Back in my Wall Street days, when I was a stockbroker pretending to know more than I did, a couple would come into my office at least once a week and slide into the chairs across from my desk with the same look on their faces. Tired. Hopeful. A little embarrassed.
And they’d ask the same question. “Stacy, just tell us. Can we retire? And if we can’t, when can we? And can you make it so safe we’ll never have to worry about anything again? Ever?”
I always wanted to say yes. The honest answer was usually, “I don’t know — let’s find out.”
That was 40 years ago. The question hasn’t changed. Neither has the panic behind it.
Here’s the thing nobody tells you: Figuring out whether you’ve saved enough isn’t complicated. It’s just uncomfortable.
Most people would rather not look. The numbers feel scary, the assumptions feel arbitrary, and the whole exercise feels like checking the weather forecast for a trip you can’t cancel.
But you can do this in about a half hour at the kitchen table. Here are the five steps.
1. Estimate what you’ll actually spend
Forget the rules of thumb that say you’ll need 70% or 80% of your pre-retirement income. That’s a starting point, not an answer.
Pull up last year’s spending. Credit card statements, bank statements, the works. Total it up, then subtract anything that’ll disappear in retirement — commuting costs, dry cleaning, the 401(k) contributions you won’t be making anymore.
Then add back what’ll go up. Travel. Hobbies. And especially health care.
According to Fidelity’s 2025 Retiree Health Care Cost Estimate, a 65-year-old retiring today will need an average of $172,500 to cover health care expenses throughout retirement. That’s per person. For a couple, double it.
The number you land on is your annual retirement budget. Write it down.
2. Add up your guaranteed income
Now go to SSA.gov and pull your Social Security statement. It’ll show you what you’d get at 62, at full retirement age, and at 70. Pick the age you plan to claim, then write down that annual amount.
If you have a pension — congratulations, you’re a unicorn — add it.
Annuity income? Add that too. And any other income you’ll be getting, like rental property, etc.
What’s left is the gap your savings have to fill.
3. Multiply the gap by 25
This is the famous “4% rule,” and it’s been beaten up in recent years. The original idea, from financial planner William Bengen in 1994, was that you could safely withdraw 4% of your savings the first year of retirement, adjust for inflation each year after, and have a high probability of not running out for 30 years.
Morningstar now suggests starting closer to 3.7% for new retirees, as Money Talks News covered when Morningstar’s director of retirement planning called the 4% rule no longer reliable as a baseline.
Either way, the math is simple. Take your annual income gap and multiply by 25. That’s roughly the size of the portfolio you’ll need to support your spending. If your gap is $40,000 a year, you need around $1 million. If it’s $60,000, you need $1.5 million.
Now you have a target.
Quick aside — most internet financial advice comes from people who weren’t alive during the last recession. I’ve been writing about money for more than 40 years. Want rock-solid advice? Sign up for the free Money Talks Newsletter. Takes 10 seconds. No fluff. No spam.
4. Compare to what you’ve actually got
Here comes the gut punch. Add up everything you’ve saved for retirement: 401(k), IRA, taxable brokerage accounts, anything you’d reasonably tap to pay the bills.
Compare it to your target.
If you’re behind, you’re not alone. According to Kiplinger, the average 401(k) balance across all participants was about $146,400. Among savers who’d been investing in the same plan continuously for 15 years, the average was $617,600.
There are real wealth-builders out there. There are also a lot of people who haven’t run the numbers yet.
For a benchmark, Fidelity’s rule of thumb is to have eight times your salary saved by 60 and 10 times by 67. Not gospel — just a sanity check.
5. Decide what you’re going to do about it
Now you know. Either you’re on track, you’re ahead, or you’ve got work to do.
If you’re behind, you’ve got three levers and only three: Save more, spend less in retirement, or work longer. Working an extra two or three years does triple duty — you keep adding to savings, you keep your portfolio growing, and you shorten the years you have to fund.
Catch-up contributions help. In 2026, savers 50 and up can put an extra $8,000 in a 401(k) on top of the regular limit. Workers ages 60 to 63 get an even bigger catch-up of $11,250 thanks to Secure 2.0.
If you’re ahead, congratulations — but don’t stop running the numbers. Sequence-of-returns risk (the danger that a market downturn occurs early in retirement) is real, and a bad market in your first few years of retirement can do a lot of damage.
Here’s the truth I came to after 10 years on Wall Street and 30+ years writing books and answering questions like this one: Nobody can promise you a retirement so safe you’ll never worry. What you can do is run the math, look at what you’ve got, and adjust. That’s it. That’s the whole game.
Don’t guess. Don’t avoid it. Run the numbers. The couple sitting across from me 40 years ago wanted certainty. What they actually needed was a plan. So do you.
For more on the drawdown side of the equation, check out “5 Steps to Ensure Your Money Lasts Through Retirement.”
