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There is no single retirement-income amount everyone should save beyond Social Security. Estimate your household’s planned retirement spending, subtract your own Social Security estimate and other dependable income, and treat the remaining annual shortfall as the amount savings or other resources must cover. You can translate that gap into a savings target only after choosing assumptions about taxes, retirement timing, investment returns, withdrawals, inflation and how long the money may need to last.
Start with the income gap, not a universal savings number
The useful first question is not “How much should everyone save?” It is “How much income will my household need, and how much of it is already expected from Social Security and other sources?” The difference is the income gap your savings, work or other resources may need to fund.
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Use the same basis on both sides of the calculation: monthly with monthly or annual with annual, household with household, and today’s purchasing-power dollars with today’s dollars. Mixing an individual Social Security estimate with a couple’s spending target, or a pretax benefit with an after-tax spending figure, can make the result misleading.
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A positive result is the annual shortfall to plan for. A zero or negative result is not, by itself, proof that a plan is secure: the estimate still depends on how long retirement lasts, inflation, taxes, health costs and unexpected changes.
Why replacement-rate rules are not a personal budget
A commonly repeated rule says retirees need about 70% of their working income. That can be a starting point for discussion, but it is not a personal spending estimate and should not be confused with the share Social Security will replace. Social Security Administration researchers Andrew G. Biggs and Glenn R. Springstead explained in a 2008 Social Security Bulletin article that replacement rates vary according to the earnings denominator used and whether the comparison is individual or shared household income. A total-income replacement rate and a Social Security replacement rate may therefore use different bases and are not directly comparable.
The authors put the underlying issue this way: “Retirement income adequacy is a relative measure. No single dollar amount is correct for every retired individual or couple at every time; rather, households are best served with different real retirement income levels, balancing retirement income with consumption patterns established during working years.” Their 2008 analysis helps explain why one percentage cannot answer an individual household’s question; it is not a current estimate for you.
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Build your estimate in six steps
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Choose a target date and a dollar basis
Decide when you are estimating retirement to begin and whether the figures will be in today’s dollars or future nominal dollars. Today’s dollars are easier to compare with current expenses because they express the target in current purchasing power. If you use future dollars, make sure your spending and income estimates are both expressed that way.
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Estimate household spending after work ends
List the expenses you expect in retirement rather than applying a percentage automatically. Include housing, food and utilities, transportation, health care, taxes, debt payments and discretionary spending such as travel or hobbies. Note which costs may change: commuting or work-related expenses may fall, and saving for retirement may stop, while health expenses can add uncertainty. A mortgage payoff, a move or a change in household size can also alter the plan, so use the circumstances you actually expect rather than assuming every current bill stays constant.
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Get Social Security estimates based on your earnings record
Use your personal my Social Security account, check that your earnings record is accurate, and review the benefit estimates for different claiming ages. The Social Security Administration says, “Your account shows personalized estimates based on your earnings.” The account also lets you change assumptions about expected future earnings, which matters if you expect to keep working before retirement. The estimate is personalized to your record, but it is still an estimate that can change as assumptions and benefit adjustments are updated.
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Add other dependable income
Include a pension or other expected income that you reasonably expect to receive, and any planned part-time earnings if they are part of the plan. Keep the units and ownership consistent: compare household income with household expenses, and do not add an individual amount to a couple’s total without accounting for both people. For a couple, evaluate how the household budget depends on each person’s income rather than assuming that one person’s benefit alone represents the household’s resources.
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Subtract income from spending
Apply the formula once your estimates are on the same basis. If, for example, a household’s illustrative annual spending target is $72,000, its illustrative annual Social Security income is $40,000 and its other expected annual income is $8,000, the initial gap is $24,000 per year. These figures are only an arithmetic example, not a recommended budget or a forecast of benefits. A real estimate should use your own spending and income assumptions.
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Stress-test before deciding how much to accumulate
Check whether the result changes materially if retirement begins later or earlier, one person claims at a different age, health costs are higher, or other income is lower. A gap estimate tells you how much annual income must come from somewhere else; it does not determine the required account balance or monthly contribution. Model that next, using explicit assumptions for withdrawals, investments, inflation, taxes and the duration of retirement.
Make the spending and income figures comparable
A practical estimate needs more than a benefit figure and a round-number spending goal. Before relying on the difference, make these choices explicit:
- Individual or household: A single worker’s benefit estimate and a couple’s combined budget are different measures. Build a household total from the income each person expects and compare it with the household’s expenses.
- Before or after tax: Decide whether amounts are pretax or after tax. A spending target is usually about money available to pay bills, so a pretax income figure cannot simply be treated as the same amount of spendable income.
- Today’s or future dollars: Keep all amounts in the same purchasing-power frame. If the spending target is in today’s dollars, do not subtract an income figure expressed in future nominal dollars without adjusting the comparison.
- Essential and optional costs: Separate necessary expenses from discretionary plans if that helps show which parts of the budget can be reduced. Be specific about housing, debt and health-care assumptions instead of letting a broad replacement-rate percentage conceal them.
- Income reliability and timing: Record when pension income, work income and Social Security are expected to start. A household may face a different gap before all expected income begins than it will later.
What current Social Security figures can—and cannot—tell you
The Social Security Administration’s June 30, 2026 fact sheet reports an average monthly benefit of $2,084 for retired workers. That is a population average, not a forecast for any one person. Individual benefits depend on a person’s earnings record and the claiming-age assumptions in the estimate, so use the record-based account estimate for your plan rather than treating the average as a personal entitlement.
The same 2026 fact sheet, summarizing the 2026 Trustees Report, projects depletion of the combined Old-Age and Survivors Insurance and Disability Insurance reserves in 2034. It also projects that continuing income at depletion would cover about 83% of program costs. This is not a projection that Social Security ends in 2034: the projection includes continuing income. If uncertainty about future benefits affects your plan, you can model a reduced-benefit scenario alongside the personal estimate, but do not replace your personalized estimate with an assumption that benefits will be zero.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Only convert the gap into a savings target after setting assumptions
There is no universal conversion from an annual shortfall to a required savings balance in the official figures described here. A balance that might cover a given gap under one set of withdrawal, investment and longevity assumptions may not do so under another. The conversion therefore needs to be a scenario, not a guaranteed number.
For a useful scenario, specify when withdrawals begin, what annual withdrawal pattern you are testing, how investment returns and inflation are treated, whether taxes are included, and how many years the plan is meant to support. A plan that assumes a particular retirement age and spending path should not be presented as if it remains valid if either changes. If you need a more detailed household projection, retirement income planning with a qualified financial planner can help model taxes, withdrawals and multiple scenarios; it is an option, not a requirement for every saver.
Saving limits are not recommendations
For 2026, the Internal Revenue Service lists a $24,500 basic employee elective-deferral limit for 401(k) and similar plans. That figure is a legal contribution ceiling, not a recommendation that everyone should save $24,500 or a measure of the balance needed to close a particular retirement-income gap. Eligibility, employer matching, catch-up contributions, tax treatment and plan rules can affect what an individual can contribute and how contributions work. Set your target from the household gap and your savings scenario, not from the maximum allowed contribution alone.
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A retirement-income plan is only as useful as its inputs. Update spending assumptions when housing, debt, health needs or retirement plans change; review the earnings record and future-earnings assumption used for the Social Security estimate; and recalculate if the intended retirement or claiming age shifts. The SSA calculator version identified in the available material as 2026.2 was released July 13, 2026, and estimates or calculator versions may change as assumptions and benefit adjustments are updated. Treat a saved estimate as a dated planning snapshot, not a permanent guarantee.
The most actionable outcome is a documented annual gap with clear assumptions. Once you know which expenses and income streams create it, you can decide whether the response is to save more, work longer, adjust discretionary spending, change timing, or explore other resources—and then test how those choices affect the plan.
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