Retirement Rules of Thumb

Are you on track for retirement? Could you be doing more to achieve your goals? Retirement rules of thumb can offer helpful benchmarks as you check your progress—but remember, they are starting points, not a substitute for a plan built around your unique needs.

A rule of thumb is a simple guideline to help with financial decisions. For example, the Rule of 100 helps estimate an appropriate level of investment risk by subtracting your age from 100. This article explains that and other common rules, so you can apply them wisely and avoid common mistakes.

These rules of thumb give you quick reference points to:

• Check whether your savings rate is on track. Schedule a call with Foxcove Financial if you want a personalized review.
• Estimate how quickly your retirement savings could grow.
• Understand the impact of inflation on your future income.
• Set an initial savings goal for retirement income needs.

While these rules are helpful benchmarks, some retirees look to fixed index annuities for principal protection and guaranteed income as part of a balanced retirement strategy.

Remember, these guidelines are like pins on a map—they show you where to look, but your financial journey is unique. Foxcove Financial can help you explore insured retirement income strategies and how these rules of thumb may support your retirement goals.

Common Retirement Rules of Thumb

Here are widely used rules of thumb for retirement planning:

Retirement Guide #1: Rule of 72

Wondering how long it takes for your savings to double? The Rule of 72 gives you a quick estimate using compound growth. Divide 72 by your expected annual return to find the number of years for your money to double. For example, an 8% return means doubling in about 9 years (72 ÷ 8 = 9). This is a rough guide—real returns will vary year to year.

Retirement Guide #2: Rule of 114

Like the Rule of 72, the Rule of 114 shows how long it would take to triple your savings. Divide 114 by your expected annual return. An 8% return would triple your money in about 14 years (114 ÷ 8 = 14.25). Remember, consistent returns are rare—use this as a benchmark, not a guarantee.

Retirement Guide #3: 25x Rule

How much should you save? The 25x Rule suggests targeting 25 times your expected annual retirement expenses. If you plan to spend $50,000 per year, that means aiming for $1.25 million. This is a general estimate—your personal needs may differ. Combining withdrawal strategies and insured income solutions such as fixed index annuities can help address income needs, even if your savings are below this benchmark.

Foxcove Financial can help you evaluate how fixed index annuities might complement your overall retirement income plan.

Retirement Guide #4: Rule of 100

The Rule of 100 is a simple educational tool for understanding how investment risk may shift as you age. Subtract your age from 100 to estimate a suggested percentage for stocks in your portfolio (e.g., at 65: 100 – 65 = 35%). This is not a personalized recommendation. Your actual approach should reflect your risk tolerance, goals, and insurance needs. Foxcove Financial can help you explore insured income strategies and how these rules of thumb may fit into your retirement plan.

Retirement Guide #5: Rule of 70

Inflation erodes purchasing power over time. The Rule of 70 estimates how long it takes for inflation to cut your buying power in half. Divide 70 by the inflation rate—for example, 70 ÷ 3% = 23 years. This illustrates why your retirement income plan should account for rising costs over decades.

Retirement Guide #6: 4% Withdrawal Rule

Once you’ve saved for retirement, you need a way to withdraw funds sustainably. The 4% rule recommends withdrawing 4% of your portfolio in the first year of retirement, then adjusting annually for inflation. For $1 million in savings, that’s $40,000 in year one. This is a traditional guideline—market conditions and personal factors may require a more flexible approach. Learn more about withdrawal strategies here.

Retirement Guide #7: 10x Income Rule

The 10x Income Rule offers a quick way to set a retirement savings target: aim to save at least 10 times your final annual salary by the time you retire. For example, if your last working-year salary is $80,000, set a target of $800,000. Use this as a starting point—your individual needs may vary.

Retirement Guide #8: 80% Replacement Rule

This rule suggests you may need about 70–80% of your pre-retirement income each year in retirement. For example, if your pre-retirement salary is $100,000, plan for $70,000–$80,000 per year as a goal. Factors like healthcare, lifestyle, and taxes may adjust this number.

Retirement Guide #9: Rule of 63 (Social Security Milestone)

You can start Social Security benefits as early as age 62. However, your monthly benefit amount increases for each year you delay claiming, up to age 70. This isn’t a recommendation—just a milestone to consider as you coordinate retirement income sources.

Retirement Rules of Thumb Aren’t an End-All, Be-All

These rules are helpful starting points—but not a substitute for a plan customized to your needs. Your retirement strategy should reflect your unique goals, income sources, spending needs, and risk tolerance. Consider these rules as conversation starters, not one-size-fits-all solutions.