Question 1

How much do I need to retire?

Accepted Answer

Multiply your expected annual retirement expenses by 25. This is based on the 4% safe withdrawal rate. For example, $60,000/year in expenses requires a $1,500,000 portfolio. Subtract guaranteed income like Social Security before calculating — if you expect $24,000/year from Social Security, you only need to fund $36,000/year from savings, requiring a $900,000 portfolio.

Question 2

What is the 4% rule for retirement?

Accepted Answer

The 4% rule states you can withdraw 4% of your portfolio in year one of retirement, adjust for inflation each year, and your money should last 30+ years in most historical market scenarios. It originated from the 1998 Trinity Study. For retirements longer than 30 years, a 3.5% withdrawal rate is considered safer.

Question 3

When should I claim Social Security?

Accepted Answer

Claiming at 70 vs 62 increases your monthly benefit by approximately 77%. The break-even point — where delaying pays off — is typically around age 78-80. If you expect to live past 80 and have other income to bridge the gap, delaying to 70 is usually the better financial choice. For married couples, the higher earner should generally delay to maximize the survivor benefit.

Question 4

How much should I have saved for retirement by age?

Accepted Answer

According to Federal Reserve data, US median retirement savings by age are approximately: age 35: $45,000; age 40: $93,000; age 45: $145,000; age 50: $203,000; age 55: $290,000; age 60: $368,000. A common benchmark is to have 1x your salary saved by 30, 3x by 40, 6x by 50, and 10x by retirement.

Question 5

What is a Monte Carlo simulation for retirement?

Accepted Answer

A Monte Carlo simulation runs your retirement plan through thousands of randomly generated market scenarios to show the probability your savings will last. Instead of assuming average returns every year, it models the full range of possible outcomes including bad sequences of returns. A success rate above 90% is considered very safe; above 80% is generally acceptable.

Question 6

What are the 401k contribution limits for 2026?

Accepted Answer

For 2026, the 401k employee contribution limit is $23,500 (under age 50) or $31,000 (age 50+). Workers aged 60-63 can contribute up to $34,750 under the new super catch-up provision. The IRA contribution limit is $7,000 ($8,000 if 50+). The HSA limit is $4,300 for individuals and $8,550 for families.

Question 7

How does inflation affect retirement savings?

Accepted Answer

At 3% annual inflation, your purchasing power is cut in half every 24 years. For a 30-year retirement, $60,000 in expenses today would cost over $145,000 in year 30. To protect against inflation: stay invested in stocks throughout retirement, delay Social Security to maximize COLA-adjusted benefits, consider TIPS bonds, and use a realistic 2.5-3% inflation assumption in your retirement calculator.

Question 8

Can I retire at 55?

Accepted Answer

Yes, retiring at 55 is achievable but requires more savings than a traditional retirement. With a 40-year retirement horizon, use a 3.5% withdrawal rate (28-30x annual expenses instead of 25x). Key challenges: no Medicare until 65 (budget $800-1,500/month for health insurance), no Social Security until 62 at earliest, and no penalty-free 401k access until 59.5 (except via the Rule of 55 for your current employer's plan).

Feature	401(k) Traditional	Roth 401(k)	Traditional IRA	Roth IRA	SEP IRA	SIMPLE IRA	HSA	457(b)
2026 Contribution Limit	$23,500 / $31,000 (50+) / $34,750 (60–63)	$23,500 / $31,000 (50+) / $34,750 (60–63)	$7,000 / $8,000 (50+)	$7,000 / $8,000 (50+)	Up to 25% of compensation or $70,000 (whichever is less)	$16,500 / $20,000 (50+)	$4,300 (individual) / $8,550 (family) + $1,000 catch-up (55+)	$23,500 / $31,000 (50+)
Tax Treatment Now	Pre-tax (reduces taxable income)	After-tax (no deduction)	Pre-tax if you qualify for deduction (income limits if covered by workplace plan)	After-tax (no deduction)	Pre-tax	Pre-tax	Pre-tax contributions	Pre-tax
Tax Treatment in Retirement	Withdrawals taxed as ordinary income	Qualified withdrawals completely tax-free	Withdrawals taxed as ordinary income	Qualified withdrawals completely tax-free	Withdrawals taxed as ordinary income	Withdrawals taxed as ordinary income	Tax-free for medical expenses; ordinary income tax for non-medical after 65	Withdrawals taxed as ordinary income
Required Minimum Distributions	Yes, starting at age 73	No RMDs starting 2024 (SECURE 2.0)	Yes, starting at age 73	None during your lifetime	Yes, starting at age 73	Yes, starting at age 73	None	Yes, starting at age 73
Early Withdrawal	10% penalty + taxes before 59½ (exceptions apply)	10% penalty on earnings before 59½; contributions withdrawable anytime	10% penalty + taxes before 59½ (exceptions apply)	Contributions withdrawable anytime; 10% penalty on earnings before 59½	10% penalty + taxes before 59½	25% penalty in first 2 years; 10% after that	20% penalty + taxes for non-medical before 65	No 10% penalty — can withdraw upon separation from service at any age
Income Limits	None	None	Deduction phases out: $79k–$89k (single) / $126k–$146k (married, covered by plan)	Phase-out: $150k–$165k (single) / $236k–$246k (married). Use backdoor Roth if over limit.	None	None (employer must have ≤100 employees)	Must have qualifying high-deductible health plan (HDHP)	None (government/nonprofit employees only)
Employer Match	Yes — always contribute enough to get full match	Yes	No	No	Employer only (self-employed: you are the employer)	Required: either 2% non-elective or 3% matching	Sometimes	Sometimes
Best For	High earners who expect lower taxes in retirement	Those who expect higher taxes in retirement or want tax-free income	Those without workplace plan or who want additional pre-tax savings	Young earners, those expecting higher future taxes, or wanting flexible access	Self-employed individuals and small business owners with high income	Small business employees; higher limit than IRA with mandatory employer match	Triple tax advantage — best account available if you have an HDHP	Government/nonprofit employees — unique benefit of no early withdrawal penalty

Retirement Account Comparison 2026