A common starting point is estimating your yearly spending in retirement and multiplying by about 25. The goal is a directionally correct “retirement number,” then a monthly contribution plan you can consistently follow.
Step 1: Estimate retirement spending
Start with today’s spending and adjust for changes you expect (housing, kids, healthcare, lifestyle). You do not need perfect accuracy—just a reasonable estimate to guide saving.
Step 2: Convert spending into a target number
A simple method many people use is multiplying annual spending by a factor (often 25× as a starting point). Example: $60,000/year × 25 = $1.5M. This turns a vague goal into a target you can plan around.
Step 3: Turn the target into a monthly plan
Once you have a target and a timeline, back into a monthly contribution you can automate. The plan should be stable enough to continue during busy months—consistency matters more than occasional big pushes.
Step 4: Increase contributions as income rises
The fastest way to reach retirement goals is not constant optimization—it’s increasing contributions when income increases. Use a simple “raise rule” so your plan scales with your career.
