How to Tell If You’re On Track for Retirement

Retirement planning can feel overwhelming, but simple benchmarks and strategies help you gauge progress. By tracking savings rates, net worth, and withdrawal rules against established guidelines, you can confidently adjust your path to financial independence.

Calculate Your Retirement Number

Your

retirement number

is the total savings needed to sustain your lifestyle without working. Multiply your annual expenses by 25 to apply the 4% rule, which suggests withdrawing 4% of your portfolio annually for sustainable income over 30 years.

• Estimate post-retirement expenses: Factor in 70-80% of pre-retirement income, adjusting for no commute, payroll taxes, or work clothes.
• Account for inflation: Use 3% annual rate to project future costs.
• Example: $50,000 yearly expenses × 25 = $1.25 million needed.

This benchmark assumes a balanced stock-bond portfolio. For longer retirements due to increased longevity, consider extending to 30-33 times expenses.

Assess Your Savings Rate

Aim to save

15-20% of income

annually for retirement, including employer matches. Those starting late may need 30-50%.

Age Started	Required Annual Savings Rate
25	15%
35	20-25%
45	30-40%
55	50%+

Maximize 401(k) contributions up to employer matches first, then IRAs. In 2026 limits, contribute up to $23,500 to 401(k)s plus catch-up for 50+.

Check Savings Benchmarks by Age

Compare your nest egg to Fidelity’s guidelines, which assume retirement at 67 with 30-year horizon.

• 30s: 1x annual salary (e.g., $60k salary → $60k saved).
• 40s: 3x salary.
• 50s: 6x salary.
• 60s: 8-10x salary.

These include 401(k)s, IRAs, and taxable accounts. If behind, boost contributions or downsize expenses.

Track Your Net Worth Progress

**Net worth** (assets minus liabilities) should grow steadily. Target positive net worth by 30, covering 1-year expenses by 40.

• Build assets: Max retirement accounts, invest in low-cost index funds.
• Reduce liabilities: Pay off high-interest debt before extra savings.
• Annual check: Calculate quarterly; aim for 10-15% yearly growth pre-retirement.

High net worth enables flexibility, like semi-retirement where part-time work supplements savings.

Factor in Social Security and Pensions

Social Security replaces ~40% of pre-retirement income; delay to 70 for 8% annual credits.

• Check SSA.gov statement: Average benefit ~$1,900/month in 2026.
• Pensions: Include defined-benefit plans in projections.
• Safe withdrawal: Cover gaps with personal savings; don’t rely solely on government benefits.

With longevity rising to 84-86 years, plan for 20-30+ retirement years.

Understand the 4% Rule and Variations

The

4% rule

from the Trinity Study allows 4% initial withdrawal, adjusted for inflation, with 95%+ success over 30 years.

Refinements for volatility:

• Spend 4% of current portfolio yearly, not fixed amount.
• 95% rule: Withdraw up to 95% of prior year’s sustainable amount in down markets.
• For early retirement, use 3-3.5% to account for longer horizons.

Test scenarios with tools like FIRECalc or Vanguard’s calculator.

Plan for Healthcare and Longevity Risks

Healthcare costs ~$315,000 for a couple retiring at 65 (2024 figures, inflation-adjusted).

• Bridge to Medicare: HSA contributions pre-65; market health plans.
• Long-term care: Insurance or self-fund via aggressive saving.
• Longevity: Women plan to 95, men 92; sequence risk from early market downturns.

Semi-retirement extends insurance coverage and delays withdrawals.

Monitor Withdrawal Strategies

Flexible spending preserves principal: Increase in good years, cut 5-10% in bad.

Strategy	Pros	Cons
Fixed 4%	Simple	Rigid in volatility
Portfolio %	Adapts to markets	Spending fluctuates
Required Minimum Distributions (RMDs)	Mandatory post-73	Tax implications

Tax efficiency: Roth conversions pre-RMDs.

Frequently Asked Questions (FAQs)

Q: Am I behind if under benchmarks?

A: Not necessarily—adjust by saving more, working longer, or relocating affordably. Focus on your number, not averages.

Q: What’s better, 401(k) or IRA?

A: Both; max 401(k) match first, then IRA for flexibility. Combine for tax diversification.

Q: Can I retire early?

A: Yes, with 25-33x expenses saved, frugality, and side income. Use 3.5% withdrawal.

Q: How does debt impact retirement?

A: Eliminate high-interest debt (>4%) before aggressive saving; mortgage ok if low-rate.

Q: Should I consider semi-retirement?

A: Ideal for bridging gaps—provides income, purpose, delays SS/401(k) withdrawals.

Action Steps to Get or Stay on Track

1. Run your numbers: Expenses × 25; check SSA.gov.
2. Automate savings: 15%+ to retirement accounts.
3. Review annually: Adjust for life changes, markets.
4. Build emergency fund: 6-12 months expenses.
5. Consult advisor: For complex situations like pensions.

Consistent action beats perfection. Even late starters succeed with discipline.