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).

State	Social Security	Pension	401k / IRA	Notes
Alabama	None	Partial	Full	State/federal pensions exempt; private pensions taxed
Alaska	None	None	None	No state income tax
Arizona	None	Partial	Full	Government pensions partially exempt
Arkansas	None	Partial	Partial	$6,000 exemption on retirement income
California	None	Full	Full	Taxes most retirement income; no SS tax
Colorado	Partial	Partial	Partial	$24,000 exemption for those 65+
Connecticut	Partial	Partial	Full	SS exempt if income under $75k (single)/$100k (married)
Delaware	None	Partial	Partial	$12,500 pension/retirement exclusion for 60+
Florida	None	None	None	No state income tax
Georgia	None	Partial	Partial	$65,000 retirement income exclusion for 65+
Hawaii	None	Partial	Full	Government pensions exempt; private pensions taxed
Idaho	None	Full	Full	Deduction available for retirement income
Illinois	None	None	None	All retirement income exempt from state tax
Indiana	None	Partial	Full	Military and some government pensions exempt
Iowa	None	None	None	All retirement income exempt for those 55+
Kansas	Partial	Partial	Full	SS exempt if AGI under $75,000
Kentucky	None	Partial	Partial	$31,110 pension income exclusion
Louisiana	None	Partial	Full	Government pensions exempt
Maine	Partial	Partial	Full	$25,000 pension deduction; SS partially exempt
Maryland	None	Partial	Full	$34,300 pension exclusion for 65+
Massachusetts	None	Partial	Full	Government pensions exempt; private pensions taxed
Michigan	None	Partial	Partial	Exemptions vary by birth year; phasing in changes
Minnesota	Partial	Full	Full	SS exempt if income under $78k (single)/$100k (married)
Mississippi	None	None	None	All retirement income exempt
Missouri	Partial	Partial	Full	SS exempt if AGI under $85k (single)/$100k (married)
Montana	Partial	Full	Full	SS taxed like federal; some pension deductions available
Nebraska	None	Full	Full	SS fully exempt starting 2025
Nevada	None	None	None	No state income tax
New Hampshire	None	None	None	No income tax on wages or retirement income
New Jersey	None	Partial	Partial	$75,000 retirement income exclusion for 62+ (income limits apply)
New Mexico	Partial	Full	Full	SS exempt if income under $100k (single)/$150k (married)
New York	None	Partial	Partial	Government pensions fully exempt; $20,000 private pension exclusion
North Carolina	None	Partial	Full	Government pensions exempt for pre-1989 employees
North Dakota	Partial	Full	Full	SS partially exempt; low flat income tax rate
Ohio	None	Partial	Full	Retirement income credit available
Oklahoma	None	Partial	Partial	$10,000 retirement income exclusion
Oregon	None	Full	Full	No SS tax; federal pension partially exempt
Pennsylvania	None	None	None	All retirement income exempt if from qualified plans
Rhode Island	Partial	Full	Full	SS exempt if income under $86k (single)/$107k (married)
South Carolina	None	Partial	Partial	$15,000 retirement income deduction for 65+
South Dakota	None	None	None	No state income tax
Tennessee	None	None	None	No state income tax on wages or retirement income
Texas	None	None	None	No state income tax
Utah	Partial	Full	Full	Retirement tax credit available; SS partially exempt
Vermont	Partial	Full	Full	SS exempt if income under $65k (single)/$85k (married)
Virginia	None	Partial	Full	$12,000 age deduction for 65+
Washington	None	None	None	No state income tax
West Virginia	Partial	Partial	Full	SS exempt if income under $50k (single)/$100k (married)
Wisconsin	None	Partial	Full	Government pensions partially exempt
Wyoming	None	None	None	No state income tax

State Retirement Tax Guide 2026