How Much to Save for Retirement (Use AI to Check Your Number)

How much should you save for retirement?

A common starting point is 15% of your gross income each year, counting any employer 401(k) match, for a working life that starts in your 20s. If you are starting later, or you want to retire early, the number is higher. The more useful way to get your own figure is to work backward. Estimate what you will spend in retirement, subtract guaranteed income like Social Security, multiply the gap by 25, and then work out the yearly savings needed to reach that total. AI is good at running that math and its variations. It is not good at knowing your tax situation or the current rules.

This post is written for US readers with a 401(k) or similar plan, aimed at mid-career and senior employees. It is general education, not personal financial advice.

What are the common rules of thumb, and how reliable are they?

Three shortcuts come up constantly. They are useful as sanity checks, not as plans.

The 4% rule is the one that makes the backward method work. If you can safely spend 4% of a portfolio per year, you need 25 times your yearly gap between spending and guaranteed income. Treat 25x as a planning estimate. Markets, fees, taxes and how long you live all move it.

How do you calculate your own retirement number?

You need five inputs. Rough values are fine.

1. Your age and the age you want to stop working.
2. What you have saved today across 401(k), IRA and other investment accounts.
3. Your yearly spending in retirement, in current dollars. Start with what you spend now, then remove things that will end (mortgage, commuting, kids' costs) and add things that will grow (health care, travel).
4. Expected Social Security, from your statement at ssa.gov. Claiming at 62 pays less each month than waiting until your full retirement age (67 for anyone born in 1960 or later), and waiting until 70 pays more.
5. Your current income and what you contribute, including the employer match.

Then the steps:

1. Subtract Social Security (and any pension) from your retirement spending. That is your yearly gap.
2. Multiply the gap by 25. That is your target portfolio.
3. Grow your current savings to your retirement date using a modest inflation-adjusted return.
4. Subtract that from the target. The remainder is what future contributions must cover.
5. Convert that remainder to a yearly amount, then to a percentage of your income.

What does a worked example look like?

Say you are 45, earn $140,000, have $250,000 saved, and want to stop working at 65. You expect to spend $90,000 a year in current dollars. Your Social Security statement suggests about $38,000 a year (an illustrative number).

• Yearly gap: $90,000 minus $38,000 is $52,000.
• Target: $52,000 times 25 is $1,300,000.
• Current savings growing for 20 years at a 4% return after inflation: about $548,000.
• Still needed from new contributions: about $752,000.
• Yearly contribution to get there: about $25,000.

That is roughly 18% of salary, and it includes your employer's match. If your employer adds 4% of pay ($5,600), you would contribute about $19,400 yourself.

The return assumption matters a great deal:

Two points to take from this. First, a single percentage point of return changes your required savings by thousands of dollars a year, so plan on the middle case and see whether the cautious case is survivable. Second, all figures are in current dollars, so you do not have to guess future inflation separately.

How can AI help you plan for retirement?

AI is useful for four things here: running the arithmetic in the order above, comparing scenarios quickly, turning the results into plain language, and generating questions to ask a professional. You can use a general chat assistant such as ChatGPT, Claude or Gemini. Rough numbers are enough, so there is no need to enter account numbers, your Social Security number, or your employer's name.

Prompt 1: Find your number

Act as a retirement planning calculator and explain your work step by step.

My inputs (all in current dollars):
- Age: [45]. Planned retirement age: [65].
- Current retirement savings: $[250,000]
- Annual gross income: $[140,000]
- Employer match: [4% of pay]
- Expected retirement spending per year: $[90,000]
- Expected Social Security per year: $[38,000]

Use the 4% rule (target = yearly gap x 25). Assume investment returns
after inflation of 3%, 4% and 5%. For each case, show:
1. Target portfolio
2. What my current savings grows to
3. The yearly contribution needed, in dollars and as a % of income
4. How much of that my employer match covers

Show the formulas so I can check them. List every assumption you made.

Prompt 2: Stress-test the plan

Using the same inputs, run these what-ifs and show the yearly savings
needed in each:
- I retire at 62 instead of 65
- I retire at 68 instead of 65
- Retirement spending is 20% higher than I estimated
- I take Social Security at 62 (assume 30% less) versus 70 (assume 25% more
  than my age-67 estimate)
- The stock market falls 30% in the year before I retire

Summarize which change hurts the plan most and which helps most.

Prompt 3: Prepare for a human conversation

Based on this plan, write ten questions I should ask a fee-only
fiduciary financial planner. Include questions about Roth versus
traditional contributions, catch-up contributions after age 50, taxes on
withdrawals, and health care costs before Medicare. Keep each question
to one sentence.

What should you check in the AI's answer?

Treat the output as a draft from a fast assistant who sometimes gets arithmetic wrong.

• Redo one calculation by hand or in a spreadsheet. Take the middle case. Check that $250,000 growing at 4% for 20 years comes to about $548,000. Language models can slip on compound growth.
• Look for the stated assumptions. If the answer does not say what return, inflation rate or retirement length it used, ask for them.
• Confirm any limit or rule against an official source. Annual 401(k) and IRA contribution limits, catch-up amounts for age 50 and over, and Social Security rules change. Look them up on your plan provider's site, irs.gov or ssa.gov rather than trusting a number in a chat.
• Check that everything is in the same dollars. A mix of today's dollars and future dollars is the most common error.
• Ask what is missing. A good follow-up is "What did this plan leave out?" Common answers: taxes on withdrawals, health care costs, a spouse's accounts, a pension, and the order of withdrawals.

Where should you not trust AI with retirement planning?

• Tax decisions. Roth versus traditional, Roth conversions and withdrawal order depend on your bracket now and later, your state, and rules that change. AI can explain the tradeoffs. It cannot know your return.
• Specific investments. Do not ask a chatbot which funds to buy and then act on it. Look at fees (expense ratios) and diversification in your plan's fund menu, and consider a target-date fund if you want a default.
• Predictions. No one knows future returns, and an AI that gives you a confident single number is hiding that.
• Anything urgent or irreversible, such as an early withdrawal, a rollover with a deadline, or a decision about a pension payout. Get a professional involved.
• Sensitive data. Keep account numbers, passwords and your Social Security number out of any chat.

What can you do this month to improve the number?

Most of the gains are not clever. In rough order of impact:

1. Capture the full employer match. It is part of your pay. Not contributing enough to get it is leaving compensation unclaimed.
2. Raise your contribution rate by 1 to 2 points, or tie an increase to your next raise so you do not feel it.
3. Use catch-up contributions if you are 50 or older. Check the current limit with your plan provider.
4. Check your fees. Look at the expense ratios of the funds you hold. A high fee compounds against you for decades.
5. Rerun the plan once a year, ideally at open enrollment or after a raise, using the same prompts so you can compare results.
6. Decide when to claim Social Security as a strategy, not a default. Run the 62, 67 and 70 comparison from Prompt 2.

Could you build your own retirement what-if tracker?

If you rerun this plan every year, a chat history is an awkward place to keep it. A spreadsheet works well for this, and for many people it is enough. If you want something more tailored, such as a small private app where you enter your inputs once, compare scenarios side by side and see how each year's update changes the picture, you could describe it in plain English to Remy, which builds and deploys full-stack apps from a description and includes sign-in so the app stays yours. It is worth the effort only if a spreadsheet frustrates you. Keep the inputs rounded, and do not store account numbers there either.