Retirement: How to Figure Out If You're on Track to Retire

By Eileen Ambrose and Kimberly Lankford, Kiplinger's Personal Finance | August 3rd, 2018

Are you making all of the right financial choices for your future?


Many people get serious about calculating whether they are on target to retire when they hit their 50s. That’s often when reality starts to sink in and retirement no longer seems like just a vague goal.

Figuring out whether you’ll have enough assets and income to cover a retirement that can easily stretch to 30 years can be daunting, but there’s no lack of advice out there. For a quick-and-dirty way to see if you’re on track, you could check one of the multitude of savings benchmarks financial firms offer. Or you could use one of the many online retirement calculators provided by Fidelity Investments, T. Rowe Price, Vanguard and others. Kiplinger also offers a calculator at

For a more accurate estimate, you’ll have to crunch your own numbers. A few things to keep in mind: When you estimate yearly expenses in retirement, remember that you’ll no longer be contributing to retirement savings, you’ll likely pay less in taxes, and if you plan to pay off your mortgage, those payments will disappear. (You may want to boost your budget for travel and hobbies.) Don’t forget that your costs will go up with inflation (figure 3% a year).

The next step is to add up your annual sources of guaranteed income, such as Social Security and possibly a pension. To find your estimated Social Security benefits, open a “my Social Security” account online at Finally, subtract your income from expenses. What’s left is how much money you will need to draw down from your savings to maintain your lifestyle.

You need to make sure you won’t deplete your savings too fast. One widely used guideline is to take an initial withdrawal of 4% of your nest egg and increase the dollar amount of your withdrawals each year by the annual inflation rate. Based on historical investment returns, this rule of thumb holds that there is a high probability that your nest egg will last for at least 30 years, assuming 50% or 60% of your portfolio is invested in stocks and the rest in bonds.

You may need more or less savings depending on how long you live. That’s impossible to predict, but you can get an idea at, which estimates life expectancy based on your answers to questions about your health, lifestyle and family history.

If you don’t already work with a financial planner, now is a good time to find one. An adviser can address your specific situation and help you create a plan to reach your goal.

Eileen Ambrose is a senior editor and Kimberly Lankford is a contributing editor at Kiplinger’s Personal Finance magazine. Send your questions and comments to And for more on this and similar money topics, visit

(c) 2018 Kiplinger’s Personal Finance; Distributed by Tribune Content Agency, LLC.

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