Rule 1: The Rule of 72
Divide 72 by your annual return to estimate doubling time. At 7%: 10.3 years. Verdict: Timeless and accurate. This is pure math — it doesn’t depend on economic conditions. Accurate to within 3% across common investment returns.
Rule 2: Save 15% of Income for Retirement
The 15% rule (including employer match) is designed to replace 70–80% of pre-retirement income with 35 years of saving. Verdict: Still mostly valid, but needs adjustment for late starters. Start at 25: 15% works. Start at 35: needs 20–25%. Start at 45: needs 30%+ or reduced retirement expectations.
Required savings rate by starting age to maintain lifestyle in retirement — assumes 7% return
| Start Age | Required Savings Rate | Monthly on $75K Income |
|---|---|---|
| 25 | 15% | $938/month |
| 30 | 18% | $1,125/month |
| 35 | 22% | $1,375/month |
| 40 | 28% | $1,750/month |
| 45 | 36% | $2,250/month |
Rule 3: The 4% Withdrawal Rule
Withdraw no more than 4% of your retirement portfolio in Year 1, adjusting for inflation annually. The research (Bengen, 1994) showed this rate survived all 30-year historical periods. Verdict: Still valid but requires context. With low bond yields and 30+ year retirement horizons, 3.5% is more conservative and more appropriate.
To withdraw $60,000/year using the 4% rule: need $1,500,000 invested. To withdraw $80,000/year: need $2,000,000. To withdraw $100,000/year: need $2,500,000. Social Security and pension income reduce the required portfolio proportionally.
Rule 4: 10× Annual Salary in Retirement Savings
Fidelity’s benchmark: 10× annual salary saved by age 67. Verdict: Reasonable but blunt. This assumes retirement spending equals 70% of pre-retirement salary and a 25-year retirement. High earners who spend a lower percentage of income may need less than 10×; high spenders relative to income may need more.
Rule 5: The Rule of 100/110/120
Equity allocation = 100 (or 110, or 120) minus your age. Verdict: Outdated at 100, better at 110–120. With life expectancies extending and bond yields still below historical long-term equity returns, most advisors use 110–120. A 50-year-old using the 110 rule holds 60% equity — appropriate for most risk tolerances.
Test the Rules Against Your Numbers
Enter your age, income, and savings — see if you’re on track with the benchmarks and where adjustments help most.