Enter the annual expenses expected during retirement into the calculator to determine the total retirement savings needed.

## Rule of 25 Formula

The following formula is used to calculate the total amount needed for retirement based on the Rule of 25.

RS = A * 25

Variables:

- RS is the total retirement savings needed ($)
- A is the annual expenses expected during retirement ($)

To calculate the total retirement savings needed, multiply the annual expenses expected during retirement by 25. This is based on the assumption that a retiree can withdraw 4% of their retirement savings each year without running out of money for at least 30 years.

## What is a Rule of 25?

The Rule of 25 is a guideline used in retirement planning to estimate how much a retiree will need to save to sustain their lifestyle after retirement. According to this rule, a retiree will need to save 25 times the amount that they expect to spend annually during retirement. This rule is based on the 4% withdrawal rate, which suggests that a retiree can withdraw 4% of their retirement savings each year without running out of money for at least 30 years.

## How to Calculate Rule of 25?

The following steps outline how to calculate the Rule Of 25.

- First, determine the annual expenses expected during retirement ($).
- Next, gather the formula from above = RS = A * 25.
- Finally, calculate the Rule Of 25.
- After inserting the variables and calculating the result, check your answer with the calculator above.

**Example Problem : **

Use the following variables as an example problem to test your knowledge.

annual expenses expected during retirement ($) = 40000