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How much money do you really need to retire without losing sleep at night? If you think your 401(k) alone will cut it, think again — one wrong market move could put your retirement plan to sleep.
But figuring out how much you’ll need to enjoy your retirement isn’t straightforward. The costs can add up fast between health care, housing, groceries and maybe even a vacation or two.
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And the reality? Everyone’s “magic number” is a little different.
If you’re looking for a solid starting point, personal finance icon Suze Orman has some rules that might help you get a good night’s sleep, though her magic number may surprise you.
Orman’s magic number
Orman recently shared her thoughts about how much to retire with on her Women & Money podcast. Her advice is all about playing defense — especially in unpredictable markets.
Her first rule: Don’t rely on your 401(k) or IRA alone. Both are tied closely to stocks, but the market doesn’t always play nice.
“It’s not always that stocks go down and bonds go up, or bonds go down and therefore stocks go up. Sometimes everything can go down,” Orman said on the podcast.
Translation? If your retirement plan is riding the market rollercoaster, you could be in for a sharp drop when you’re hoping for smooth sailing. To soften the blow, Orman recommends stashing away three to five years worth of living expenses in a liquid, low-risk account — like a high-yield savings or a checking account.
This “just-in-case” cash fund should not be tied to the market. That way you’re not forced to sell investments at a loss just to cover rent or buy groceries.
Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
“If you really wanna be on the safe side, it’s five years,” Orman said.
If you haven’t started building that emergency fund yet, here’s how to begin.
How to build your cash cushion
Building a solid cash cushion isn’t just about peace of mind. Having easily accessible funds can help you navigate emergencies, smooth out your cash flow and even take advantage of surprise investment opportunities.
High-yield savings
A great place to start is with a high-yield savings account.
These offer better interest rates than traditional savings accounts, so your money works harder while remaining liquid. Plus, they’re usually insured by the Federal Deposit Insurance Corporation. This means qualifying high-yield accounts are protected against bank-based losses of up to $250,000.
While the national average interest rate for U.S. savings accounts is 0.41% APY, online banks can offer you better returns. You can find some of the most competitive banks on Moneywise’s list of the Best High-Yield Savings Accounts of 2025 to find an offer that fits with your goals.
One option is Wealthfront, which offers everything from automated investing to cash accounts. The Wealthfront Cash Account offers 4.00% APY — nearly 10 times the U.S. average. With full access to your money at all times, Wealthfront’s high-yield account maintains your financial flexibility.
Certificates of deposit
Short-term certificates of deposit (CDs) might also be worth a look, if you’re comfortable locking your money away for at least a year.
Certificates of deposit offer fixed-interest rates and are FDIC-insured. Just keep in mind that there are penalties if you withdraw early. CDs are best for funds you won’t need soon. If you’re building an emergency fund, make sure you have money set aside in an easy-to-access account.
SavingsAccounts.com can help you shop around across various banks and financial institutions. The platform allows users to easily compare different CD terms, interest rates and features to find the best options for their savings goals.
They aim to simplify the process of choosing the right CD by providing transparent and up-to-date information, helping you maximize your return while locking in financial security.
Keep calm and save on
Don’t panic if you’re nearing retirement and your savings aren’t quite where you want them to be. In some cases, delaying retirement by even a year or two can make a huge difference. You’ll have more time to save, fewer years to fund and you may increase your Social Security benefits in the process.
But there are ways to save towards your retirement goals without putting away large sums of money at once.
With Acorns, any purchase on your credit or debit card is automatically rounded up to the nearest dollar. In other words, that $4.25 daily coffee is now $5, but that 75 cent difference — coins that would otherwise wind up as loose change if you were paying cash — goes into a smart investment portfolio.
Automating your savings is a game-changer, too. Set up a recurring transfer on Acorns from your checking account to your savings or investing account, and you’ll build up a nest egg without thinking about it. It’s one of the easiest ways to stay consistent and avoid spending that extra cash.
Even better, Acorns can help you get started with a $20 sign-up bonus.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
