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