How Ready Are You to Retire? A Complete Framework

Why Most Retirement Plans Fail — And How to Know If Yours Will

The most common retirement planning mistake isn't choosing the wrong investments or retiring too early. It's not having a clear, honest answer to a simple question: at your current savings rate, what is the probability your money lasts 30 years? Most people genuinely don't know. They have a balance, a vague sense of whether it's 'enough,' and a plan to figure it out later.

Later is expensive. A 45-year-old who discovers they're significantly behind retirement targets has 20 years to recover — enough time to double their balance with focused effort. A 60-year-old discovering the same thing has 5 years and far fewer options. The entire value of measuring retirement readiness early is that problems are solvable if you catch them while you have time.

Retirement readiness can be measured precisely using five inputs: your current age, current savings, monthly contribution rate, expected retirement age, and assumed return. From those, you can project your balance at retirement, calculate what 4% of that balance generates as annual income, and estimate whether that income — combined with Social Security — covers your expected spending. The gap between what you'll have and what you'll need is the retirement readiness problem, and it's quantifiable right now.

Get your Retirement Readiness Score

Enter your age, savings, monthly contribution, and retirement target to see a 0–100 readiness score, probability of success, year-by-year projection, and a prioritized action plan.

Calculate My Retirement Readiness

The 4% Rule: The Foundation of Retirement Income Planning

The 4% rule is the most widely used framework for estimating how much you can safely withdraw from a retirement portfolio each year without depleting it. It states: in the first year of retirement, withdraw 4% of your portfolio balance. Each year after, adjust that amount for inflation. Based on historical US market data going back to 1926, this withdrawal rate has sustained a portfolio through 30 years in the vast majority of scenarios, including the Great Depression and the 2008 financial crisis.

The practical implication: to generate $60,000/year in retirement income, you need $1.5 million saved (because $1.5M × 4% = $60,000). To generate $80,000/year, you need $2 million. This is often called the '25× rule' — you need 25 times your desired annual withdrawal in savings. This is your retirement number. Everything in retirement planning is either getting to that number or deciding how to adjust it.

Important caveat: the 4% rule was designed for 30-year retirements. If you retire at 55 and live to 90, you're looking at a 35-year retirement — and the historical success rate at that horizon drops modestly. More conservative planners use 3.3–3.5% for longer retirements. The Retirement Readiness calculator uses the 4% rule as the baseline, which is appropriate for a 65-year retirement target. If you're planning early retirement, model at 3.5% as a buffer.

How to Evaluate Your Retirement Readiness: A Step-by-Step Framework

1
Calculate your retirement number
Estimate your desired annual retirement income (a common starting point is 70–80% of pre-retirement gross income). Multiply by 25. This is your target portfolio size under the 4% rule. Example: $70,000/year desired income × 25 = $1.75M retirement number. If you need $80k/year and want a buffer, aim for $2M–$2.2M.
2
Project your current trajectory
Use the Retirement Readiness calculator to project your balance at your target retirement age based on your current savings and monthly contribution. Compare that projected balance to your retirement number. If your projected balance is less than your number, the gap is your problem to solve. The calculator shows this gap directly.
3
Identify your most impactful lever
Three levers change your retirement outcome: contribution rate, time (retirement age), and return. Of these, contribution rate and time are within your control. Return is not (you can influence it slightly through allocation, but you can't reliably generate 2% more return by being smarter). The calculator's scenario tab shows you exactly how much each lever moves the needle — often the answer is that retiring 3 years later matters more than any contribution change.
4
Maximize tax-advantaged space first
The order of operations for retirement savings: (1) 401k up to employer match (instant 50–100% return), (2) HSA if eligible — triple tax advantage, (3) Roth IRA ($7,000/yr) — tax-free growth, (4) 401k up to max ($23,000/yr), (5) taxable brokerage. Most people never fill step 4, but if you're behind on your retirement number, that's the focus. Each dollar that compounds tax-free or tax-deferred is worth more than each dollar in a taxable account.
5
Account for what the calculator doesn't include
The Retirement Readiness calculator models savings in isolation. Real retirement income also includes Social Security (average $1,800/month at full retirement age), potential pension income, part-time work income in early retirement, and any inheritance. For most people, Social Security alone bridges 30–40% of the retirement income gap. Factor this in when assessing your true readiness — the calculator is intentionally conservative.
6
Re-run the assessment annually
Retirement readiness is a trajectory, not a snapshot. Run the calculator every January when contribution rates are set for the new year. A rising score year-over-year is a reliable indicator of progress. If your score drops — because you took a pay cut, withdrew early, or changed retirement plans — you'll catch it early enough to course-correct.

Behind vs On Track for Retirement at 45

Behind at 45

✓Savings: $85,000
✓Monthly contribution: $600
✓Projected balance at 65: $580,000
✓Real balance: $330,000
✓Monthly income (4%): $1,100/mo
✓Readiness Score: 38 — At Risk
✓Probability of success: 42%

On Track at 45

✗Savings: $280,000
✗Monthly contribution: $2,000
✗Projected balance at 65: $1.92M
✗Real balance: $1.09M
✗Monthly income (4%): $3,640/mo
✗Readiness Score: 78 — Strong
✗Probability of success: 88%

Frequently Asked Questions

How much do I need to retire comfortably?

The widely used formula: 25× your desired annual income in retirement. If you want $60,000/year, you need $1.5M. If $80,000, you need $2M. This is the 4% rule target. Add your expected Social Security benefit (the average is around $1,800/month at full retirement age) to your projected savings withdrawal to get your total retirement income. Most people need 70–80% of their pre-retirement income to maintain their lifestyle.

What if I'm significantly behind in my 50s?

Being behind in your 50s is recoveable but requires intentional action. The four most effective moves: max 401k and IRA catch-up contributions ($7,500 extra allowed in 401k after 50, $1,000 extra in IRA), plan to work 2–3 years longer than originally planned, reduce retirement spending expectations by 10–15%, and delay claiming Social Security to 70 (increases monthly benefit by ~8% per year you delay past 62). Running these scenarios in the calculator shows the cumulative impact.

Should I pay off the mortgage before retiring?

Entering retirement mortgage-free dramatically reduces fixed monthly expenses, improving the probability that your portfolio lasts. However, if your mortgage rate is low (under 4%) and your expected portfolio return is higher (7%+), mathematically you come out ahead by investing rather than paying down the mortgage. The psychological value of no housing payment in retirement is real and shouldn't be dismissed. Most financial planners recommend paying off the mortgage by retirement as a risk-reduction measure.

What's the best asset allocation approaching retirement?

A common rule: subtract your age from 110 to get your equity percentage (at 60, that's 50% equities). More aggressive investors use 120 or 130. Vanguard's Target Date funds shift from 90% equity at 30 years out to roughly 50% equity at retirement and 30% at 7 years post-retirement. The key risk to manage near retirement is sequence-of-returns: a 30% market drop in year 1 of retirement is far more damaging than the same drop in year 20, because you're withdrawing while the portfolio is down.

When should I claim Social Security?

Every year you delay claiming past 62 increases your monthly benefit by 5–8%. At 70, you receive 124–132% of your full retirement benefit versus claiming at 62. If you're healthy and have other income sources, delaying to 70 is usually the optimal financial decision. The breakeven age — where the higher monthly payment catches up to the foregone early payments — is typically around age 78–80. If you're in poor health, claiming earlier makes more sense.

Know your number — calculate your Retirement Readiness Score

Takes under 60 seconds. See your score, your probability of success, a year-by-year wealth projection, and exactly what to change to improve your trajectory.