Retirement Readiness Assessment: Are You on Track?

March 07, 2026

Disclaimer: Securities offered through LPL Financial, member FINRA/SIPC. Investment advice offered through Private Advisor Group, a Registered Investment Advisor. This content provides general information for educational purposes. The information presented does not constitute a recommendation or guarantee of any specific outcome. Your individual situation may differ, and you should consult with qualified financial, legal, and tax professionals regarding your specific circumstances.

Retirement isn't just about hitting a certain age. It's about being financially, emotionally, and mentally prepared for one of life's biggest transitions.

But how do you know if you're truly ready?

In 2022, approximately 46% of U.S. households had no retirement account assets, according to the Federal Reserve's Survey of Consumer Finances, as summarized by the Congressional Research Service. Even among those who are saving, the Center for Retirement Research's National Retirement Risk Index estimates 39% of working-age U.S. households are at risk of not maintaining their pre-retirement standard of living in retirement.

This guide helps you assess your current situation and determine the next steps to take today.

What Does Retirement Readiness Actually Mean?

Being retirement-ready goes beyond having money in a 401(k). It means answering critical questions about your financial future and building a sustainable plan.

Financial readiness includes your retirement savings, income sources, and spending strategy. Emotional readiness involves knowing how you'll spend your time and find purpose. Practical readiness covers healthcare, estate planning, and day-to-day logistics.

Most people focus only on finances. That's why many feel unprepared, even with substantial assets in their portfolio.

Understanding Your Target Number

Americans believe they need $1.26 million to retire comfortably in 2025, down from $1.46 million in 2024 as inflation has cooled. But this figure is a national average and shouldn't be viewed as the only path forward.

Your actual target depends on several personal factors. Where you live makes a difference. So do your lifestyle choices and health status. Many retirees find that their basic expenses differ significantly from what they anticipated.

Research from the Center for Retirement Research shows that among households with retirement accounts, many have saved far less than they'll likely need to maintain their standard of living.

How to Assess Your Retirement Readiness

Evaluating your preparedness means examining three core areas. Each plays a crucial role in your overall security and ability to pursue your retirement goals.

1. Calculate Your Expected Income and Expenses

Start with your expected monthly living expenses. Take current costs and adjust for retirement. Some expenses decrease (commuting, work clothes). Others increase (healthcare, travel).

A common planning heuristic is the 80% rule, wherein you'll need roughly 80% of your working income. However, real replacement needs vary widely depending on housing status, taxes, health costs, and lifestyle.

Research indicates that higher-wealth retirees tend to allocate a smaller proportion of their available resources to retirement. On the other hand, households with lower incomes rely more heavily on income that is largely consumed to meet essential needs.

Next, list all your potential retirement income sources:

Social Security retirement benefits
Pension payments (if applicable)
401(k) or IRA withdrawals
Personal savings and investment accounts
Part-time work income from jobs you might pursue
Rental or other passive income streams

Compare your actual spending to your expected budget. Any shortfall represents your income gap. Identifying it now gives you time to adjust your plan and save more if needed.

2. Plan Your Social Security Strategy

Your claiming age dramatically affects your monthly benefit amount. If you were born in 1959, your Social Security full retirement age is 66 and 10 months. The calendar month you reach this age depends on your birth month.

Claiming early reduces your benefit permanently. In SSA examples, the benefit at 70 can be about 77% higher than starting at 62 (exact percentages vary by birth year). This difference can significantly affect your ability to manage living expenses throughout a long retirement.

The right timing depends on your health, financial needs, and family longevity. Working with a financial professional can help you run personalized scenarios based on your unique situation.

3. Review Your Healthcare and Medicare Coverage

Healthcare is one of the most significant variables in retirement planning. Medicare starts at 65, but it doesn't cover all medical costs that retirees face.

Consider these questions:

Will you retire before 65? You'll need bridge coverage to fill the gap.
Which Medicare option fits your needs—Original Medicare or Medicare Advantage?
Should you purchase supplemental insurance to reduce out-of-pocket costs?
Does long-term care insurance make sense for your situation and family history?

Research your options well before you need them. Understanding how various factors impact your coverage can help alleviate stress during the transition.

Your Retirement Readiness Checklist

Use this practical guide to gauge your preparedness. Each item represents a critical component of your retirement foundation, helping you track your progress.

Financial Foundation

Emergency savings established. In the Federal Reserve's 2024 economic well-being survey, 48% said they could cover a $2,000 expense using savings. Build three to six months of living expenses before retirement to protect against unexpected costs without derailing your long-term plan.

Debt minimized or eliminated. Focus on high-interest debt first, such as credit cards and personal loans. Lower-interest, fixed-rate debt like mortgages may be less urgent, but it still affects your cash flow. The goal is to enter retirement with minimal debt to free up more money for living expenses and the lifestyle you want to pursue.

Retirement contributions maximized. For 2025, the elective deferral limit is $23,500. Under SECURE 2.0, some plans may allow a higher catch-up contribution for individuals aged 60-63, which is $11,250 (instead of the standard $7,500). Are you getting your full employer match? This is essentially free money that helps your nest egg grow faster.

Withdrawal strategy developed. The "4% rule" is a guideline derived from historical market data and is often used as a starting point, rather than a guarantee of returns. It's because outcomes depend on market returns, inflation, and spending flexibility. Build in the ability to adjust based on market volatility and your actual spending patterns.

Income Planning

Social Security estimate reviewed. Create a My Social Security account to see projected benefits. Check your earnings record for accuracy. Compare benefits at different claiming ages to understand how timing affects your monthly income.
All income sources documented. Understand your pension options if you have one. Know the difference between single-life annuities and survivor benefits. Account for any cost-of-living adjustments that might help offset inflation risk.
Cash flow timeline created. Map when each income source begins. This prevents gaps and helps you manage taxes more efficiently across different account types. Some younger workers may also want to plan for career transitions or part-time work.
Tax implications understood. Traditional and Roth accounts have different tax treatments. The taxes you'll pay on withdrawals can significantly affect your net income. A tax professional or certified financial planner can help optimize your strategy to minimize what you pay to the government.

Protection and Legacy

Medicare decisions made. Research your options early. Understand the differences between Medicare plans and how they cover various healthcare needs. Budget realistically for out-of-pocket costs that Medicare doesn't fully cover.
Long-term care considered. Determine whether long-term care insurance is a suitable option for your situation. Consider alternatives such as Health Savings Accounts or dedicated savings accounts. This is a key factor in protecting your assets if you or a family member needs extended care.
Estate documents current. Update your will, power of attorney, and healthcare directives. Verify that beneficiaries on all investment accounts and insurance policies reflect your current wishes. This helps your assets be distributed according to your plan.
Insurance coverage appropriate. Reassess life insurance needs. Determine whether to maintain or drop policies based on your changing circumstances. Adjust homeowners and auto coverage as needed to match your retirement lifestyle.

Retirement Readiness Plans for Different Life Stages

Your strategy depends on how close you are to retirement and your current financial position. Different age groups face different challenges and opportunities.

10+ Years Until Retirement: Building Your Foundation

Time remains your greatest asset for growth. Balances vary widely by age and income, and many households approach retirement with less saved than they expected.

Focus on:

Maximizing 401(k) contributions to get the full employer match
Building emergency reserves to handle unexpected costs
Eliminating high-interest debt that drains your paycheck
Diversifying investments across different asset allocation strategies
Visualizing your ideal retirement lifestyle and what it will cost

At this stage, you can afford to take on more risk in your portfolio. Market volatility matters less when you have decades to wait before needing the money. Consider how you want to spend your time and what that means for your retirement outlook.

5-10 Years Away: Getting Specific About Your Plan

This is your reality-check phase. Get specific about your retirement plan and how you'll manage the transition from the workforce.

Start answering detailed questions: When exactly do you want to retire? What will you do with your time? Where will you live? How will you structure your days?

Priority actions:

Run detailed calculations based on your actual spending patterns
Fine-tune your Social Security strategy based on your health and family history
Research healthcare options thoroughly, including Medicare and supplemental coverage
Review asset allocation and gradually shift toward less volatile investments
Create a realistic spending budget that accounts for both basic expenses and discretionary spending

This phase is about preparing your finances and your mindset. Many people underestimate the emotional adjustment of leaving their jobs and established routines.

Within 5 Years: Final Preparations

Every decision carries more weight now. You need precision in your planning and execution.

Beginning in 2024, over 4.1 million Americans per year are turning 65 through 2027, a "Peak 65" wave that's reshaping retirement transitions. If you're among them, make sure you're ready for this transition.

Focus on:

Finalizing Social Security and pension claiming strategies
Organizing all financial documents and account information
Consulting with a financial advisor if you haven't already
Stress-testing your spending plan against different scenarios
Preparing emotionally for the transition and loss of work identity
Developing plans for how you'll spend your time and stay engaged

This is also the time to assess whether working longer makes sense for your situation. Even a few extra years can significantly enhance your financial position, providing your investments with more time to grow and mature.

Common Pitfalls to Avoid

Even careful planners make these mistakes. Being aware of them can help you steer clear of them.

Underestimating healthcare costs. Medical expenses often exceed expectations, especially for those who retire before Medicare age. Among older consumer units, housing is the largest line item. SSA's chartbook indicates that housing is approximately 36% for individuals aged 65-74 and about 39% for those aged 75 and above. Don't let healthcare costs derail your retirement plan.
Claiming Social Security prematurely. The difference between claiming at 62 versus 70 can mean tens of thousands of dollars over your lifetime. Don't let short-term thinking affect this long-term decision without analyzing your specific situation.
Ignoring taxes on withdrawals. Traditional IRAs, Roth IRAs, and taxable accounts all have different tax implications. Strategic withdrawals can help manage your expenses over time, freeing up more cash for your actual living expenses.
Forgetting about inflation. What costs $100 today might cost $135 in 20 years, assuming a 3% inflation rate. Your plan must account for rising prices that will affect your purchasing power throughout retirement.
Planning for too short a life. SSA actuarial tables show remaining life expectancy at age 65 is roughly 19 years for men and 21 years for women (varies by year and cohort). Some people live much longer. Plan for longevity, not just averages, to reduce the risk of outliving your assets.
Failing to diversify investments. Investing too much in a single asset class or individual investment can increase your risk. A well-diversified portfolio can help manage volatility and protect your retirement security.
Not preparing for the non-financial aspects. Retirement is a major life transition. Many people struggle with the loss of purpose, identity, and social connections due to work. Plan how you'll stay engaged and find meaning.

How Can You Catch Up If You're Behind?

If your retirement savings fall short of where they should be, don't panic. You still have options to improve your situation.

Maximize catch-up contributions. If you're 50 or older, take advantage of additional contribution limits. For those ages 60-63, you can contribute an extra amount to your 401(k) in 2025 under SECURE 2.0, though availability depends on your plan.
Delay retirement by a few years. Working longer has multiple benefits. You can continue earning a paycheck, save more, give your existing investments time to grow, and delay tapping into your retirement accounts. The longer you wait, the higher your Social Security benefits will be.
Consider part-time work in retirement. Many retirees find fulfilling part-time jobs that provide both income and purpose. This can reduce withdrawals from savings during the early years when your nest egg is most vulnerable to market downturns.
Tap into home equity carefully. For homeowners, a home equity line of credit or downsizing can provide additional funds. However, carefully weigh the pros and cons before using this option, as it affects your housing situation and reduces the assets you can pass to family.
Reduce spending in strategic areas. Look for expenses you can cut without significantly affecting your quality of life. Small reductions in multiple categories can add up over time.
Optimize your investment strategy. Review your asset allocation to see if it matches your timeline and risk tolerance. Sometimes investors are too conservative too early or take excessive risk too late.

The key is to start taking action now rather than waiting. Even modest improvements in your saving rate or investment approach may help strengthen your retirement outlook.

Get Guidance for Your Retirement Journey

At JBL Financial Services, we don't just list investments and hope you succeed on your own. Since 1979, we've served as Retirement Coaches, educating and guiding clients through every step of their financial game plan. From Social Security optimization and income planning to Medicare strategies and tax efficiency, we simplify complex financial concerns so you can focus on what matters most: your loved ones and your passions.

Whether you're 10 years away from retirement or ready to make the transition tomorrow, our team works with you to develop a personalized strategy designed to help your unique situation. We believe everyone deserves the opportunity to pursue financial independence in retirement, which is why we don't require an investable asset minimum.

Ready to assess your retirement readiness with expert guidance? Schedule a complimentary call with our team today, or tune into Straight Talk on Retirement every Saturday from 9-11 AM CST on The Big 550 KTRS for practical retirement advice.